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Synopsis

Centre has today assured the Supreme Court of India that no coercive steps shall be taken against Indian National Congress in the case relating to income tax demand of INR 3500 crores.

"We will not take coercive action till matter is heard, as ELECTIONS WILL BE GOING ON...plea keep in June second week..", Solicitor General Tushar Mehta told the court today.

On a submission being made by Senior Counsel AM Singhvi that Congress was only a political party and not a profit making organisation, court was told by the SG, "A demand is there for INR 3500 crores, a lot is to be said on merits by us..".

Recording the SG's submission, the bench of Justices BV Nagarathna and AG Masih listed the case in second week of July.

Few days back, he Delhi High Court dismissed the petition filed by the Indian National Congress (INC) challenging the order passed by the Income Tax Appellate Tribunal (ITAT) whereby it sought to halt the recovery of a disputed demand for the Assessment year 2018-19, under Rule 35A of the Income-tax (Appellate Tribunal) Rules, 1963 (ITAT Rules), which was rejected.

This order dismissed INC's objections to re-assessment proceedings for the assessment years 2014-15, 2015-16, and 2016-17.

The disputed demand, totaling Rs.105,17,29,635 arose due to the denial of exemption under Section 13A of the Income-tax Act, 1961. Per the INC, they should have been exempted under the Income Tax Act. However, the Tribunal's decision was based on two key grounds: firstly, the alleged violation of the time limit specified in the third Proviso to Section 13A, and secondly, the receipt of cash donations exceeding Rs. 2,000 each, which contravened clause (d) of the first Proviso to Section 13A. Consequently, the Tribunal upheld the denial of exemption under Section 13A due to breaches of the first and third Provisos. 

The Delhi High Court also dismissed three other petitions concerning other assessment years, which were under fresh scrutiny by the IT Department. These petitions pertained to the assessment years 2017-18, 2018-19, 2019-20, and 2020-21, and were rejected on similar grounds as the previous cases.

However, the INC had expressed concerns regarding their ability to actively participate in the upcoming elections. The freezing of their account casts a shadow over their capacity to effectively campaign, Congress alleges.

Case Title: Indian National Congress vs. Commissioner of Income Tax, Delhi XI