Setback for Congress, Delhi High Court upholds Rs 105 crore tax recovery order

The Delhi High Court has declined to intervene in the Income Tax Appellate Tribunal's (ITAT) order for the recovery of over Rs 105 crores in outstanding tax from the Congress party. The ITAT had imposed penalties on the Congress for discrepancies in tax returns, a decision challenged by the party in court

In a major setback for the Congress party, the Delhi High Court has declined to intervene in the order issued by the Income Tax Appellate Tribunal (ITAT) directing the recovery of over Rs 105 crores as outstanding tax from the Congress party. The ITAT had imposed penalties on Congress for discrepancies in certain tax returns, a decision which the party had challenged in court.

A bench comprising Justices Yashwant Varma and Purushaindra Kumar Kaurav is set to deliver the order at 2:15 pm today. The bench had reserved its decision on Tuesday after hearing arguments from both the Congress and the Income Tax (I-T) department.

The tax demand was raised by the assessing officer for the assessment year 2018-19, amounting to over Rs 100 crore, based on an assessed income of over Rs 199 crore. The Congress party's counsel had appealed to the court for protection, expressing concern that the party would face severe financial strain, especially with the Lok Sabha elections looming, as its bank accounts had been frozen.

The court, however, noted that despite the demand being raised in 2021, the Congress had not taken any action to address the issue, criticizing the handling of the matter. The bench emphasized that the party's failure to respond earlier could not be rectified by recent actions.

The I-T department's counsel informed the court that the original tax demand stood at Rs 102 crore, which had increased to Rs 135.06 crore with interest, of which Rs 65.94 crore had already been recovered. The tribunal had previously dismissed the Congress' stay application, stating that the recovery notice issued by the assessing officer in February 2024 was legitimate and did not warrant intervention.

The Congress had condemned the freezing of its funds by the ITAT, labelling it as an assault on democracy, particularly coming just before the parliamentary elections.