The Election Commission on Tuesday issued a showcause notice to the Aam Aadmi Party, asking it to explain alleged discrepancies in the donations it received in the 2014-’15 financial year, The Times of India reported. The poll panel asked the party to explain within 20 days why no action should be taken against it.

The Election Commission said that hawala transactions had been “wrongly disclosed as voluntary donations”, PTI reported.

In January, the Central Board of Direct Taxes pointed out to the Election Commission the alleged discrepancies in the party’s actual and reported donations. An assessment of the party’s finances showed that it had contravened the provisions of Section 29(C) of the Representation of the People Act of 1951, the tax body claimed. The provision mandates all political parties to inform tax authorities of details of donations of more than Rs 20,000. Parties found violating this provision are barred from receiving any tax relief.

In a notice to the AAP on November 27, 2017, the Income Tax Department claimed that the party had not disclosed income worth Rs 13 crore and had also not recorded the details of 462 donors. These donors reportedly gave Rs 6.26 crore.

The tax authority is believed to have discovered that Rs 2 crore of hawala entries was reported as voluntary donations. The AAP is also accused of not reporting donations worth Rs 29.13 crore from donors contributing more than Rs 20,000 each in its report submitted to the Election Commission in 2015.

AAP says notice based on incorrect observations

The AAP on Tuesday claimed that the poll body’s notice was the result of “poor interpretation of basic accounting practices by the Central Board of Direct Taxes”. The party said that it had filed a contribution report with the Election Commission, which showed that it had received Rs 376 crore from various donors. The party said it had told the I-T department the number of times each donor had contributed.

“Even the amount of donations in the original contribution report is mentioned wrongly in the notice,” the party’s national treasurer ND Gupta said. “The Election Commission has copy-pasted and referred grossly incorrect and biased observations of the I-T department in its notice. Even bank transfers between different state units of the AAP have been treated as fresh donations.”

The party accused the poll body, the tax department and the central government of bias. “The AAP has explained each and every ‘misinterpretation’ and every so called ‘difference of Rs 13 crores’,” Gupta said. “We will also explain each and every detail to the Election Commission of India.”