The Income Tax department on Thursday raided two registered unrecognised political parties (RUPP) operating from a slum in Sion Koliwada and another from a small flat in Borivali.
The raids led the taxman to hawala transactions of over Rs 150 crore. The raids are part of a nationwide crackdown on RUPPs.
Sources said that the money came to the parties as donations from shell companies who wanted to evade tax. This amount was later returned for a nominal commission.
Section 80GGC of the Income Tax Act allows individuals to donate any amount to any political party registered under section 29A of the Representation of the People Act. The individuals can then avail tax deduction up to 100 per cent of the donated amount.
The office of a political party called Jantavadi Congress Party operated from a shack measuring only 100 square feet in a transit camp at Sion. It had received funds of over Rs 50 crore in the last two years. Its president Santosh Maruti Katke has been residing here with his family for the last 20 years.
The other political party operated from a small room in suburban Borivali and received over Rs 70 crore as political donations. Officials recorded the statements of heads of both the parties and suspect that they were formed at the behest of a Gujarat-based hawala operator.
The party heads were questioned on the elections contested so far and expenses incurred. Officials have also sought documents related to donations and bills. Katke alleged that the Income Tax raid is a conspiracy.
He said, “A game is being played against me. I have submitted all the documents related to our party to the Election Commission (EC) and gave the accounts of the money received as donation. All my papers are clear, which is why no further action was taken against me.”
He said his party was established in 2014 and has received donations of nearly Rs 80 crore. According to the I-T department, 199 registered but unrecognised political parties had claimed receiving Rs 445 crore in donations in 2018-19, while 219 similar parties had claimed donations of Rs 608 crore in 2019-20.
The parties, however, failed to provide information to the EC in Form 24. The EC had then struck off about 198 entities from its RUPP list after they were found non-existent during physical verification.
A senior official said, “Action was taken for flouting rules and election laws, including those related to filing of monetary contributions, failing to update the addresses and names of office bearers. Many RUPPs are misusing the provision for tax evasion and generating unaccounted money.”