The Indian National Congress (INC) filed a challenge on Wednesday against a decision of the Income Tax Appellate Tribunal (ITAT) dismissing the party’s request for a suspension of the Income Tax (IT) department’s demand notice for the recovery of around ₹105 crore in unpaid taxes. The Delhi High Court denied the plea.
Justices Yashwant Varma and Purushaindra Kumar Kaurav, sitting in division, declared that there was no justification for interfering with the ITAT ruling.
The total amount including interest is currently close to ₹135 crore, according to the statement presented in court.
Nevertheless, in light of the events that have transpired since then, including the recovery of ₹65.94 crores from the party, the Court permitted Congress to file a new motion for a stay before the ITAT.
Since the ITAT is the tribunal hearing the main appeal, it is imperative that it first determine whether the aforementioned situation justifies protective measures being granted in relation to the remaining outstanding demand and, if so, to what extent. We therefore decline to offer a definitive judgment in this regard and leave this matter up for the ITAT’s deliberation,” the Court stated.
Additionally, it requested that the ITAT evaluate the application as soon as possible, if it was moved.
The Court had stated that it did not seem that the ITAT order included any basic flaws when it heard the case on March 12.
The bench stated that someone in the Congress party office “went to sleep,” noting that the procedures against the party had begun in 2021. The Bench stated that the situation has been handled terribly overall.
“The petitioner bears some of the blame, as we understand this order (ITAT order). The year 2021 is the demand.It appears that you did not attempt to securitize the demand. It says, “Someone in petitioner’s office has not woken up since 2021.”
The Congress party received a letter from the IT department demanding the return of ₹105 crore in unpaid taxes for the assessment year 2018–19.
The Congress’s assertion of zero income was rejected by the IT authorities in July 2021, and they requested more than ₹105 crore in taxes.
The claim was made on the grounds that the return was filed after the deadline and that the party had received “donations” totaling ₹14,49,000 from many individuals, each of whom had given more than ₹2,000.
It was claimed that this was against Section 13A of the Income Tax Act, which permits a political party to request an exemption from paying taxes under specific circumstances.
Aiming to cause troubles for the party ahead of the 2018 parliamentary elections, the Congress contested the IT department’s actions before the ITAT, claiming that the recovery processes, which were started on February 13.
The ITAT decided in an order dated March 8, 2024, that the IT authorities had not erred in rejecting the Congress’s request for an income tax exemption.
It went on to say that Congress was unable to provide a compelling initial defense against the IT authorities’ refusal of such an exception.
The ITAT ruled in a comprehensive ruling on March 8 that Congress had to provide its income return before the “due date.”
This resulted in the current argument made before the High Court.
During his appearance on behalf of the Congress, Senior Advocate Vivek Tankha declared that the party will fail if its finances remain blocked.
He stated that in a few days, the schedule for the Lok Sabha elections of 2024 would be revealed. He asked how a national party that is unable to use its funds could challenge the polls in this situation.
It has also been reported to me that seven or eight years of my assessment have been reopened. The constitutional courts now have a duty to defend us,” he said.
On March 12, the bench did note that this was a spectre that was formed in 2021 and that nothing would alter just because someone woke up in February 2024.
Advocate Zoheb Hossain, on the other hand, spoke on behalf of the IT department and refuted the notion that the IT proceedings started right before the elections.
We have demonstrated that these legal processes date back to 2021. This is a standard recuperation. There will be an election every fifth year if you don’t pay for four years,” he stated.
According to Hossain, ₹65.9 crore of the ₹135 crore total demand against the Congress party has been recovered, plus interest.
He went on to say that the party is not facing any financial difficulties and that its total assets are close to ₹1,400 crore.
“It can’t be an argument that because we have to fight the elections, we won’t pay,” Hossain insisted.
The Congress party was represented by senior counsel Vivek K. Tankha and Ravi Shankar Jandhyala, as well as advocates Prasanna S., Vipul Tiwari, Inderdev Singh, Kanishka Singh, Nikhil Bhalla, and Tarannum Cheema.
Advocates Zoheb Hossain, Vipul Agrawal, Sanjeev Menon, Sakshi Shairwal, Abhipriya, Vivek Gurnani, and Rajat Sen represented the IT department.
Delhi High Court Denies Congress Request to Halt Income Tax Notice”
