The Congress party moved the Delhi High Court on Wednesday against Income Tax Department order opening reassessment proceedings against the political party.
The Delhi High Court allowed urgent listing of the matter tomorrow (Wednesday).
Advocate Prasanna S appearing for Congress mentioned the matter before a bench of Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora.
The High Court said if the petition is in order by 12:30 PM, the matter will be listed tomorrow.
Prasanna told the high court that the reassessment proceedings for three years have been initiated against the Congress party.
On March 13, the Delhi High Court had rejected a petition filed by the Congress party against an Income Tax Appellate Tribunal (ITAT) order rejecting its plea for stay on the demand notice issued by Income Tax (I-T) department for recovery of nearly Rs 105 crores in outstanding taxes. The ITAT had dismissed the plea by Congress saying that its intervention is not needed at this stage in the case.
A division bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that there was no reason to interfere with the ITAT order. The bench had allowed Congress to move a fresh petition for a stay before the ITAT.
The total amount with interest that the I-T department seeks is now nearly at Rs 135 crore. The I-T department had issued notice to the Congress party for recovery of Rs 105 crore in outstanding tax for the assessment year 2018-19.
In July 2021, the I-T department rejected the declaration of nill income by the Congress party and demanded Rs 105 crore in tax.
This demand was raised on the ground that the party filed a return after the prescribed time period. The I-T department also found that the party has received donations worth more than Rs 14 lakhs from individuals, which was in excess of Rs 2,000.
Thus, party violated Section 13A of the Income Tax Act, which allows a political party to claim exemption from tax.
While appealing in the high court, Congress leader Vivek Tankha said that Congress's accounts have been frozen and their stay application was rejected by the ITAT. He urged the court that this is the peak time for elections. He said that ITAT had protected the party, but now that is gone.
In February, the Congress party found itself embroiled in a legal tussle with the Income Tax Department ahead of the Lok Sabha Elections 2024.
On February 16, the Congress treasurer Ajay Maken alleged that the I-T Department has frozen four of its bank accounts and has demanded Rs 210 crore in connection with the party's income tax returns in 2018-19. Maken said that 2018-2019 was the election year, and the deadline to submit account details was December 31, 2019. The Congress party was late by 40-45 days.
Following this, the party moved to the ITAT with an appeal against the freezing of its bank accounts and seeking a stay on the IT Department’s action.
After the first ITAT hearing, Congress treasurer Ajay Maken said that the Income Tax Department and the ITAT have lifted the freeze on its bank accounts but has said that the party has to ensure that Rs 115 crores are kept in the banks as lien. The ITAT allowed the Congress party to spend amounts over and above Rs 115 crores. But, the Congress party claimed that it has much less than Rs 115 crores on their current account.
The Congress also said that the I-T Department also initiated a recovery process by withdrawing the available Rs 65.8 crores from the Congress's bank accounts. The Congress claimed that they are being wrongly targeted by the I-T Department and said that no national party pays Income Tax.