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Synopsis

The Delhi High Court has dismissed the petition filed by the Indian National Congress (INC) challenging the order passed by the Income Tax Appellate Tribunal (ITAT). Congress had approached the ITAT seeking 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.

The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav acknowledged that the arguments raised by INC were addressed in a prior ruling dated March 22, 2024. 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 v Deputy Commissioner Of Income Tax (W.P. (C)- 4276/2024)