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- Supreme Court Hearing Today On Case Of Rs 1800 Crore Tax Due To Congress Party
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Income Tax Department demanded tax of ₹3567 crores from Congress Party.
Today, the Supreme Court will hear the case of the outstanding recovery notice given by the Income Tax Department to the Congress Party.
Earlier, the hearing was held on 1 April. Then Solicitor General Tushar Mehta on behalf of the Income Tax Department had said that the department will not take any action against Congress in view of the Lok Sabha elections. He had said that we do not want to create problems for any party during the elections. After this, the court had asked for hearing of the case on 24 July.
The Income Tax Department has demanded tax of Rs 3567 crore. A tax notice of Rs 1745 crore was sent in March. The Congress party had approached the Supreme Court against this notice. However, the Tax Department has already recovered Rs 135 crore from the accounts of the Congress.
Under which rules of Income Tax do political parties get exemption?
Under Section 13A of the Income Tax Act, 1961, registered political parties are exempted from income tax on their income. Section 13A states that income of any political party from house property, other sources, capital gains and voluntary contributions from any individual shall not be included in its total income of the previous year, but certain conditions have to be fulfilled for this.
Why did Congress receive an income tax notice of Rs 3,569 crore?
There are mainly three cases in which Congress is accused of violating the provisions of income tax exemption…
First case: Congress filed income tax return 1 month late in 2018-19
- The income tax return for 2018-19 was to be filed by the due date i.e. 31 December 2018, but Congress filed it on 2 February 2019, more than a month later.
- Out of the total donations of Rs 142.83 crore received by it this year, Congress did not give details of donations worth Rs 14.49 lakh. It had accepted this money in cash.
- For non-compliance of the exemption provisions, the Income Tax Department issued a notice to the Congress in September 2019 and then in January and March 2020.
- In these notices, a demand of income tax of Rs 94.44 crore was made on the total income of Congress of Rs 199.15 crore after assessment for the year 2018-19.
- Congress challenged this assessment order in August 2021. In October 2021, it applied for a stay on the recovery of Rs 94.44 crore demanded by the Income Tax. In August 2021 itself, an assessment officer settled the matter and directed Congress to pay 20% of its outstanding tax liability. This instruction said that if Congress does not do so, it will be considered a defaulter.
- Congress did not pay this 20% amount and paid only Rs 78 lakh. After this, Income Tax issued a letter to Congress in January 2023. In this, Congress was again asked to pay its liability. Congress challenged this instruction in the Income Tax Commissioner (Appeal) and Income Tax Appellate Tribunal, but did not get any relief.
- Congress also appealed in the High Court against the income tax demand. On March 13, 2024, the High Court rejected the appeal of Congress. Along with this, Congress was criticized for not settling the matter properly and said that ‘the people in the Congress office have been sleeping since the year 2021.’
- On March 16, 2024, the Income Tax Department recovered Rs 135 crore from the bank accounts of the Congress. This included a tax demand of Rs 102.66 crore and interest of Rs 32.4 crore.
Second case: Irregularities were found in the re-assessment of Congress’s income from 2014-21
- Before the Lok Sabha elections, Congress has received notices from the Income Tax Department for 7 assessment years 2014-21. According to media reports, these notices are related to the use of hundreds of crores of rupees in cash by the party.
- In April 2019, the Income Tax Department found evidence of this during a raid on people associated with Congress leader and former Chief Minister of Madhya Pradesh Kamal Nath.
- According to the Income Tax Department, it has seized material related to cash donations and transactions made by the Congress. IT claims that during these years too, the Congress has violated the provisions of income tax exemption.
- Congress had filed petitions in the Delhi High Court challenging the reassessment of the Income Tax Department for all these seven years. The Delhi High Court heard the petitions for three of these years on 20 March 2024.
Third case: Demand notice of Rs 53 crore to Congress in a 30 year old case
- Congress said that after 30 years, the Income Tax Department has given it a demand notice of Rs 53 crore for the assessment of 1994-95. Congress called it a vindictive action of the Center.
- The IT department had already warned Congress in the case of the assessment year 1994-95. This matter went to the IGT authorities and Delhi High Court several times, but no one gave a decision in favor of Congress.
- In this case, Congress had appealed to the Supreme Court, which was heard by the court on 1 April 2024.
High Court proceedings: All petitions of Congress dismissed
- On March 22, the Delhi High Court dismissed the Congress’ petitions challenging the Income Tax Department’s reassessment proceedings for the three financial years 2014-15, 2015-16 and 2016-17. The court had also asked whether the delay in starting the proceedings would affect the assessment.
- On March 28, the Delhi High Court dismissed four more petitions of the Congress. These included challenges to the re-initiation of tax assessment proceedings by the Income Tax Department during the four financial years from 2017-18 to 2020-21.
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