ITAT Dismisses Congress Plea For ₹199 Crore Tax Exemption

Paromita Das

New Delhi, 24th July: In a decision that may further embarrass the Congress party, the Income Tax Appellate Tribunal (ITAT) on July 21 dismissed the party’s appeal seeking exemption on ₹199.15 crore income for the 2018–19 assessment year. The tribunal registered concerns over delayed filing and illegal cash donations—violations of Section 13A of the Income Tax Act—signaling a significant setback to the party’s financial and political standing.

Stricter Scrutiny Under Section 13A

Congress’s claim hinged on Section 13A, which grants tax exemption to political parties that strictly adhere to conditions such as timely filing of returns, mandatory documentation, and cash donation limits. The ITAT delivered a stern reprimand, noting a late return filed on February 2, 2019—well past the due date. It held, “the assessee’s return is not within the ‘due’ date to make it eligible for the impugned exemption.” Moreover, the tribunal highlighted ₹14.49 lakh received in cash donations beyond the permissible ₹2,000 threshold via cheque or digital means, violating statutory norms. These lapses underscored the ITAT’s rejection of Congress’s plea.

Legacy of Non‑Compliance: A Pattern Emerges

This verdict comes in the wake of persistent scrutiny by the Income Tax Department. Over ₹3,500 crore remains demanded of Congress across assessment years ranging from 1994–95 to 2020–21. In particular, reassessments for 2014–15 through 2016–17 added over ₹1,700 crore to the demand ledger. Investigative raids in 2019 unearthed ₹523.87 crore in unaccounted income, triggering further demands. Though the party claimed relief when ₹116 crore was unfrozen, it remains liable for nearly ₹135 crore. The IT department has dismissed Congress’s “victimhood” narrative, clarifying that account freezes were part of statutory recovery—a damaging rebuttal to Congress’s public posture.

Political and Financial Fallout

The ITAT’s ruling extends beyond just a legal setback; it strikes at the heart of Congress’s financial credibility. Political parties are beholden to transparency and lawful fundraising. The denial of tax exemption not only places an added fiscal burden on the party but also offers ammunition to political rivals. As demands grow, Congress’s claim of procedural injustice will struggle to match the perception of a deeply underfunded, litigation-ridden organization.

Fixing Broken Systems or Fueling Political Narratives?

From a legal standpoint, the ITAT’s stance is unambiguous: non-compliance with tax norms merits denial of exemption. Such clarity should bolster public confidence in enforcement. Yet questions remain: are political parties held to select scrutiny, or should other bodies be held to similar standards? Congress’s woes may invite deeper discussion on tighter oversight for all institutions benefiting from tax concessions. However, by positioning itself as a victim, Congress risks trading substance for sympathy—a short-term strategy with limited long-term return.

Congress at a Crossroads

The ITAT verdict marks a watershed moment for the Congress party. Losing the ₹199 crore exemption claim over technical irregularities exposes vulnerabilities in its financial operations and public trust. Coupled with sustained tax demands totaling ₹3,500 crore, the party faces mounting pressure—not just to comply with legal requirements but also to recover credibility. Moving forward, Congress must overhaul its fund‑management practices if it wishes to emerge from this fiscal crisis stronger. Until then, rival parties are sure to press their advantage, tying legal non-compliance to broader narratives of incompetence.