Cong moves Delhi HC against ITAT's order denying stay on tax recovery

New Delhi, March 11 (IANS) The Indian National Congress (INC) has approached the Delhi High Court, contesting an order of the Income Tax Appellate Tribunal (ITAT) that rejected its plea for a stay on outstanding tax recovery for the assessment year 2018-19.

The bench of Acting Chief Justice Manmohan and Justice Tushar Rao Gedela has agreed for an expedited hearing.

The Congress party is challenging the ITAT's decision which led to the freezing of its accounts, amidst an ongoing appeal.

On February 16, the Congress had announced that its bank accounts had been frozen by the I-T department in connection with the tax demand dispute.

Labelling the action as "an attack on democracy", the party had pointed out that the move comes at a critical juncture ahead of the impending Lok Sabha elections.

The tax dispute arose after the party's income for the 2018-19 assessment year was assessed at Rs 1,99,15,26,560, significantly higher than the nil income declared, resulting in a tax demand of Rs 1,05,17,29,635.

The bone of contention lies in the denial of exemption under Section 13A of the Income Tax Act, based on two grounds.

Firstly, the tax return filed on February 2, 2019, was deemed late according to the prescribed deadline.

Secondly, the Congress was found to have accepted cash donations amounting to Rs 14,49,000 from various individuals, breaching the Rs 2,000 limit per donation.

The ITAT, in dismissing the Congress party's stay plea, had said that violation of the mandatory conditions outlined in Section 13A leaves no room for discretion by the income tax authorities in granting the exemption.

The Tribunal has also noted that the sequence of events, from the assessment order dated July 6, 2021, to the issuance of a recovery notice on February 13, 2024, did not suggest any undue haste in the recovery proceedings.

The party had also disclosed that the Income Tax department had "undemocratically" withdrawn Rs 65 crore from its accounts across various banks. This action was taken despite the case being sub judice, according to the party's statements.

The Congress revealed that funds collected through crowdfunding have also been frozen by tax authorities.