Financial woes for Congress? I-T notice demands near double party's net worth

The Congress party is facing a significant challenge as the Income Tax Department is expected to demand an amount almost double its total net worth of around Rs 1,430 crore. On Friday, the Congress revealed that it had received income tax demand notices totaling Rs 1,823 crore for five assessment years, with three more assessment years yet to receive notices.

According to sources quoted by News 18, the total amount the Congress party might owe after receiving all demand notices before March 31 could exceed Rs 2,500 crore. This poses a significant challenge as the party's net worth is approximately Rs 1,430 crore. In its latest income tax return for the assessment year 2023-24, the Congress reported a total corpus of nearly Rs 657 crore, net assets of Rs 340 crore, and cash equivalents of Rs 388 crore, totaling around Rs 1,430 crore.

In summary, the Congress is facing a significant financial challenge with an income tax demand of around Rs 2,500 crore, far exceeding its net worth. Even if the party were to exhaust its resources, it might struggle to meet this demand. The Income Tax Department typically allows the taxpayer to pay 20 percent of the demanded amount to temporarily halt the recovery process.

“The Congress party has got no relief from the Delhi High Court regarding the re-assessment of their returns for seven years. Their petitions were rejected earlier this week. This was the reason Congress did a press conference chaired by Sonia Gandhi last week as they feared a huge demand notice for these seven years,” a government source told News18.

The Congress party plans to approach the Supreme Court to halt the actions of the Income Tax Department. They have received demand notices for several financial years, including the highest demand of Rs 918 crore for the year 2018-19, which coincided with the Lok Sabha elections in 2019.

The Income Tax Department is set to issue three additional demand notices to the Congress for the assessment years 2014-15, 2015-16, and 2020-21. This action follows the Department's claim of recovering "incriminating material" during raids on two corporates in 2019, revealing cash payments to the Congress amounting to Rs 520 crore.

The IT Department has argued that the Congress cannot claim exemption from paying income tax under Section 13 (A) of the Income Tax Act due to violations of provisions. They have already recovered Rs 135 crore from Congress bank accounts for violations in IT returns for the assessment year 2018-19.