The Congress party faced a significant setback as the Delhi High Court rejected its petitions challenging the Income Tax Department's reassessment proceedings. The court emphasized the presence of substantial evidence justifying further examination by tax authorities.
According to a bench comprising Justices Yashwant Varma and Purushaindra Kumar Kaurav, the party's petitions were filed at a late stage, considering the assessment deadline of March 31, 2024. The court noted that although the I-T Department issued a notice to the party on March 7, 2023, the satisfaction note by the assessing officer (AO) was provided to the petitioner later, in June 2023.
Highlighting statutory time frames, the court indicated that assessments should conclude within 12 months of handing over relevant documents to the AO. The deadline for the current case was determined as March 31, 2024. Despite the party's last-minute approach, invoking Article 226 of the Constitution to halt assessment proceedings was deemed unjustified.
The court acknowledged the possibility of commencement delay affecting the assessment but refrained from making a definitive judgment on this matter. It observed that substantial evidence necessitating further scrutiny under the I-T Act had been gathered by authorities.
The Congress contested the initiation of proceedings under Section 153C of the Income Tax Act, pertaining to assessment years 2014-15 to 2016-17, following searches conducted in April 2019 on four individuals. The party argued that the assessment period exceeded the statutory limitation.
In response, the I-T department refuted any violation of statutory provisions and asserted an "escaped" income of over Rs 520 crore. The court's judgment highlighted unaccounted transactions related to elections and payments made to political figures and candidates.
Regarding material gathered from the MEIL Group, the court noted unaccounted transfers to the political party during specific assessment years. Payments allegedly made to MPs/MLAs and candidates, as well as contributions from various entities, were also highlighted.
Despite the Congress's attempts to discredit the evidence, the court emphasized the substantial nature of the material forming the basis for reassessment. The cumulative income allegedly escaping assessment amounted to approximately Rs 520 crore.
Previously, the High Court had declined to intervene in the Income Tax Appellate Tribunal's decision not to stay a notice issued for the recovery of outstanding tax exceeding Rs 100 crore. The tax demand arose from an assessment year when the income surpassed Rs 199 crore.
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