Big Setback to Congress, Delhi HC Upholds ITAT’s Decision Over Tax Penalties

The Delhi High Court on Wednesday upheld an order of the Income Tax Appellate Tribunal (ITAT) declining to stay a notice issued by the Income Tax department to the Congress party for the recovery of outstanding tax exceeding Rs 100 crore.
A division bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav stated that there was no reason to intervene with the ITAT’s order dated March 8.

After hearing submissions from both the Congress and the Income Tax department, the bench has reserved its order on Tuesday.
The Congress moved the high court subsequent to the dismissal by ITAT of the party’s plea seeking a stay on the I-T department’s notice dated February 13, initiating recovery proceedings.

For the assessment year 2018-19, when the income was assessed to be more than Rs 199 crore, the assessing officer had raised a tax demand of over Rs 100 crore.

The Congress’s counsel urged the court to grant some protection, expressing concerns that the party would face collapse otherwise.

The counsel representing the Income Tax department informed the court that the initial tax demand amounted to Rs 102 crore, and with accrued interest, it had risen to Rs 135.06 crore, of which Rs 65.94 crore has already been recovered.

The tribunal had dismissed the stay application, stating, “… we do not find that the recovery notice under Section 226(3) of the Act issued by the assessing officer on February 13, 2024, is lacking in bona fides, so as to require us to intervene.”

Earlier, the party had denounced the freezing of its funds by the I-T tribunal, describing it as “an assault on democracy,” particularly as it occurred just ahead of the Lok Sabha elections.