IT Department has evidence on unaccounted transactions by Megha Group to Congress: Delhi High Court

The Delhi High Court Friday said that the Income Tax Department prima facie had “substantial and concrete evidence” to further scrutinise the income of Congress for the years 2014-15, 2015-16 and 2016-17 under the Income Tax Act [Indian National Congress Vs. Deputy Commissioner Of Income Tax Central - 19 & Anr]..A division bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav noted that the Satisfaction Note drawn by the Assessing Officer makes detailed reference to unaccounted transactions with respect to the Lok Sabha Elections of 2019 and the Madhya Pradesh Assembly Elections of 2018 and 2013."On a prima facie examination, it is evident that the respondents appear to have collated substantial and concrete evidence warranting further scrutiny and examination under the Income Tax Act," the Court said.There is specific reference to unaccounted transactions pertaining to assessment years 2014-15, 2015-16 and 2016-17, said the Court while noting that income which allegedly “escaped assessment" stands at about ₹520 crores. In the decision, the Court particularly referred to the documents recovered from Megha Engineering and Infrastructure Limited (MEIL) Group and said it appears that unaccounted transfers were made to the political party.“The search documents recovered from the MEIL Group appear to indicate unaccounted transfers to the political party during AYs‘ 2017-18 to 2020-21.”Pertinently, the MEIL is reported to have been the highest donor to the Bharatiya Janata Party (BJP) with ₹584 crore through the electoral bonds scheme, which was recently quashed by the Supreme Court..On a prima facie examination, it is evident that the respondents appear to have collated substantial and concrete evidence warranting further scrutiny and examination under the Income Tax Act.Delhi High Court.The Court made the observations in the judgment rejecting the petitions filed by Congress to challenge the reassessment proceedings initiated against it by the Income Tax (IT) Department. .The proceeding for reassessment of income of Congress party had been initiated by the Income Tax (IT) Department last year on the basis of a search conducted in relation to different persons and entities. Among them, MEIL Group had been searched by the Income Tax authorities in 2019 and a diary seized during the procedure allegedly revealed transfer of a large amount to Congress. .The Court today said the IT authorities also have material capturing details of disbursements made to candidates “vying in upcoming elections together with signed receipts”.“There is a detailed reference to payments allegedly made to MPs‘/MLAs‘ and candidates. The said note also carries material seeming to suggest payments and contributions made by government departments and corporations, liquor manufacturers, industry entities and individuals to the petitioner,” it said.In this backdrop, the Court remarked that the Congress had “woefully” failed to establish that the material which forms the “bedrock for recordal of satisfaction” for further scrutiny of its income was “not founded on any data, material evidence or documentation”. “In fact no submission in this respect was either addressed or iterated,” it added..Senior Advocate Abhishek Manu Singhvi, who had appeared for the Congress party, had argued that the reassessment proceedings are barred by limitation and are being done in violation of the provisions of the Income Tax Act.However, the Court said that the material gathered during the searches would have enabled and empowered the IT authorities to “undertake an assessment for six assessment years immediately preceding the assessment year pertaining to the previous year in which the search was conducted and would also extend to the four additional” Assessment Years..The Court also said that Congress had chosen to appear before it only a few days before the time for completion of assessment is set to expire on March 31.It noted that while the proceedings against it were initiated last year, the writ petitions were filed only on March 19. “We consequently find no justification to interdict the assessment proceedings at this belated stage by invoking our jurisdiction under Article 226 of the Constitution,” the Court said..Senior Advocates Abhishek Manu Singhvi, Vivek Tankha, AS Chandhiok and PC Sen along with Advocates Prasanna, Amit Bhandari, Siddharth s, Vipul Tiwari, Inder Singh, Simran Kohli, Vidhushi Keshari, Kanishka Singh, Nikhil Bhalla and Swati Arya represented the Indian National CongressSenior Standing Counsel Zoheb Hossain and Vipul Agrawal along with advocates Sanjeev Menon, Sakshi Shairwal and Vivek Gurnani represented the IT Department[Read Judgment]