Delhi HC reserves verdict on Congress’s plea against Rs 105 crore I-T tax notice

During the hearing, the bench orally said that it did not see any “basic or fundamental infirmity” in the ITAT’s order and that it had taken a “balanced and plausible” view.

“As we read this (ITAT) order, the petitioner has itself to blame. The demand is of 2021… you don’t seem to have made any attempt to offer to securitise… the demand amount… Somebody in the petitioner’s office went to sleep right from 2021,” the bench said orally.

Senior advocate Vivek Tankha, appearing for the party, said this argument was made before the ITAT, stating that like other people who had been put to terms for securitising 20% of the demand amount, the party had urged that it can be put to similar terms. Seeking that the party be protected for the time being, Tankha argued that the notification for the national elections is expected in the next few days, and the party’s accounts have been seized and it is under a lot of pressure.

Meanwhile, appearing for the department, advocate Zoheb Hossain argued that the party was offered to deposit 20% of the demand amount way back in October 2021 but it was not done.

He further submitted that an “impression” is sought to be made that the department is making the recovery just before elections, when the entire seriatim of events since 2021 has been shown. Hossain thereafter said that this was a “routine recovery and has nothing to do with the elections”.

On March 8, the ITAT had dismissed the Congress party’s application for stay, observing that “once the mandatory requirements in Section 13A of the (Income Tax) Act is violated, there is no discretion with the income tax authorities to give any relaxation in allowing the exemption”. It had said the Congress party was unable to make out a “strong prima facie case” against the interpretation of Section 13A adopted by the department to deny the exemption.

Section 13A pertains to a special provision for political parties providing tax exemption on income from house property, from other sources, voluntary contributions and capital gains, subject to certain terms and conditions.

According to the ITAT order, the assessment of the Congress party for the year 2018-19 was completed at an income of Rs 1,99,15,26,560 “against nil income” declared in its return, thereby resulting in a demand of Rs 105,17,29,635.

The order noted that the difference between the returned and assessed income is solely for the reason that the Congress claim for exemption under Section 13A of the Income Tax Act has been denied by the assessing officer, and the entire income of Rs 1,99,15,26,560 was held to be taxable. One of the grounds on which the Congress party’s claim of exemption was denied was that it had “received donations of Rs 14,49,000 in cash from various persons, each donation being in excess of Rs 2,000”.