The Delhi High Court delivered a decision that rejected the Indian National Congress Party’s (INC) appeal against the Income Tax Appellate Tribunal’s (Tribunal) decision to dismiss their application to halt the Income Tax Department’s recovery proceedings for Rs 135 crores (comprising interest accrued).
The party had been requesting an adjournment since September 2023, therefore the bench, which was made up of Justices Yashwant Varma and Purushaindra Kumar Kaurav, decided against interfering with the Tribunal’s decision on the grounds that there was no justification for it.
The Bench voiced dissatisfaction with the Congress party’s handling of the issue during the March 12 hearing, pointing out that the tax demand dates back to 2021. The bench criticized the party for what appeared to be passivity, noting that the current state of affairs appeared to result from someone in the Congress office ignoring the matter since 2021.
“As we read this order (ITAT order), the petitioner has itself to blame. The demand is for 2021…It seems you made no efforts to securitize the demand…Someone in the petitioner’s office has remained asleep since 2021,” it added.
In July 2021, the Congress party was subject to legal action by the IT department, which challenged their statement of nil income and demanded more than Rs 105 crore in taxes for the assessment year 2018–19. The demand was made in response to the late submission of the return and the purported receipt of donations totaling more than Rs 2,000 each, which violated the Income Tax Act’s Section 13A’s tax exemption provisions for political parties.
The Congress went to the ITAT to voice its disapproval of the IT department’s conduct and to argue against the rejection of tax exemption. On March 8, 2024, the ITAT, however, affirmed the department’s decision, concluding that the Congress’s claim lacked substantial evidence.
Representing the Congress, Senior Advocate Vivek Tankha expressed apprehension regarding the party’s accounts being frozen and threatened severe repercussions should the situation continue, particularly in light of the approaching Lok Sabha elections. The bench did stress that last-minute fixes would not address the problem, which has been since 2021.
The attorney for the IT department, meanwhile, denied that the case was being handled close to the elections, stating that it has been going on since 2021 and rejecting charges that it was placing an excessive financial strain on the party.