The recent assertions made by the Congress regarding alleged “tax terrorism” stemming from new notices issued by the Income Tax department have been met with staunch rebuttals from government sources within the agency. These sources have underscored that the ongoing assessment proceedings were necessitated by the imminent expiration of the time limit on March 31 of this year, rather than any vindictive intent.
According to these sources, the Congress was well aware of the assessment proceedings and had been afforded ample opportunity to respond, including during hearings in the Delhi High Court, where the party’s pleas for relief were dismissed. The Congress had previously asserted that its bank accounts were frozen following the imposition of a ₹200 crore penalty by Income Tax authorities. However, on Friday, the party disclosed receiving a fresh tax notice amounting to ₹1,800 crore.
This latest notice pertains to the assessment years 2017-18 to 2020-21 (financial years 2016-17 to 2019-20) and encompasses penalties and interest. Officials have revealed that income tax searches conducted in April 2019 uncovered cash receipts by the Congress from entities like Megha Engineering, which has emerged as a significant donor in the electoral bonds scheme, among others. These findings allegedly surfaced during raids on associates of Congress leader and former Madhya Pradesh Chief Minister Kamal Nath.
The total cash receipts between 2013-14 and April 2019 reportedly amounted to ₹626 crore and were linked to purported proceeds from an alleged corruption scandal. Officials maintain that these cash receipts have been substantiated through various means, including seized documents, WhatsApp communications, and recorded statements.
Under Section 13A of the Income Tax Act, political parties are exempt from taxation on received funds if certain conditions are met, such as not accepting amounts exceeding ₹2,000. However, the Congress is purportedly in violation of these conditions, rendering its entire income subject to taxation, as per officials.
A source emphasized that the Congress’ ability to secure a stay rested on the detailed and corroborated evidence presented by the Income Tax department in court. If the party believes in its innocence, the source suggested, it should release the complete assessment order to the public for clarity.
The Delhi High Court recently dismissed four petitions filed by the Congress challenging the initiation of income tax reassessment proceedings for the 2017-18 to 2020-21 assessment years.
In response, the Congress has decried what it perceives as targeted persecution and denounced the purported escalation of “tax terrorism” by the BJP-led Central government. Senior Congress leader Jairam Ramesh lamented the party’s receipt of additional notices, expressing uncertainty about the potential influx of further notices.
Karnataka Deputy Chief Minister DK Shivakumar echoed these sentiments, alleging that the BJP’s issuance of notices signifies apprehension over the impending elections and serves as a tactic to instill fear. Shivakumar claimed to have received an Income Tax notice concerning a resolved matter, further fueling accusations of political intimidation.
The unfolding developments underscore escalating tensions between the Congress and the ruling government, with accusations of partisan targeting and retaliatory measures clouding the discourse surrounding taxation and accountability. As both parties navigate this contentious terrain, the broader implications for governance, transparency, and democratic norms remain subjects of intense scrutiny and debate.