The Delhi High Court on Tuesday reserved its order on a petition by the Congress party challenging an order of the Income Tax Appellate Tribunal which refused to stay a notice issued by the Income Tax department for recovery of outstanding dues of more than Rs 100 crore.
A bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav heard the submissions on behalf of Congress and the I-T department and said the order is likely by Wednesday.
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 I-T department initiating recovery proceedings against it.
The assessing officer had raised a tax demand of more than Rs 100 crore for the assessment year 2018-19 when the income was assessed to be more than Rs 199 crore.
Senior advocate Vivek Tankha, representing the Congress, urged the court to grant it some protection otherwise the party would collapse.
He 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.
The bench told the senior lawyer that though the demand was raised in 2021, the party took no steps to address the issue. It 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 said, adding the appellate tribunal has taken a balanced and plausible view.
Advocate Zoheb Hossain, representing the I-T department, 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, Hossain said.
“That is done in the normal course, there is nothing special for the petitioner (Congress),” he submitted, adding the impression being created is that the department is recovering tax right before the elections.
“But it is a routine process. It has nothing to do with the elections,” he said.
The I-T department’s counsel informed the court that the original tax demand stood at Rs 102 crore and with interest it became Rs 135.06 crore. He said Rs 65.94 crore stands recovered now.
The Congress’s counsel said the I-T authorities have reopened the party’s assessment of the last 7-8 years.
Before the ITAT, the counsel for the Congress had highlighted the hardship being faced by the party just ahead of the Lok Sabha elections.
The counsel 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.
Attributing malice to the action of the assessing officer, the counsel had submitted that the intention was not merely to recover the outstanding demand but to bring the activities of the assessee to a standstill as it would not be able to meet even the basic maintenance and establishment expenditure.
The counsel for the I-T department had countered the claims, saying the party was unnecessarily attributing motives to the action of the assessing officer who has proceeded in accordance with the due process of law.
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.
