Delhi High Court Dismisses Congress Party's Pleas Against Tax Re-Assessment Proceedings

A division bench comprising Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav said that Congress had chosen to approach the court only a few days before the time for completion of assessment would expire and at the “proverbial fag end of the proceedings.”

”We consequently find no justification to interdict the assessment proceedings at this belated stage by invoking our jurisdiction under Article 226 of the Constitution. However and whether the asserted delay in commencement of proceedings would be fatal to the assessment itself is a question that we leave open to be urged at an appropriate juncture,” the court said.

It added that the income tax authorities appear to have collated substantial and concrete evidence warranting further scrutiny and examination of Congress' income under the Income Tax Act. 

The bench said that the material which was taken note of in the Satisfaction Note as drawn by the accessing officer makes detailed references to unaccounted transactions with respect to the Lok Sabha Elections of 2019 and MP Assembly Elections 2018 and 2013. 

“The material which forms part of the Satisfaction Note also captures details of disbursements made to candidates vying in upcoming elections together with signed receipts. There is a detailed reference to payments allegedly made to MPs'/MLAs' and candidates,” the court said. 

It added that the said note also carried material suggesting payments and contributions made by government departments and corporations, liquor manufacturers, industry entities and individuals to the Congress.

Furthermore, the court said that the assessment period is liable to be completed by 31 March, 2024, taking the date of handing over or recordal of satisfaction as constituting the date from which that period is liable to be reckoned.

The court had reserved the verdict on March 20 after hearing Senior Advocate Abhishek Manu Singhvi and Advocate Zoheb Hossain appearing for tax authorities.

Appearing for Indian National Congress, Singhvi has submitted that the action of the tax authorities is “barred by limitation” as they could have gone back to maximum of six assessment years.

On court's query as to what is the alleged escaped income by the Congress, Hossain had responded that as per the seized material, the amount is about Rs. 520 crores.

Notably, Congress has also filed fresh pleas challenging initiation of tax re-assessment proceedings against it for four different years. The petitions are yet to be listed before the High Court.

Recently, the court had upheld the order passed by the Income Tax Appellate Tribunal (ITAT) on March 08 refusing to stay a demand notice issued to the political party for recovery of outstanding tax of more than Rs. 100 crores for the assessment year 2018-19.

However, it granted liberty to the Congress to move a fresh application for stay before the ITAT bearing in mind the developments which have occurred in the meanwhile including that of an amount of Rs.65.94 crores having been recovered by the tax authorities pursuant to encashment of the bank drafts.

The bench had added that Congress' application, if so moved, may be considered by the ITAT with due expedition.

Also Read: Delhi High Court Upholds ITAT Order Rejecting Congress' Plea To Stay Notice For Recovery Of Over ₹100 Cr Outstanding Tax