Congress’s accounts not frozen, recovery of Rs 135 cr made: Officials

The Janata Party and the Bahujan Samaj Party have also lost their exemption status in the past for violating the Income Tax Act, they added.

New Delhi: The Income Tax department has not frozen the Congress’ bank accounts, as charged by the opposition party, but has made a recovery of Rs 135 crore because of its violations of the law that grants political parties tax exemptions, official sources said on Thursday.

The party is free to operate these accounts beyond the money recovered by the department, they said.

The Congress lost the exemption for the assessment year 2018-19 as it filed income tax returns in February 2019, weeks after the extended deadline of December 31, 2018, and its accounts also showed total cash donations of Rs 14 lakh which were in breach of the law that caps a single cash donation at Rs 2,000, the sources said.

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However, what may spell more trouble for the party is that the I-T department has launched free assessment proceedings for the years between 2014-15 and 2020-21 following the recovery of “incriminating” documents during searches in April 2019 on people linked to the then-chief minister of Madhya Pradesh Kamal Nath.

The tax authorities then expanded their net to carry out nationwide raids. If the Congress loses the exemption for these years, it may have to deal with demands of a much larger sum than it is dealing with now, the sources added.

Countering the Congress’ charge earlier in the day, the sources insisted that the claim that its accounts were frozen to cripple its finances was wrong as the party was free to use any cash beyond Rs 135 crore from the accounts in which the recovery has been made.

They said the bank accounts touched by the I-T department are in the national capital and much of the recovery has been made from four of them. The Congress has many bank accounts across the country, the sources added.

Any political party loses its exemption benefits if it violates any of the laid-down conditions and the Congress flouted two of them, they said.

Top Congress leaders, including its president Mallikarjun Kharge, Sonia Gandhi and Rahul Gandhi, had earlier put the spotlight on their party’s precarious finances ahead of the Lok Sabha polls and accused Prime Minister Narendra Modi of a “systematic effort” to cripple the party.

The sources said the I-T department moved to recover Rs 135 crore on March 16 only after various appellate authorities dismissed the party’s stay pleas and the Delhi High Court also rejected its appeal on March 13 with adverse remarks.

The department has also raised a demand of around Rs 53 crore from the Congress for the assessment year 1994-95.

Asked about the Congress’ questioning the demand for a three-decade-old matter, the sources said the opposition party was aware of the issue all along and its appeal was dismissed by the Delhi High Court in 2015.

Technological transformation within the department might have caused some time gap, they said.

The sources said the Congress even had more than two PANs (Permanent Account Number) and some of its state bodies were also found to have their separate PANs, something that was against the party’s own constitution which affirmed that the All India Congress Committee represented all its wings.

The Janata Party and the Bahujan Samaj Party have also lost their exemption status in the past for violating the Income Tax Act, they added.

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