The Income Tax Appellate Tribunal (ITAT) has dismissed an appeal by the Congress party, upholding a tax demand of ₹199.15 crore for the assessment year 2018-19. The two-member bench ruled that Congress failed to meet the conditions required for availing the exemption under Section 13A of the Income Tax Act. The ITAT's decision was based on the grounds of late filing of income tax returns and violations of cash donation limits.

The Congress party filed its income tax return on February 2, 2019, which was over a month after the extended deadline of December 31, 2018. Under Section 139(4B) of the Income Tax Act, political parties are required to file their returns within the "due date" to qualify for the exemption. The ITAT rejected the Congress party's argument that a belated return should suffice, similar to the provisions for charitable trusts under Section 12A.

In addition to the late filing, the assessment also highlighted that the party accepted cash donations totaling ₹14.49 lakh, with each donation exceeding the permissible limit of ₹2,000. The tribunal found the Congress party in violation of Section 13A(d) of the Income Tax Act, which mandates that donations exceeding ₹2,000 must be received through banking channels, such as account payee cheques or electronic transfers, as per the Finance Act, 2017. The ITAT order stated that accepting donations exceeding ₹2,000 in cash violates the provisions of clause (d) of the first proviso to Section 13A of the Act.

The Congress party had declared nil income after claiming an exemption of ₹199.15 crore under Section 13A of the Income Tax Act. While the party reported total receipts of ₹199.15 crore against ₹197.43 crore in expenses, resulting in a surplus of ₹1.71 crore, the assessment order dated July 6, 2021, denied the exemption entirely, making the full amount taxable. The Commissioner of Income Tax (Appeals) upheld this decision on March 28, 2023, which led Congress to approach the ITAT. In 2024, the ITAT refused interim relief and, in its latest ruling, dismissed the party's appeal.

The ITAT emphasized that exemption provisions must be interpreted strictly and that Section 139(4B) requires political parties to file returns within the due date under Section 139(1). The tribunal rejected Congress's argument that it should be treated similarly to charitable trusts under Section 12A, which have broader leeway in filing returns.