TMI Blog2001 (11) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account and other details, which were also admittedly produced before the AO. It revealed that the return filed reported the income of the Central Office along with those of some other State units of the party but not of the totality of units. The audit report certified that there was no voluntary contribution received individually exceeding Rs. 10,000 at a time. The total collection of voluntary contribution was reported to be sum of Rs. 68,64,800. During the assessment proceedings, the AO received information from DIT (Investigation), Chennai, about the appellant having a bank account in Vijaya Bank,Welder Street,Mount Road, Chennai. On examination, it was found that this bank account was not included in the accounts. When the party was confronted with this fact, it submitted that that was true and apart from the said bank account there were found more bank accounts, two at Chennai and one each atBombayandBangalore, which it had subsequently discovered. It was also lack of knowledge thereof, consequent to the successive splits undergone by the party from time to time. It was not known who had taken over which unit and with which account or accounts, and further, with whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 13A of the Act, the AO concluded that in view of the failure of the party to comply with the letter of law, it was not entitled to the exemption under the Act and a sum of Rs. 1,23,72,370 was to be assessed as income. The assessment in that manner was completed on31st March, 1998. 3. The CIT(A) before whom the first appeal was filed observed that there were three statutory conditions for availing of the benefit of s. 13A of the Act and that none of those conditions had been satisfied by the appellant and that the party s plea that it was not aware of the need to file the accounts of all the units was bereft of merit in view of the decision of Gujarat High Court in CIT vs. Gujarat Pradesh Congress Samiti (1993) 114 CTR (Guj) 379 : (1994) 207 ITR 622 (Guj). Since proper books of accounts were not maintained to enable the AO to deduce the income of the party and that since the party had not filed its return voluntarily under s. 139(1) of the Act, it could not have revised its income at all. On these premises, the CIT(A) upheld the action of the AO and dismissed the appeal. 4. In the course of the hearing, the appellant was represented by Shri K. Sampath,C.A., and the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Common Cause vs. Union of India Ors. was only with a view to bring, accountability in the election expenditure incurred by political parties and not at all with a view to make the political parties a source for collection of taxes. It was submitted that the appellant had complied with the crucial requirements of s. 13A of the Act inasmuch as it had kept and maintained proper books of accounts to enable the AO to deduce the income so much so that the final consolidated accounts submitted on 28th March, 1998, was correct and complete and were taken on record by the AO and duly acknowledged as such without any adverse remarks or objections. It was submitted that it was established law that the audited accounts could be submitted prior to assessment without jeopardy to the exemption. On this point decision under s. 12A in Swajan Pariwar Trust vs. Asstt. CIT (1997) 57 TTJ (Mumbai) 77, 49 ITD 68 (sic), 49 ITR 68 (sic), and decisions of the Calcutta High Court in CIT vs. Rai Bahadur Bissesswar Lal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal) and CIT vs. Hardeodas (1992) 198 ITR 511 (Cal) were cited. It was submitted that the requirement of law in this connection had been fully satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was unable to determine the income of the appellant. He further submitted that the appellant had opened many bank accounts and it was not clear as to which account was opened by whom and at what point of time. Even the names of the persons who were duly authorised to open such accounts were not made available despite repeated requests. He submitted that apparently, anybody could open a bank account in the name of the appellant without even an authorisation from it, and deal with such money as he pleased. It was further submitted by Sh. Ahuja that particulars of name and address of the party functionaries who used to bring money to Delhi was not submitted by the appellant despite specific insistence of the AO. It was also not clear as to who were authorised to collect money on behalf of the party and issue receipts for the same. In other words, it was apparently a situation where any worker of the appellant could collect donations and also issue receipts. Furthermore, the receipts were not mechanically numbered. The method of remitting the collection of donation to the central office of the appellant atDelhiwas also not satisfactorily explained. The appellants functionaries could tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portedly produced its books of account before the assessing authority who had scrutinised and found that the collections were fully accounted for through receipts that were duly numbered. The objection taken by the assessing authority is that the receipt numbers were manually numbered. We thus have a situation where the accounting part of the obligation under law has been more or less complied with though in stages. Before examining the issue any further, it is necessary to examine the requirements of s. 13A of the Act, which reads: 8. "Sec. 13A Any income of a political party, which is chargeable under the head "Income from house property" or "Income from other sources" or any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year of such political party; Provided that: (a) such political party keeps and maintains such books of account and other documents as would enable the AO to properly deduce its income therefrom; (b) in respect of each such voluntary contribution in excess of ten thousand rupees, such political party keeps and maintains a record of such contribution and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n found to be more than Rs. 10,000, nothing further was required to be proved. Nothing further by way of Explanation was required from the side of the appellant. Books of account cannot be rejected on the mere ipse dixit of the Revenue authorities. Defects are required to be located and established. Nothing of this nature has been done by the AO anywhere in the order, apart from taking certain objections, which we find erroneous and untenable. 9. Adverting to the objections of the AO with regard to the non-furnishing of names and address of persons who had visited central office at Delhi, it is note-worthy that the persons carried only such monies comprising of donation which each individually were less than Rs. 10,000. It is also noteworthy that the party had undergone many splits over the years and naturally a political party of an All India status would have bank accounts in different States and different districts and Taluks in each such State, manned by several representatives and after the splits it may be anybody s guess as to the number of units left owing allegiance to it. In such circumstances, no exception can be taken for the failure to recall the names of persons who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars are available or insofar as individual donations are less than Rs. 10,000 each, this item also would not present any book-keeping complication. Perhaps, as appellant s counsel points out, it is in recognition of this apparent simplicity that there is no provision similar to s. 44AA applicable for political parties. That being the situation in law, it will be wrong to suggest that exhaustive books of account as normally understood in commercial parlance ought compulsorily to be maintained to avail the exemption under s. 13A of the Act. So long as the auditor has found the accounting version amenable to verification and audit and the report is not qualified, the purpose of law is well subserved. We, therefore, do not see much merit in the argument. 12. On the point of no valid revised return filed, we find that the authorities below omitted to take note that the return was filed pursuant to s. 142(1) of the Act. No variation of income was sought. Consistently, the appellant had been canvassing nil income. The case is thus academic. The other point that has been raised on behalf of the Department is about the transfer of money being effected through DD s or TT s instead o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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