Rs 135 crore gone, Congress faces Income Tax Department action on ‘unaccounted’ Rs 524 crore

When contacted, Congress leader and Rajya Sabha member V K Tankha, who is a senior lawyer, said the party apprehended that a hefty penalty and interest would now be added to the Rs 523.87 crore for calculation of fresh demand. “Not satisfied with crippling us by withdrawing the lien amount of Rs 135 crore on the eve of general elections, a bigger setback is expected, thus crippling us further. But what is left to cripple?” Tankha told The Indian Express.

In March, the Congress party lost its appeal before the Income-Tax Appellate Tribunal (ITAT) where it had sought a stay on withdrawal of Rs 135 crore from its bank accounts. On March 22, it also lost in the Delhi High Court a challenge to the search operations conducted by the I-T department. The party had argued that these were “time-barred” and a “delayed action”.

As reported earlier on May 24, 2019, the Election Commission had sought an inquiry by the Central Bureau of Investigation in the same tax matter case. On April 7, 2019, the I-T department had conducted simultaneous raids in 52 locations. Finally, in 2023, it had dispatched a “satisfaction note” to the Congress party for alleged pay-offs having traced these to fund collections for the 2013 Madhya Pradesh Assembly elections, the 2018 Madhya Pradesh Assembly Elections and the 2019 Lok Sabha elections.

A “satisfaction note” is a pre-requisite prepared by an Assessing officer (AO) of the searched person and then handed over to the AO of the assessee, in this case the Congress Party. Party lawyers argued that the I-T department took a long time for this procedure. The High Court finally observed that the party chose to approach it “only a few days” before the completion of assessments, that is March 31.

In its March 22 order, the Delhi High Court listed evidence collected during the raids, which shows that the searches on employees of the MEIL Group (Megha Engineering & Infrastructure Limited) also yielded evidence of pay-offs to the Congress party. The Megha Group had emerged as the second largest donor to political parties in the recently released data on electoral bonds. Its group company had donated Rs 110 crore to the Congress during October-November 2023.

During the proceedings, Congress lawyers had informed the Delhi High Court that the audited expenses for the 2019 Lok Sabha elections was Rs 860 crore. Tankha, who had argued the ITAT matter and also appeared in the Delhi High Court admits that the party cannot envisage such expenses for the 2024 polls. He said, “Where is the level playing field? Who knows for how many hundred crores the demand for the 2019 raids and searches will be?’’

Rajya Sabha member Digvijay Singh also said the Congress party was seriously cash-strapped. His name also figures in the list for evidence collected from the residence of Praveen Kakkar, OSD to then Chief Minister Kamal Nath. The alleged payment of Rs 90 lakhs to him (along with several other Congress MLAs) as per a diary seized from an employee of the MEIL Group is listed in the Delhi High Court judgement as among the “substantial and concrete evidence” of unaccounted transactions.

Singh, however, said the tagging of 2019 search matters as fresh tax demands just weeks before the Lok Sabha polls was vendetta politics. “The I-T Department has even given us a notice for violations of Rs 14 lakhs for 1994-95. This is a witch-hunt. The fact remains that the Congress doesn’t have funds to either release advertisements or to give money to candidates for the Lok Sabha elections or to make travel plans for leaders. They are killing the election campaign of the principal opposition party,” he said.