Operation or Activity of Accounts Not Stopped, Say Sources as Congress Cries Foul Over IT Dept Action

The “recovery” of Rs 115 crore from various bank accounts of the Congress is a “routine affair” and the operation or activity of the party’s accounts has not been stopped, sources in the Income Tax Department told News18 on Friday.

Congress treasurer Ajay Maken had claimed earlier in the day that the Income Tax department has frozen the party’s main bank accounts on “flimsy grounds”, adding that the action has affected all political activity of the party barely two weeks before general elections are announced.

The party is unable to use even the funds received under its crowdfunding scheme, Maken said at a press conference, adding that four main bank accounts were frozen. The accounts, including that of the Indian Youth Congress, were frozen on an Income Tax demand of Rs 210 crore for 2018-19, an election year, Maken said.

According to him, the party filed its Income Tax return for the concerned year a few days late and that is why this action. He said the IT authorities’ orders freezing the accounts had come on Wednesday.

Sources in the IT department, however, termed the action as routine.

“A demand of Rs 135 crore is outstanding in the case of Indian National Congress (INC) for Assessment Year 2018-19. This includes demand of Rs 103 crore on account of assessment and interest of Rs 32 crore(approximately),” an official said.

“In this case assessment u/s 143(3) under the Income-tax Act, 1961 was completed on 06/07/2021 disallowing exemption u/s 13A, as provisions of section 13A(d) were not complied with and the return of income was also filed late. The assessment was completed at an income of Rs 199 crore and tax demand of Rs 105 crore was created,” he added.

“Thereafter, in stay proceedings before the AO, INC was requested to pay 20% of the total demand (i.e. Rs 21 crore approx) as per extant procedure. An amount of Rs 78 lakh only was paid. Since INC failed to pay 20% of the outstanding demand, letter was issued asking it to pay the balance demand of Rs 104 crore. The appeal filed by INC before CIT(A) was later dismissed.”

“The second appeal was filed by INC before ITAT (Income Tax Appellate Tribunal) in May, 2023. Though no petition of stay of demand was filed before ITAT or any other judicial authority, subsequently, Rs 1.72 crore was paid by INC in October, 2023. At present, recovery to the tune of Rs 115 crore has been effected by withdrawing money from various bank accounts of INC. In proceedings before ITAT on 16/02/2024, it was informed by the Income Tax Department that the recovery made by withdrawing money from accounts is a routine recovery measure,” the source further said.

Sources added that operation or activity of the accounts has not been stopped. “Further, INC has many more accounts for its activities, a fact which was taken note of by the ITAT. The hearing has now been fixed for 21st February, 2024.”

Congress leader Ajay Maken, however, disputed claims that the accounts had been unfrozen.

“On our petition, Income Tax Department and the Income Tax Appellate Tribunal (ITAT) has said that we have to ensure that Rs 115 crores have to be kept in the Banks. This 115 crore is the lien marked in the Bank Accounts. This means that Rs 115 crores have been frozen. This Rs 115 crores is much more than we have in our Current Accounts,” he posted on X.