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In a major reprieve for the Congress facing financial woes ahead of the Lok Sabha elections, the Income Tax department told the Supreme Court on Monday that it will not take coercive steps to recover a demand of ₹3,500 crore, including the levy of notices worth about ₹1,700 crore that were issued last week.
In light of the April-June general elections, the department, represented by Solicitor General Tushar Mehta, submitted before the court that it will not be resorting to any urgent action to retrieve the money from the party.
“The petitioner is a political party. This impugned judgment is from 2016 and based on these parameters, a demand was raised in 2021. In March 2024, we recovered ₹ 134 crore and now we have raised a demand of ₹1,700 crores based on the same parameters. Since elections are going on, until the matter is heard after elections, we will not take any action for recovery of this amount,” Mehta told a bench of justices BV Nagarathna and AG Masih.
At this, the bench commended the law officer’s statement and recorded his undertaking in response to an application moved by Congress against a series of demand notices issued against the party last month.
“At the commencement of the hearing, learned S-G, appearing for CIT, submitted that there is no dispute that for several dates in March 2024, demands have been made for approximately ₹3500 crore. The issues which arise in these appeals are yet to be adjudicated upon but having regard to the situation now, the department does not wish to precipitate the matter and says that no coercive steps will be taken with regard to recovery of ₹3500 crores,” the bench recorded in its order.
It listed the next hearing of the matter on July 24 while adding that the concession offered by the department is without any prejudice to the rights and contentions of the department in arguing the case. The bench also recorded the Mehta’s submissions that the demand of ₹3500 crore may not be strictly relatable to the controversy in the appeals pending before the top court and that they may touch upon other demands raised by the department in separate proceedings.
Senior counsel Abhishek Manu Singhvi and Vivek Tankha, who appeared for the Congress, highlighted the financial difficulties faced by the party in view of the IT notices raising huge demands. “They have already collected ₹135 crore by way of attachment of funds…We are not a profit-making organisation but only a political party,” Singhvi submitted.
But the senior lawyer was also pleasantly surprised after Mehta made a categorical statement at the commencement of the hearing that no coercive steps will be taken to recover the money from the party. “I am rendered speechless and very few times I am,” Singhvi reacted to Mehta’s statement.
The Congress on March 29 announced a nationwide protest over the next two days at the party’s state and district headquarters against the income-tax notices, the latest being of around ₹1,700 crore, which was sent hours after the Delhi high court dismissed the party’s petition challenging the reassessment proceedings for four years.
On March 28, the Delhi high court dismissed Congress’s plea challenging the initiation of tax reassessment proceedings against it for a period of four years, noting the pleas were dismissed in terms of its earlier decision refusing to interfere with the opening of reassessment for another period. Subsequently, the department served the notice of ₹1,700 crore including penalty and interest for the assessment years 2017-18 and 2020-21.
The case before the Supreme Court pertains to the Congress’s appeal against a 2016 decision of the Delhi high court 2016 denying exemption from tax.
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