Delhi HC Reserves Verdict on Congress Party’s Plea against ITAT Order

The Delhi High Court reserved its verdict on Tuesday on a plea filed by the Indian National Congress party against an order of the Income Tax Appellate Tribunal (ITAT) rejecting its application for a stay on the demand notice issued by the Income Tax (IT) department for the recovery of more than ₹105 crore in outstanding taxes.

Justices Yashwant Varma and Purushaindra Kumar Kaurav reserved the verdict while noting that there appears to be no fundamental infirmity in the ITAT order.

The division bench remarked that the proceedings against the party had commenced in 2021 and criticized the lack of action from the Congress party, stating, “Someone in petitioner’s office has remained asleep since 2021.”

The bench hinted that the judgment would be delivered on Wednesday.

Senior Advocate Vivek Tankha, appearing for the Congress, expressed concern over the freezing of the party’s accounts, stating that continued freezing would lead to the collapse of the party, particularly with the upcoming 2024 Lok Sabha elections.

However, the Bench countered Tankha’s arguments, stating that the situation had arisen in 2021 and that mere recent awareness in February 2024 would not change the circumstances.

Advocate Zoheb Hossain, representing the IT department, argued against the notion that the proceedings were timed with the elections, asserting that the process had been ongoing since 2021.

Hossain highlighted that with interest, the total demand against the Congress party amounted to ₹135 crore, of which ₹65.9 crore had already been recovered.

The ITAT had earlier ruled, in a March 8, 2024 order, that the IT authorities were justified in denying the income tax exemption claimed by the Congress, citing the party’s failure to establish a strong prima facie case.

The IT authorities had initially rejected the Congress’s nil income declaration and demanded over ₹105 crore in tax, citing late filing and donations exceeding the prescribed limit.

Controversy arose in February 2024 when the Congress claimed that its bank accounts were frozen, leading to the party challenging the proceedings before the ITAT.

The Department of Revenue of the Ministry of Finance clarified to the ITAT that it had not ordered freezing the Congress’s accounts but had only placed a lien on the amount corresponding to the outstanding tax demand.

The ITAT, in its detailed judgment, stated that the Congress was required to file its income tax return by the due date.