Case Law Details
Public Political Party Vs DCIT (Delhi High Court)
The Delhi High Court dismissed the appeals challenging the Income Tax Appellate Tribunal’s common order dated 17.12.2025. The appellant contended that after the Tribunal held the addition made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 to be unsustainable, it could not direct taxation of 6% of the donation/contribution under Section 56. The appellant further argued that deletion of the Section 68 addition entitled it to exemption under Section 13A.
The Revenue submitted that the appellant political party had neither undertaken political activities nor received genuine political contributions, but had issued forged donation receipts, returned the donated amounts to the contributors, and retained only 6% as commission. It maintained that the Tribunal had correctly treated the 6% commission as income under Section 56, while reiterating, without prejudice, the Department’s stand that the entire amount was liable to be added under Section 68.
The High Court noted the Tribunal’s categorical factual finding that the appellant had issued bogus donation receipts to enable contributors to claim deductions under Sections 80GGB and 80GGC and had repaid the purported donations to those contributors. It held that these findings of fact could not be interfered with in an appeal under Section 260A.
The Court found no error in the Tribunal’s approach of treating 6% of the total amount as the appellant’s income instead of the entire amount. It rejected the contention that deletion of the Section 68 addition automatically entitled the appellant to exemption under Section 13A. The Court also referred to the assessment order recording that the appellant had failed to submit the report to the Election Commission of India as required under the second proviso to Section 13A and observed that, in some assessment years, improper reports were filed while in others no report was filed. It held that the appellant had lost its eligibility to claim exemption under Section 13A. Accordingly, the appeals and pending applications were dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
By way of present appeals, the appellant has challenged the common order dated 17.12.2025 passed by the Income Tax Appellate Tribunal ‘C’ Bench, New Delhi, (hereinafter referred to as ‘Tribunal’) in the appeals filed by the appellant.
2. Learned counsel for the appellant argued that when the Tribunal has come to a conclusion that the addition under Section 68 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), made by the Assessing Officer (AO) as affirmed by the Commissioner Income Tax, (Appeal) [hereinafter referred to as ‘CIT (A)]’, was not sustainable it could not have directed addition of 6% of the donation/contribution under Section 56 of the Act of 1961.
3. He argued that once the addition made under Section 68 of the Act of 1961 was found to be untenable, then as a natural corollary, the appellant’s income was eligible for exemption under Section 13A of the Act of 1961.
4. Mr. Shlok Chandra, learned Senior Standing Counsel, on the other hand, argued that the appellant, a political party has as neither done any political activity nor has it received any genuine political contribution or donation and as a matter of fact it had issued forged receipts. He further submitted that a perusal of the order of the Tribunal and record would reveal that it had issued receipts of the donation and had given back the amount to the payers for which, the Assessing Officer had made addition under Section 68 of the Act of 1961. He argued that the Tribunal in turn has held that instead of adding the entire amount i.e., 6%, being commission in fact on such amount should be added under Section 56 of the Act of 1961. He nevertheless maintained that this is without prejudice to the Department’s stand that as a matter of fact entire amount should have been added under Section 68 of the Act of 1961, as has been done by the Assessing Officer.
5. Heard learned counsel for the parties.
6. On perusal of the record and orders of the authorities below, more particularly, the order of the Tribunal, we find that the Tribunal has recorded a categorical finding that the assessee has indulged in issuing bogus donation receipts to various persons in a bid to give them undue advantage of deductions under Section 80GGB and Section 80GGC of the Act of 1961.
7. The Tribunal has recorded a finding that the so-called amount received as donation has been paid back to the persons from whom the amount was purportedly received. Such finding recorded by the Tribunal is a finding of fact, which cannot be interfered with by this Court under Section 260A of the Act of 1961.
8. If such finding is taken into consideration, then we do not find any error or infirmity in the approach of the Tribunal. It has rightly taken 6% of the total amount as assessee’s income rather than the entire amount of purported donation. Because the assessee had facilitated false donation receipts in order to enable them to claim deduction under Section 80GGB and 80GGC of the Act of 1961.
9. Assessee’s claim that once the addition under Section 68 of the Act of 1961 is deleted, the appellant should get benefit of Section 13A of the Act of 1961 is misplaced and misconceived, inasmuch as a violator of law, cannot claim exemption. Such benefit will result in mischief with the mandate of the provisions of Section 13A of the Act, as appellant’s books of accounts do not reflect a true and correct picture.
10. A perusal of the assessment order (para No. 4.13.1) shows that the appellant had failed to submit report to the Election Commission of India as per second proviso to Section 13A of the Act of 1961.
11. In light of the findings recorded by the AO and CIT (A), we are of the view that the appellant has flouted the second proviso to Section 13A of the Act of 1961 by filing the improper report in some assessment years, while in other assessment years, it did not file any report at all. Therefore, the assessee had lost the very eligibility to claim exemption under Section 13A of the Act of 1961.
12. The appeals along with pending applications, therefore, fail.
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