A bench consisting of Justices BV Nagarathna and N Kotiswar Singh was hearing the Congress’ appeal against the Delhi High Court’s March 13 order, which found no reason to interfere with the ITAT’s decision. However, the High Court permitted the Congress to file a new stay application before the ITAT, taking into account developments such as the recovery of Rs 65.94 crore.
![[INC Vs Income Tax Department]"Why did Delhi HC Send them Back to the ITAT When the Congress...": Supreme Court Questioning HC](https://i0.wp.com/lawchakra.in/wp-content/uploads/2024/08/image-83-1.png?resize=820%2C492&ssl=1)
`NEW DELHI: The Supreme Court on Tuesday(20th Aug) raised questions regarding the Delhi High Court’s directive instructing the Congress party to approach the Income Tax Appellate Tribunal (ITAT) to seek a stay on the demand notice issued by the Income Tax (IT) department. The demand pertained to the recovery of nearly Rs 105 crore in unpaid taxes.
READ ALSO: ITAT Allows CONGRESS to Operate Bank Accounts with IT Department Lien
A bench consisting of Justices BV Nagarathna and N Kotiswar Singh was hearing the Congress’ appeal against the Delhi High Court’s March 13 order, which found no reason to interfere with the ITAT’s decision. However, the High Court permitted the Congress to file a new stay application before the ITAT, taking into account developments such as the recovery of Rs 65.94 crore.
The Supreme Court inquired,
“Why did the High Court send them back to the ITAT when the Congress had already filed an appeal? How could it fail to exercise its jurisdiction?”
Additional Solicitor General N Venkatraman, along with advocate Zoheb Hossain representing the IT Department, responded, stating that the matter had become “purely academic” since the recovery had already been made.
“They were directed to approach the ITAT again for a stay, but they initially did not comply,”
the Court was informed.
Representing the IT Department, Additional Solicitor General N Venkatraman and advocate Zoheb Hossain argued that the matter had become purely academic as the recovery was already in progress. They pointed out that the Congress initially failed to comply with the directive to approach the ITAT for a stay.
On the other hand, Senior Advocate Vivek Tankha and advocate Prasanna S, representing the Congress, argued that the High Court should have granted an interim stay instead.
The Supreme Court, after hearing the arguments, issued notice on Congress’s plea but clarified that the ITAT could continue with the party’s appeal.
“Issue notice to the respondents. The pending SLP will not obstruct the ITAT from deciding the appeal. The Congress Party, as the appellant, is to cooperate,”
the Court ordered.
The Supreme Court issued notice on the Congress’s plea but allowed the ITAT to proceed with the party’s appeal. The Court ordered the Congress to cooperate with the ITAT proceedings, clarifying that the pendency of the Special Leave Petition (SLP) would not interfere with the ongoing appeal at the ITAT.
The Rs 105 crore tax recovery demand for the 2018-19 assessment year was issued by the IT department after rejecting the Congress party’s declaration of nil income.
This demand arose in July 2021 after the department found that the party’s return was filed after the deadline, and it had received donations of Rs 14,49,000, each exceeding Rs 2,000, in violation of Section 13A of the Income Tax Act, which governs tax exemptions for political parties.
READ ALSO: Delhi High Court Reserves Verdict on Congress’ Tax Recovery Dispute
The Congress had previously challenged the IT department’s action at the ITAT and the Delhi High Court but was unsuccessful. The ITAT’s March 8 ruling found no error in the actions of the IT authorities, stating that the Congress had failed to make a compelling prima facie case for exemption denial.
The Delhi High Court, on March 12, also found no significant flaws in the ITAT’s decision, suggesting that someone within the Congress party “went to sleep” during the filing process.
Case Title: Indian National Congress v Deputy Commissioner of Income Tax, Central-Circle 19 and Ors
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