I-T Appellate Tribunal rules Congress ineligible for exemption due to late filing and violation of Section 13A

New Delhi, July 23, 2025

The Income Tax Appellate Tribunal (ITAT) on Tuesday dismissed the Congress party’s plea for tax exemption. The case involved ₹199 crore in income for the assessment year 2018–19. The tribunal upheld the Income Tax Department’s decision. The department had rejected the exemption due to late return filing. It also cited violations of donation rules under Section 13A of the Income Tax Act.

The ITAT bench, led by judicial member Sandeep Singh Godara and accountant member M. Balaganesh ruled that Congress lost its tax relief because it missed the filing deadline. The tribunal added that Congress also violated provisions regarding political donations, including receiving cash contributions exceeding ₹2,000 per donor.

Congress claimed that donations worth ₹199 crore should get tax exemption under Section 13A. But the tribunal pointed out that Congress filed its return for AY 2018–19 on February 2, 2019—after the deadline. As a result, the party became ineligible for the exemption.“The same rules apply to everyone,” the bench said. “Being a political party doesn’t excuse late filing.”

Further, the tribunal said Congress could not net its income against expenses, stating, “The party cannot adjust against expenses too,” reinforcing that compliance with the conditions of Section 13A is mandatory to qualify for tax benefits. The tribunal stressed that cash donations must not exceed ₹2,000 per person. Larger contributions must be made through bank transfer.

The Commissioner of Income Tax (Appeals) first rejected the party’s claim. Congress then appealed the decision before the ITAT in March 2023. In its order, the tribunal quoted the High Court’s view that tax exemption is a legislative benefit, not a right. “If a political party fails to meet the statutory conditions, the claim for exemption cannot be entertained,” the order stated.

Legal experts say the ruling highlights the importance of procedural discipline even for political entities. “The judgment makes clear that tax compliance rules apply equally to political parties. Lapses like delayed returns or improper donation receipts will attract full liability,” said tax advocate Neha Bhasin.

The decision may also set a precedent for how other political parties handle their financial disclosures and tax filings. The ruling could push for tighter adherence to donation reporting norms and discourage cash-based contributions.

By upholding the ₹199 crore tax liability, the ITAT has reinforced the position that political parties must comply strictly with the law to retain their tax-exempt status. The Congress party is now liable to pay the full tax amount as assessed.

Sources