New Delhi, July 17 (IANS) Some 300 Indian political parties have never filed their income tax returns, the Central Board of Direct Taxes (CBDT) has told the Election Commission, official sources said Sunday.

The CBDT investigated the financial transactions of these 300 parties, mostly politically insignificant, after it was asked by the poll panel to probe if these parties were involved in violations of tax laws or engaged in money laundering, official sources said.

After receiving the report, the Election Commission has now asked the tax panel to initiate proceedings against these parties, spread over 13 states including West Bengal and Tamil Nadu, as also the northeast.

These political parties are being seen as a cover to escape taxes as money donated to political parties is exempt of tax.

In the course of the income tax proceedings, these parties would be asked to show cause why they did not file statutory tax returns and what their sources of funds are. An adverse finding by the tax department could lead to the registration of these political parties being cancelled.

Under the law, all the political parties are obliged to file their annual returns showing the sources of funds received by them and their expenditure.

Chief Election Commissioner Y.S. Quraishi had recently noted that 75 percent of registered political parties in the country have never contested an election.