Tax Assessments Against Congress Based On Incriminating Evidence: Sources

Income tax notices to the Indian National Congress were issued back in March 2023 and the assessment proceedings demanded for those seven years, as per law, were set to get time barred on March 31, 2024, according to sources.

The tax notices to the Congress party were sent under 153C of the Income Tax Act.

Assessments against the Congress party were reopened for 7 years (assessment years 2014-15 to 2020-21), based on incriminating material seized, the sources added. During search operations, specifically in April 2019, extensive use of cash in the electoral process was found, they added.

Faced with tax notices, the Congress party had approached the Delhi High Court, seeking quashing of reassessment proceedings for all seven years.

The Delhi High Court, in its orders dated March 22, 2024 and March 28, 2024, dismissed the writs and allowed to complete the reassessments.

As per sources, during the proceedings, the court has gone through the 'satisfaction note' in its entirety, detailing the reasons for reassessment proceedings.

In its order, the high court held that the Income Tax Department has "substantial and concrete" evidence warranting further scrutiny and examination under the Income Tax Act.

The High Court observed that there has been escapement of income approximately to the tune of Rs 520 crore.

Further, the high court observed that the assessment has to be completed by March 31, 2024 as per the law and the Congress had chosen to approach the high court only few days before the time of completion of the assessment proceedings.

Sources said that the Income Tax Department always ensures that the principle of natural justice is followed and provides all the material to the taxpayer, based on which the Department intends to make additions in the hands of taxpayers.

According to sources, an ample number of opportunities were given to the Congress to reply especially with respect to various observations of the Delhi High Court. After considering all the replies filed by the Congress, the Department has now completed the assessment of seven years.

In latest mounting troubles for Congress amid Lok Sabha poll campaign, the Income Tax Department has issued demand notice of about Rs 1700 crore to the party, sources had said.

They said the fresh demand notice is for assessment years 2017-18 to 2020-21 and includes penalty and interest.