Further troubles have mounted for Arvind Kejriwal's Aam Aadmi Party (AAP). Writing to the Election Commission, the Income Tax (IT) department has stated that the party had submitted a "wrong" audit report and therefore it is not eligible for exemption under the Income Tax Act.
The IT department has also suggested that the EC revisit or cancel the registration of AAP as a trust and a party.
As per documents accessed by DNA, the Income Tax department stated: "The AAP is liable for prosecution under 276 C (Wilful attempt to evade tax, etc) and under section 277A (falsification of books of account or document etc) of the Income Tax Act."
The department has also pointed out that the income of AAP may be subjected to special audit under section 142 (2A) of the Act.
The IT department's recommendation to the EC was given after a meeting was chaired on May 4, after anomalies were found in cash donations and four drafts of Rs 50 lakh each.
IT department officials also stated that summons had been issued to AAP and its present and former treasurers on many occasions, but all of them had been reluctant to attend the proceedings in response to summons issued by officers of the Directorate, IT investigation.
AAP filed its return of income for assessment for 2014-15 and 2015-16 financial years. In its returns of income, AAP had claimed the entire amount of donation — amounting to Rs 50 crore and Rs 54 crore — as exempt from taxation under the provisions of section 13(A) of the IT Act.
"AAP is a political party. As per provisions of section 29 (B) of representation of People Act, any political party is entitled to accept contribution voluntarily offered to it by any person or company," the document stated.
The Directorate of IT Investigations also received information that the conditions mandated by provisos of section 13(A) were not being followed by AAP for 2014-2015 and 2015-2016. Furthermore, it was learnt the report — in respect of donors of contributions in excess of Rs 20,000 — shown by the party on its official website, had differed from the report submitted by AAP to the commission. In order to investigate the matter, summons were issued to AAP but they were reluctant to attend the proceedings in response.
The IT department also probed the receipt of "voluntary contributions" to AAP. It was seen that the list of such voluntary contributors to AAP displayed by the party on its website differed from the list submitted by it to the EC both in terms of amount of such contribution as well as the number of contributors.
IT documents showed Total donations to the party in excess of 20,000 in 2014-15 as per the website of AAP, amounted to 19.8 crore, whereas total donation above 20,000 as per the party's contribution report to the EC amounted to 9.42 crore.
Similarly, total donations above 20,000 for 2015-2016 as per the website, was 27.48 crore whereas the contribution report to EC for that year was 32 crore.
Sources said that this difference in contribution was brought to the notice of AAP. They added the party was asked to explain why exemption to it should not be withdrawn, because donations above
20,000 shown on the website were not reported to the EC.
In the response to this showcase letter, AAP has initiated a few steps. The party removed the list of donors' contribution from the website. They admitted in a reply that a certain "error had been noticed'' in the contribution report with respect to 2014-2015
AAP has since filed a revised contribution report with the EC in respect of 2014-2015.
Also about the donor list for 2014-2015, the IT department learnt that the original contribution list submitted by AAP contained 177 names of donors, which was not mentioned in the revised contribution list. In addition, the revised contribution list submitted by AAP contained 874 names of donors which are not mentioned in the original contribution list.
Furthermore, the original contribution list contained 12 incomplete names and addresses. The revised contribution list contained 307 missing names. The voluntary contribution list, in respect to 2015-2016 submitted by AAP to EC, also contained 461 incomplete names. Many of the entries are just left as blanks. This lacuna in the list renders as inadequate compliance of the requirement laid down by section 29 C of the Representation of the People Act. In addition, it also raises a question mark over the veracity of the accounts of AAP.
Due to this, the Income Tax department has recommended that the EC cancel the licence of AAP.
Analysis
The AAP is liable for prosecution under 276C (Wilful attempt to evade tax, etc) and under section 277A (falsification of books of account or document etc) of the Income Tax Act
AAP filed its return of income for assessment for 2014-15 and 2015-16 financial years. In its returns of income, AAP had claimed the entire amount of donation — amounting to Rs 50 crore and Rs 54 crore — as exempt from taxation
