Congress moves Delhi high court in Tax penalty case

NEW DELHI: Congress on Monday moved the Delhi high court to challenge the dismissal of its plea by the Income Tax Appellate Tribunal (ITAT) in connection with penalties for discrepancies in tax returns.

Senior advocate Vivek Tankha mentioned the matter before a bench of acting chief justice Manmohan and justice Tushar Rao Gedela, emphasizing the urgency as the political party's accounts have been frozen. Justice Manmohan agreed to hear the case during the day if the petition is in order.

Earlier on Friday, the Income Tax Appellate Tribunal (ITAT) rejected the plea made by Congress to put a stop to the Income Tax Department's efforts to recover and freeze their bank accounts. The ITAT bench, consisting of GS Pannu, Vice President, and Anubhav Sharma, Judicial Member, dismissed the party's application, saying that it lacked merit. "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 bench said.

"At this stage, we may also refer to the reliance placed by the Senior Counsel on various judgments of the Coordinate Benches in order to support the proposition that it was an accepted practice at the level of the Tribunal that the taxpayer is entitled to a stay on the recovery proceedings on payment of 20 per cent of the demand during the pendency of the Appeal before the Tribunal. The aforesaid argument, in our view, is too general and does not merit acceptance", the bench added.

The bench emphasized that the Congress Party had not shown a strong desire to resolve the issue promptly. The party's appeal had come up for hearing on three occasions, but on each occasion, the appellant-assessee was unprepared and sought adjournment. The bench also noted that no recovery action had been taken by the Assessing Officer despite the rejection of the party's appeal by the CIT (Appeals) on March 28, 2023.

During the hearing, Senior Advocate Vivek Tankha, representing Congress, requested the bench to hold off on issuing the order for 10 days so that the party could approach the high court. However, the bench declined the request, saying that it had no provision or prayer before it to grant such a delay.

In conclusion, the Income Tax Appellate Tribunal dismissed the Congress Party's plea to stay the recovery and freezing of their bank accounts. The bench found no merit in the party's application and stated that each case should be considered independently. The party was also criticized for not being committed to resolving the issue and seeking adjournments during previous hearings. The bench's decision stands, and the party has no further recourse at the tribunal level.

The party had criticized the Income Tax department's decision to freeze its funds, calling it "an attack on democracy" ahead of the Lok Sabha polls.