COMMISSIONER OF INCOME TAX Vs. JANATA PARTY

JUDGEMENT

(1.) This appeal by the Revenue under Sec. 260A of the Income Tax Act, 1961 ('the Act') is directed against an order dated 23rd November, 2001 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No. 2140/Del/2000 for the Assessment Year ('AY') 1995 -96.

(2.) The Respondent Assessee is a political party registered under the Representation of the People Act, 1951 ('RP Act'). It was formed on 3rd May, 1977. According to the Assessee there were three major splits in the party. The first occurred on 18th July 1979, when Mr. Chaudhary Charan Singh left to form the Lok Dal. The second split occurred on 4th April 1980, when Mr. Atal Bihari Vajpayee left to form the Bharatiya Janata Party ('BJP') and the third in July 1989, when Mr. Madhu Dandavate, Mr. Ajit Singh etc. left to form the Janata Dal. It is stated that on 12th November 1990, Dr. Subramanian Swamy was elected as the President of the party and he appointed new office bearers. It is stated that Dr Swamy opened an account of the central office of the party with Vijaya Bank, New Delhi. The voluntary contributions collected in the various States were brought (mostly in cash) by the office bearers to Delhi where they were deposited in the aforementioned bank account. The Assessee's case is that from this account funds were disbursed to the various State units through demand drafts or telegraphic bank transfers. It is stated that a numbered signed receipt was given by the collecting party volunteer to the donor for each voluntary contribution.

(3.) On 10th October 1990, the Assessing Officer ('AO') wrote to the Assessee demanding production of the accounts from AY 1986 -1987 onwards till AY 1990 -1991. It is stated that since the party had different office bearers and different bank accounts, some of which the President was not aware of, the said request could not be given effect to. It is stated that when it was found that no income -tax return had ever been filed on behalf of the party, the President of the Party got a firm of Chartered Accountants ('CAs') to audit the central office accounts for the AY 1990 -91.