The Hindu Business Line : Tax returns of political parties can be made public

The only way a citizen can gain access to the details of funding of political parties is through their income-tax returns filed annually with the I-T authorities.

T. N. Pandey

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Section 13A of the Income-Tax Act, 1961 is a special provision relating to income of political parties, which mean parties registered under Section 29A of the Representation of People Act, 1951 (RPA), vide this section, income of political parties from (i) house properties; (ii) income from other sources; (iii) capital gains; and (iv) income by way of voluntary contributions received from any person, are exempt from income-tax provided:

Such political parties keep and maintain books of accounts and other documents as would enable the assessing officer (AO) to properly deduce income therefrom;

For voluntary contributions, in excess of Rs 20,000, the political parties maintain a record of such contributions with the name and address of the contributors, who have made the contributions;

The accounts of such parties are audited by chartered accountants.

The exemption gets forfeited if a political party fails to submit a report under Section 29C(3) of the RPA for a financial year.

Demand under RIA

The Right to Information Act (RIA) is applicable in respect of public authorities established, owned or substantially financed by the Central Government, the State Governments, Union Territories, including panchayats, municipalities and other local bodies. It extends to the whole of India except Jammu and Kashmir. The I-T Department is certainly a department of the Central Government and, therefore, comes within the purview of the RIA.

According to Section 2(j) of the RIA, ‘right to information’ means the right to information accessible under the Act, which is held by or under the control of any public authority and, inter alia, includes taking notes, extracts, or certified copies of documents and records available with the specified authorities.

Income-tax returns would fall in this category, where right of inspection or asking for certified copies can be exercised. Section 8 of the RIA enumerates situations where exemption can be claimed in respect of the information in the possession of an authority on an application made to it under the provisions of the RIA.

Returns of political parties

Can exemption be claimed by the I-T Department with regard to returns filed by the political parties? This issue came in for the consideration of the Central Information Commission (CIC) in the Ms Anumeha, C/o Association for Democratic Reforms vs Chief CIT (CIC/AT/A-200701029, 01263 TO 1270 dated April 29, 08) case (reported in Vol.-12, Part-I of Corporate Professionals Today of May 1-15, 2008).

In the application filed under the RIA, the argument for getting the information was that since political parties exercise power, transparency in their organisation, functions and, more particularly, their means of funding is a democratic imperative and, therefore, it is in public interest that the income-tax returns of political parties, insofar as they contain funding details, should be disclosed.

This view has been accepted by the Commission. The view expressed by the Commission is that the laws of the land do not make it mandatory for political parties to disclose the sources of their funding, and even less so the manner of expending those funds. In the absence of such laws, the only way a citizen can gain access to the details of funding of political parties is through their income-tax returns filed annually with the I-T authorities.

This is about the closest political parties get to accounting for the sources and the extent of their funding and expenditure. There is unmistakable public interest in knowing these funding details, which would enable citizens to make an informed choice about the political parties to vote for.

The RIA emphasises that “democracy requires an informed citizen” and that transparency of information is vital to flawless functioning of constitutional democracy. It can be nobody’s case that while all organs of the state must exhibit maximum transparency, no such obligation attaches to political parties. Given that political parties exercise power, transparency in their organisation, functions and, more particularly, their means of funding, is essential and, therefore, is public interest.

However, a safeguard has been provided in the matter of furnishing the information. Though the I-T returns of political parties regarding the funding details are liable for disclosure, there should be no disclosure of PAN of such parties in view of possibility of fraudulent use of such disclosure.

(The author is a former chairman of CBDT.)