The Delhi High Court on Monday reserved its verdict on a plea filed by the Indian National Congress party against an order of the Income Tax Appellate Tribunal (ITAT) rejecting its application for stay on the demand notice issued by the Income Tax (IT) department for the recovery of more than ₹105 crore in outstanding taxes.A Division Bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav reserved the verdict while remarking that there appears to be no fundamental infirmity in the ITAT order.Noting that the proceedings against the party had started in the year 2021, the Bench said that someone in the Congress party office "went out to sleep." The entire matter has been very badly handled, the Bench said."As we read this order (ITAT order), the petitioner has itself to blame. The demand is of 202...It seems you made not efforts to securitise the demand...Someone in petitioner's office has remained asleep since 2021," it added.The Bench hinted that the judgment will be out by tomorrow (Wednesday, March 13).Appearing for the Congress, Senior Advocate Vivek Tankha said that the party's accounts have been frozen and if this continues, the party will collapse.He said that the schedule for the 2024 Lok Sabha elections is to be announced in a few days. In this context, he questioned how a national party can contest the polls if it cannot use its money."I am told that seven to eight years of my assessment have also been reopened... It is now for the constitutional courts to protect us," he stated.However, the Bench remarked that this was a spectre created in 2021, and that merely because someone woke up in February 2024, it would not change anything.Meanwhile, Advocate Zoheb Hossain appeared for IT department and argued that the impression sought to be created that the IT proceedings have begun just before elections, is wrong."We have shown that these proceedings have been going on since 2021. This is routine recovery. For four years you don't pay up, then every fifth year there is going to be an election," he said.Hossain stated that with interest, the total demand against the Congress party is ₹135 crore, of which ₹65.9 crore has been recovered.He added that no financial hardship is being caused to the party and that its cumulative assets amount to nearly ₹1,400 crore."It can't be an argument that because we have to fight the elections, we won't pay," Hossain stressed.The IT department had earlier issued notice to the Congress for the recovery of ₹105 crore in outstanding tax for the assessment year 2018-19. As per the statement made in court today, the total amount with interest is now nearly ₹135 crore.In an order passed on March 8, 2024, the ITAT ruled that the IT authorities had not made any error in denying the income tax exemption claimed by the Congress.It further said that Congress was unable to make out a strong prima facie case against such a denial of exemption by the IT authorities.The IT authorities had in July 2021 rejected the declaration of nil income by the Congress and demanded over ₹105 crore in tax.The demand was raised on the ground that the return had been filed beyond the prescribed time period and also that the party has received “donations” of ₹14,49,000 from various persons, each being in excess of ₹2,000.This was stated to be in violation of Section 13A of the Income Tax Act, which allows a political party to claim exemption from tax in certain cases.Controversy broke out in February 2024 after the Congress claimed that that its bank accounts were frozen by the IT Department, as cheques being issued by it were not being honoured.The Congress challenged the IT department's the proceedings before the ITAT, alleging that recovery proceedings initiated on February 13 were aimed at creating hardships to the party in view of the upcoming parliamentary elections.However, the Department of Revenue of Ministry of Finance told the ITAT that it had not issued any order or direction to the banks for freezing the transactions relate to accounts of Congress “but only for a lien on the amount lying in the bank account(s) upto the outstanding tax demand."The IT authorities also objected to the motive being attributed to the Assessing Officer and submitted that the proceedings have been pending since July 2021.In a detailed judgement passed on March 8, the ITAT opined that Congress was required to furnish its return of income by ‘due date’.
TAGS: Congress IT Tribunal Delhi High Court verdict plea demand notice
