Delhi High Court Upholds ITAT Decision Denying Stay on Income Tax Notice to Congress for Rs 100 Crore Recovery

Delhi High Court affirmed a decision by the Income Tax Appellate Tribunal (ITAT) denying a stay on a notice issued by the Income Tax department to the Congress party, seeking recovery of over Rs 100 crore in outstanding tax. Justices Yashwant Varma and Purushaindra Kumar Kaurav, presiding over the bench, found no grounds to intervene with the ITAT's March 8 ruling.

After hearing arguments from both the Congress and the Income Tax (I-T) department, the bench, which had reserved its order on Tuesday, reached a decision.

The Congress had appealed to the high court following the dismissal by the ITAT of its plea for a stay on the I-T department's February 13 notice, initiating recovery proceedings. The assessing officer had imposed a tax demand exceeding Rs 100 crore for the 2018-19 assessment year, based on an income assessment of over Rs 199 crore. The Congress' legal representative had implored the court to provide some safeguard, expressing concerns that without it, the party would face severe repercussions.

The I-T department's counsel had informed the court that the original tax demand stood at Rs 102 crore and together with interest it rose to Rs 135.06 crore. He said Rs 65.94 crore stands recovered now.

The tribunal's decision to reject the stay application was based on their assessment that the recovery notice issued by the assessing officer on February 13, 2024, under Section 226(3) of the Act, did not appear to lack bona fides. Therefore, they saw no need to intervene in the matter.