The Income Tax department has issued a notice of approximately Rs 1,800 crore to the Congress party, exacerbating its financial concerns ahead of the crucial 2024 Lok Sabha elections, multiple reports revealed on Friday.
The development comes after the Delhi High Court rejected the party's plea challenging reassessment proceedings for four assessment years.
The new demand pertains to assessment years 2017-18 to 2020-21 and includes penalties and interest. The Congress party now awaits reassessment for three other assessment years, expected to conclude by Sunday, the stipulated deadline, said a report.
Congress lawyer and RS MP Vivek Tankha alleged that the fresh notice of nearly Rs 1,800 crore was served on the party on Thursday without key accompanying documents.
"We received the demand notice without assessment orders. The govt appeared keener to serve us with demand rather than issue us reasons for reassessment," a news paper quoted Tankha as saying. He further added, "this is how the main opposition party is being strangled financially, and that too during the Lok Sabha elections".
Delhi HC rejects plea
The Delhi High Court, on Thursday, dismissed petitions filed by the Congress challenging the initiation of tax reassessment proceedings spanning four years by tax authorities. Justices Yashwant Varma and Purushaindra Kumar Kaurav, comprising the bench, stated that the pleas were rejected in line with their earlier decision to abstain from intervening in the reopening of reassessment for an additional year.
The subject matter of the case pertained to assessment years from 2017 to 2021.
In a previous petition dismissed the week before, the Congress party had contested the initiation of reassessment proceedings concerning assessment years 2014-15 to 2016-17.
The High Court dismissed the plea, citing that the tax authority had prima facie gathered "substantial and concrete" evidence warranting further scrutiny. The tax department alleged that approximately Rs 520 crore had evaded assessment during these three years.
Additionally, the department revealed that searches conducted on entities, including some purportedly linked to Karnataka deputy chief minister D K Shivakumar and a company in Surat, had uncovered cash transactions involving Congress. These transactions were cited as violations, disqualifying the party from tax exemption available to political parties.
In the absence of exemption, parties are treated as "association of persons" and are obligated to pay taxes on their reported income. Moreover, the cash transactions are included in their total income.
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