Cong moves Delhi HC challenging tax re-assessment proceedings

New Delhi, March 20 (IANS) The Congress has approached the Delhi High Court challenging the re-assessment proceedings initiated against it by tax authorities.

A Bench of Acting Chief Justice Manmohan and Justice Manmeet PS Arora on Wednesday scheduled the matter for an expedited hearing on Thursday.

The counsel representing the Congress stressed the urgency of the situation, stating that the Income Tax authorities have decided to re-open the assessment for the last four years.

He said three such petitions pertaining to three different years are already listed for hearing during the day.

This development comes on the heels of the Congress facing a substantial tax demand, exceeding Rs 100 crore for the assessment year 2018-19, wherein the party’s income was assessed to be over Rs 199 crore.

The Bench allowed the request saying, “Okay if in order by 12:30 pm, it will be listed tomorrow.”

The move comes after the Delhi HC, last week, upheld the Income Tax Appellate Tribunal’s (ITAT) order dated March 8 rejecting the Congress’ plea for a stay on outstanding tax recovery for the assessment year 2018-19.

A Division Bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav had pronounced the verdict.

“We find no ground to interfere with the (challenger) order,” the Bench had said.

It had, however, granted liberty to the Congress to move the ITAT afresh in case of any change of circumstances.

The Bench had expressed dissatisfaction with the handling of the matter by the party, saying that it seemed someone at its office had been negligent since 2021.

The court had remarked that though the demand was of 2021, a reading of the impugned order showed that the party did not take the stand of seeking to securitise the demand or even offer to securitise the same.

Advocate Zoheb Hossain, who appeared for the tax authorities, had argued that despite being offered the option to pay 20 per cent of the demand in 2021, the party failed to do so, making the entire amount recoverable.

He had also pointed out that the Congress has 120 bank accounts and more than Rs 1,400 crore is kept in them.

He said that the party did not plead or argue financial hardship before the Tribunal.

In response, Senior Advocate Vivek Tankha, who represented the party, had stated that the Congress had only Rs 300 crore in its bank accounts and criticised the authorities for seizing every account, hindering the party’s ability to contest elections.

He urged for expeditious disposal of the appeal.

The Congress challenged the ITAT’s decision which led to the freezing of its accounts, amidst an ongoing appeal.

On February 16, the Congress announced that its bank accounts had been frozen by the Income Tax Department in connection with the tax demand dispute.

Labelling the action as “an attack on democracy”, the party had said that the move comes at a critical juncture ahead of the impending Lok Sabha elections.

The tax dispute arose after the party’s income for the 2018-19 assessment year was assessed at Rs 1,99,15,26,560, then the nil income it declared, resulting in a tax demand of Rs 1,05,17,29,635.

The bone of contention lies in the denial of exemption under Section 13A of the Income Tax Act, based on two grounds.

First, the tax return filed on February 2, 2019, was deemed late according to the prescribed deadline. Second, the Congress was found to have accepted cash donations amounting to Rs 14,49,000 from various individuals, breaching the Rs 2,000 limit per donation.

The ITAT, in dismissing the Congress’ stay plea, had said that violation of the mandatory conditions outlined in Section 13A leaves no room for discretion by the tax authorities in granting the exemption.

The Tribunal had also noted that the sequence of events, from the assessment order dated July 6, 2021 to the issuance of a recovery notice on February 13, did not suggest any undue haste in the recovery proceedings.

The party had also claimed that the Income Tax Department had “undemocratically” withdrawn Rs 65 crore from its accounts across various banks.

This action was taken despite the case being sub judice, according to the party.

The Congress also said that funds collected through crowdfunding have also been frozen by the tax authorities.

–IANS

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