Delhi HC to pass order today on Congress plea in tax demand case

In the ongoing saga related to the grand old party's Income Tax woes, the Delhi high court is all set to pronounce its verdict on Wednesday, March 13, on a petition filed by the Congress.

The Congress had challenged an Income Tax Appellate Tribunal order, which refused to stay a notice issued by the Income Tax department dealing with the recovery of outstanding dues to the tune of more than ₹100 crore.

A bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav is scheduled to deliver the order at 2.15 pm.

The bench had reserved its order on Tuesday after hearing the submissions on behalf of the Congress and the I-T department.

Tax demand of ₹100 crore

The Congress approached the high court after the Income Tax Appellate Tribunal (ITAT) on March 8 dismissed the party's application seeking a stay on the February 13 notice of the IT department initiating recovery proceedings against it.

The assessing officer had raised a tax demand of more than ₹100 crore for the assessment year 2018-19 when the income was assessed to be more than ₹199 crore.

The counsel for the Congress had urged the court to grant it some protection otherwise the party would collapse.

He had said notification for the Lok Sabha elections is expected in the next few days and the party is under tremendous pressure as its bank accounts have been frozen.

Badly handled matter

The bench had told the senior lawyer that though the demand was raised in 2021, the party took no steps to address the issue. It had said it was a “badly handled matter” and somebody from the Congress office went off to sleep right from 2021.

“Merely because someone chose to wake up and put you on notice in February will not change those facts,” the bench had said.

The I-T Department’s counsel had submitted that though the Congress was given the option of paying 20 per cent of the demand way back in 2021, it was not done. If the assessee does not avail the facility of depositing 20 per cent of the demand when offered, the entire amount becomes recoverable, he had said.

The I-T department’s counsel had informed the court that the original tax demand stood at ₹102 crore and with interest it became ₹135.06 crore. He said ₹65.94 crore stands recovered now.

Attack on democracy

Before the ITAT, the counsel for the Congress had contended that the initiation of recovery proceedings under Section 226 (3) of the Income Tax Act on February 13 is so timed that the assessee would not be left with enough resources to contest the parliamentary elections.

The tribunal had dismissed the stay application saying, "… we do not find that the recovery notice under Section 226(3) of the Act issued by the assessing officer on February 13, 2024 is lacking in bona fides, so as to require us to intervene." The party had earlier said the I-T tribunal order freezing its funds was "an attack on democracy" as it had come just ahead of the Lok Sabha elections. 

(With inputs from agencies)