Delhi High Court dismisses Congress’ pleas against income tax re-assessment

The Delhi High Court rejected Congress’ plea challenging the initiation of income tax re-assessment proceedings from 2017-18 to 2020-21. The court noted the party’s strategic delay in legal challenge and upheld the income tax authorities’ decision based on substantial evidence.

The Congress party faced a tax demand exceeding Rs 100 crore for the assessment year 2018-19, where its income was assessed at over Rs 199 crore. The High Court upheld the Income Tax Appellate Tribunal’s order rejecting Congress’ plea for a stay on outstanding tax recovery, expressing dissatisfaction with the party’s handling of the matter.

Advocate Zoheb Hossain argued that despite being offered the option to pay 20% of the demand in 2021, the party failed to do so, leading to the entire recovery of the amount. Senior Advocate Vivek Tankha criticized the tax authorities for seizing the Congress’ accounts, hindering its ability to contest elections.

The Congress challenged ITAT’s decision that resulted in freezing of its accounts, labelling it as “an attack on democracy”. The tax dispute arose after the party’s income for the 2018-19 assessment year was assessed at Rs 1,99,15,26,560, resulting in a tax demand of Rs 1,05,17,29,635 due to denial of exemption under Section 13A of the Income Tax Act.

The ITAT dismissed Congress’ stay plea citing violation of mandatory conditions under Section 13A. The party claimed the Income Tax Department ‘undemocratically’ withdrew Rs 65 crore from its accounts during ongoing appeal, freezing funds collected through crowdfunding as well.