No coercive step against Congress over Rs 3,500 crore demand notices till Lok Sabha election, I-T Dept tells Supreme Court

Tribune News Service

Satya Prakash

New Delhi, April 1

In a reprieve for the Congress, the Income Tax department on Monday told the Supreme Court that it will not take any coercive steps against the party for the recovery of Rs 3,500 crore tax until the Lok Sabha election.

Solicitor General Tushar Mehta told a Bench led by Justice BV Nagarathna that since the Lok Sabha elections were going on, the Income Tax Department will not take any coercive action for recovery of the amount -- for which demand notices had been issued -- till the matter was heard after the polls.

The Bench – which also included Augustine George Masih -- recorded the statement made by the Solicitor General and listed the matter for hearing in July after the summer vacation.

At the very outset of the hearing, Mehta said, “To balance the equity. The petitioner is a political party. Based on the 2016 judgement, which is under challenge, we have raised the demand of Rs 1,700 crore.

Since the election is going on, we would not like any problem to arise for any party and therefore, till the matter is heard after the election, we will not take any action for recovery of Rs 1700 crore.”

Terming it as “gracious”, senior advocate AM Singhvi, who represented the Congress, appreciated the Solicitor General’s gesture.

“By my learned friend's (Mehta’s) intervention, I have been rendered speechless… I am very rarely rendered speechless,” Singhvi said after Justice Nagarathna told him, “You shouldn't perceive negatively about someone all the time.”

The Congress on Sunday had received fresh notices from the Income Tax Department, raising a tax demand of Rs 1,745 crore for the assessment years 2014-15 to 2016-17. With this latest notice, the Income Tax department has raised a total demand of Rs 3,567 crore from the party, it had said.

The authorities have ended the tax exemption available to political parties and have taxed the party for the entire collections, sources said.

On March 22, the Delhi High Court dismissed the Congress’ plea challenging reassessment proceedings initiated against it by the IT Department, saying the tax authority has collated “substantial and concrete” evidence warranting further scrutiny and examination.

On March 28, the high court rejected another set of petitions filed by the Congress challenging tax reassessment proceedings against it for four years from 2017 to 2021.

Mehta said that the Delhi High Court’s verdict under challenge was of March 23, 2016, and based upon the parameters set by it, a tax demand was raised against the party in 2021. The latest demand notices were not the subject matter of the petition, he clarified.

“They were given an option to pay 20 per cent of that demand but they did not avail. Thereafter, nothing was paid. Therefore in 2024, we recovered Rs 135 crore of 2021 demand and based upon the same parameters, now we have issued a demand of Rs 1700 crore approximately,” Mehta told the Bench, adding the I-T Department has a lot to say on the merits of case and that it would like to file a reply.

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