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April 19, 2024

Income Tax Department Assures Supreme Court: No Coercive Action Against Congress Amid Tax Demand Notices

In a recent development, the Income Tax department has pledged to refrain from any coercive action against the Congress party amidst tax demand notices amounting to approximately Rs 3500 crore. This assurance was conveyed to the Supreme Court, bringing a temporary relief for the opposition party, particularly in light of the upcoming Lok Sabha elections.

The Solicitor General, representing the IT department, conveyed to the bench of justices BV Nagarathna and Augustine George Masih that no precipitative action would be taken until the final adjudication of the matter. This decision was made acknowledging the sensitive timing surrounding the demands and ensuring a fair judicial process.

The Congress party, represented by senior advocate Abhishek Singhvi, expressed gratitude for this gesture, terming it “gracious.” Singhvi highlighted that all demand notices, totaling Rs 3500 crore approximately, were issued in February and March for different years. He also emphasized the importance of addressing the matter post the election season.

Solicitor General Tushar Mehta outlined the department’s stance, citing a 2016 judgment as the basis for the tax demands against the Congress party. He clarified that while demands amounting to Rs 1700 crore were raised based on this judgment, the department would exercise restraint until the conclusion of legal proceedings post-election.

The sequence of events leading to the issuance of tax demand notices was elucidated by Mehta, who emphasized adherence to parameters set by the Delhi High Court in 2016. He clarified that the department sought not to keep the demands in abeyance but rather to defer coercive measures until after the legal process unfolds.

Singhvi countered by pointing out the discrepancy in the amount, asserting that the total tax demand stood at around Rs 3500 crore for a block of five years. He highlighted the receipt of fresh notices from the IT department, which further escalated the total demand.

The recent notices, pertaining to assessment years 2014-15 to 2016-17, added up to Rs 1,745 crore, bringing the cumulative demand to Rs 3,567 crore. These developments come amidst the IT department’s decision to end tax exemptions for political parties, subjecting them to taxation on their entire collections.

Earlier judicial pronouncements, including the rejection of Congress’ petitions challenging tax reassessment proceedings, underscored the complexity of the legal battle. However, the assurance from the IT department offers a temporary respite for the Congress party amid the ongoing legal turmoil.

In conclusion, while the tax demand notices continue to pose a significant challenge for the Congress party, the commitment from the Income Tax department to abstain from coercive actions provides a glimmer of hope amidst the legal uncertainties. The upcoming hearings in July 2024 will likely shed further light on the intricacies of the case and its implications for the political landscape.

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