The Delhi High Court on Thursday dismissed the pleas of Congress challenging the initiation of income tax re-assessment proceedings for the fiscal years 2017-18 to 2020-21. The division bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav upheld their stance consistent with a previous judgement that dismissed similar petitions concerning reassessment for the years 2014-15 to 2016-17. The court’s decision comes after it noted on March 25 that the Congress party had delayed its legal challenge until the deadline for assessment completion, hinting at a strategic postponement. The judges remarked that the income tax authorities had gathered “substantial and concrete evidence” justifying a deeper examination of the Congress party’s income and financial declarations under the provisions of the Income Tax Act.
The Congress party had been facing a substantial tax demand exceeding Rs 100 crore for the assessment year 2018-19. The Delhi HC had earlier upheld the Income Tax Appellate Tribunal’s order rejecting the Congress’ plea for a stay on outstanding tax recovery for the same assessment year. Advocate Zoheb Hossain, representing the tax authorities, pointed out that despite being offered options, the party failed to pay outstanding demands, making the entire amount recoverable.
Senior Advocate Vivek Tankha, representing the party, argued that the Congress had only Rs 300 crore in its bank accounts and criticized the seizing of accounts, hindering the party’s ability to contest elections. The tax dispute arose after the party’s income for the 2018-19 assessment year was assessed significantly higher than what was declared, resulting in a substantial tax demand.
The Congress has challenged the ITAT’s decision which led to the freezing of its accounts, labeling the action as “an attack on democracy”, especially coming at a critical juncture before the impending Lok Sabha elections. The bone of contention lies in the denial of exemption under the Income Tax Act due to late filing of tax returns and accepting cash donations exceeding the prescribed limit.
The party claimed that the Income Tax Department had withdrawn funds from its accounts and frozen crowdfunding collections despite the case being under dispute. The ongoing battle between the Congress and the tax authorities highlights the significant financial and legal challenges faced by the political party.
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