- Congress had failed to file the tax returns despite clear directions by the Gujarat High Court in an earlier case and that too since the year 1995. [para 11]
- The Supreme Court had declared that Political Parties are not above the law. [Common Cause v. Union of India 1996-222-ITR-260-SC] [para 12]
- Political parties do not carry out charitable activities. Their claim for exemption akin to one extended to charitable trusts is ill-founded. [para 69]
- Receipts of Political Parties by way of voluntary donations are their "income from other sources" [para 80]
- The income tax law grants exemption to a political party on the receipts by way of voluntary donation. However this exemption is subject to filing detailed and certified accounts. The statutory provisions reveal that "it was critical from the point of view of the legislature that political parties are made to disclose what their state of financial affairs is in any given financial year". [para 93]
103. It is also disconcerting to note that the same auditor has issued identical certificates for other AYs for which simultaneously accounts have been finalised. This kind of an auditor’s report, to say the least, leaves much to be desired. It does not comport with the degree of seriousness with which a duly qualified auditor is expected to discharge his statutory obligations. An auditor is discharging both the professional and a statutory duty. He is licensed under the expectation that he will faithfully discharge the above obligations. In the present case, the Court is constrained to note that the auditor’s report submitted before the CIT (A) on 4th November 1997 is woefully short of the requirement of the law.