The Income Tax Department is now doing a re-assessment of the Congress’s I-T returns of seven years from 2014-15 to 2020-21 after incriminating evidence of cash donations and transfers was found during searches across states since 2019, sources said. If the department assesses violations of provisions of Section 13 (1) in those assessment years too, the Congress could be in bigger financial trouble
The bank accounts of the Congress party have not been frozen but the government has recovered (Rs 135 crore) what was legally due to it, top sources said on Thursday after the Congress leadership accused the Narendra Modi government of throttling its finances.
Sources revealed that there are three separate tax matters going on against the Congress, and that all parties are at the same pedestal when it comes to tax exemptions. However, a party has to fulfill provisions under Section 13 (1) of the law to claim those exemptions.
The Congress is accused of violating those provisions, which has exposed its income to tax purposes, sources explained.
The Income Tax Department is now doing a re-assessment of the Congress’s I-T returns of seven years from 2014-15 to 2020-21 after incriminating evidence of cash donations and transfers was found during searches across states since 2019, sources said.
If the I-T department assesses violations of provisions of Section 13 (1) in those assessment years too, the Congress could be in bigger financial trouble. Sources also explained that the 1994-1995 tax matter has been pending since 1997 and there was a High Court judgement on it in 2016, hence the Congress’s claim of the matter being raised after 30 years is wrong.
FIRST CASE: ASSESSMENT YEAR 2018-19
Sources said the Congress lost exemption from taxation for this assessment year as it filed returns after a delay of 33 days and accepted taking donations of Rs 14.49 lakh in cash. The Congress had claimed exemption of Rs 199 crore income in that year.
Sources said once you lose exemption under Section 13 (1), the entire income becomes liable for tax and there is no provision in law for any lesser penalty. I-T Department, hence, served a notice of Rs 105 crore on the Congress in 2021 and asked it to pay 20% of the amount (Rs 21 crore) to stay the full recovery. But the Congress paid only Rs 78 lakh and its appeal before the CIT (A) was dismissed. On March 13, Delhi High Court also dismissed the appeal of the Congress party.
This led to the I-T Department recovering Rs 135 crore from Congress bank accounts on March 16, 2024, which included a demand of Rs 102.66 crore and interest of Rs 32.4 crore.
SECOND CASE: RE-OPENING OF ASSESSMENT YEARS 2014 TO 2021
This matter may be of bigger concern to the Congress, prompting the press conference by its top leadership on Thursday. The I-T Department is believed to have seized incriminating material during searches on Congress associates since 2019 in Madhya Pradesh, Karnataka and other states about cash donations and transactions of the party.
This led to the I-T Department opening reassessment proceedings for assessment years of Congress returns between 2014-15 and 2020-21 as the department feels there are violations in those years too regarding exemptions from taxation claimed under Section 13 (A). If proved, the Congress could be served a massive demand notice soon too.
Sources said the Congress has not been cooperating in the matter so far and is not replying to I-T queries on merits — despite the incriminating evidence being furnished to it for explanation by way of notices and summons. I-T Department suspects that the Congress does not complete audited book of accounts, which is a major violation of provisions of Section 13 (A) and could expose its entire income from 2014 to 2021 to taxation purposes.
Sources said the Congress has filed writ petitions against all seven years, out of which writ petitions for three years has been heard by Delhi High Court on March 20 and the order is reserved.
THIRD CASE: THE 1994 MATTER
The Congress leadership on Thursday said the I-T Department had served a demand notice of Rs 53 crore on it regarding the assessment year of 1994-1995 after 30 years, and termed it vendetta politics. Sources, however, say the red flag on the assessment of this particular financial year was raised by the I-T Department in 1997 itself as Section 13(A) exemption was denied due to lack of audited accounts. The matter was pending in I-T tribunals and the High Court for several years till the HC ruled in the I-T Department’s favour in 2016.
Sources said the Congress has moved an appeal in the Supreme Court in the matter and next date of hearing is April 1.
Sources said the I-T Department has, in hindsight, been “lenient” with the Congress as many litigations have dragged for years and lot of time has been given to the party. Sources also referred to the High Court judgments which have been scathing on the Congress and slammed it for being slow in settling these matters.
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