The Janata Dal (JD) may soon meet the same fate as the Congress which has been asked to pay Rs 23 crore as tax by the Income-Tax (I-T) department. The party is yet to furnish complete accounts for fiscal years 1990-91 to 1995-96, especially of its state units as was the case with the Congress party.
According to a government source, only the Left parties have furnished tax returns along with proper documents to the satisfaction of the I-T department. The Congress, the JD and the Bharatiya Janata Party (BJP) are lagging behind in submitting full records for their tax returns.
While the time limit for some cases ended on March 31 - leading to slapping of tax demands on Congress and even the BJP - the time limit in the rest of the pending cases expires on March 31, next year.
A special provision was added to the Income-Tax Act from April 1, 1979 stipulating that incomes of any political party shall be exempt if it satisfied the following conditions: parties should keep account to the satisfaction of the I-T department and get them annually audited; it should disclose to the I-T department names and addresses of all the donors contributing in excess of Rs 10,000 crore.
In spite of this, most of the parties, including the BJP, Congress and the JD, ignored the I-T notices and the attempt was abandoned soon after. Only the Communist Party of India (CPI) and the Communist Party of India (Marxist) abided by the law.
The I-T department was, however, forced to collect tax returns from all political parties after a public interest litigation (PIL) was filed in court by S D Shouri of the Common Cause. The Supreme Court made it sure that all parties filed tax returns for 1995-96. The defaulters were to file returns for this year by February 1996. Following this, some parties filed tax returns for more than one year.
In the wake of a strong indictment of major political parties and the I-T department by the Supreme Court, the department conducted inquiries into the financial affairs of all the parties. Information collected lead to opening of assessments of defaulting parties for 10 years and in the case of JD, since its inception in 1990-91. All major parties complied by filing returns for all such years.
Owing to such scanty response from parties, the department concentrated on the cases which would have become time-barred on March 31. These included assessments of Congress, Janata Party (JP), CPI(M) and Samajwadi Party (SP) for the year 1994-95.
Of these parties, Congress was the only party which was not able to satisfy the I-T department with documentary support for the year. According to a department source, the party was offered various opportunities from time to time and books of accounts and other documents as per law. The party could not furnish the consolidated accounts of all the state units and also failed to furnish names and complete addresses of donors of over Rs 10,000.
In view of this, the entire receipts shown by the party in its return of income plus the receipts remitted from the state units were taxed creating a demand of Rs 23 crore for the year 1994-95.
In respect of the BJP, the prima facie adjustment was made on March 31, 1996 resulting in a tax demand of about Rs 17 lakh. The party disputed this and it was deleted on appeal. The department has now gone in appeal against the deletion. The party is yet to furnish all details for the following years returns.
In the case of the JD, six proceedings from 1990-91 to 1995-96 are under scrutiny. The party is yet to furnish complete accounts, including that of its state units. Besides, the issues arising out of the Orissa unit of Biju Patnaik are also under investigation. If the party fails to comply with the law, substantial tax demands are likely to be made against it.The time limit for all the cases expires on March 31, next year.
