Litany of tax troubles

Tribune News Service

Sandeep Dikshit

New Delhi, March 21

The Congress is grappling with more than one case with the Income Tax authorities. While the substantial case is about the Congress not adhering to regulations while submitting its I-T returns for 2018-19 assessment year, the I-T Department has also ordered reopening assessments of the Congress for seven financial years. There is also an I-T notice of 1994-95 assessment year when Sitaram Kesri was the party treasurer. In the case where the bank accounts of the party and its mass organisations have been frozen by the I-T Department, the Congress seems to have run afoul of a change in the Finance Act that was made around the same time as the assessment year 2018-19. As per the third proviso inserted in Section 13A of the Finance Act, 2017, it is mandatory for political parties to file their I-T returns by the due date under Section 139 to claim exemption.

Notice slapped in feb

Feb 14: I-T notice to 11 bank branches of AICC, Youth Cong & NSUI seeking Rs 135 cr deposit; accounts made inoperable as none had requisite amount

Feb 16: Cong says I-T Dept demanded Rs 210 cr as recovery on two alleged counts — 45-day delay in filing returns & violating provisions relating to cash contributions

March 8: I-T Tribunal declines stay on recovery notice

March 13: Delhi HC upholds order passed by Tribunal

March 20: Delhi HC reserves judgment on Cong plea against I-T reassessment proceedings

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Alleged violations

• Cong not adhering to regulations while submitting I-T returns for 2018-19
• Party violated first proviso to Section 13A by accepting cash donations exceeding Rs 2,000
• I-T notice for 1994-95 when Sitaram Kesri was party treasurer

The demand from the I-T Department, amounting to Rs 105 crore, arose due to the denial of this exemption under Section 13A of the Income Tax Act, 1961, due to the change made in Finance Act, 2017.

In addition to this dispute, basically centring on denial of exemption under Section 13A of the I-T Act related to the income of political parties, the I-T Department claims the Congress also violated the first proviso to Section 13A by accepting cash donations exceeding Rs 2,000 each. The I-T Tribunal said there was no supporting evidence for the distinction made by the Congress between “voluntary contributions” and “donations”.

The Congress, on the other hand, argues that the return for AY 2018-19 was filed within the time allowed under Section 139(4) of the I-T Act.

Sources were unable to comment on the reopening of 1994-95 tax returns without more details. But they reckoned that the case might have started earlier in the IT Department which has quasi judicial powers to do so. “It seems that the Congress might have exhausted all avenues earlier and the amount is now recoverable,” they said.

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