Cong accuses I-T of withdrawing Rs 65 crore from its accounts, tribunal orders status quo for now

The Congress on Wednesday announced that the Income Tax department had "withdrawn" Rs 65 crore from its accounts in different banks "undemocratically", even though a case pertaining to the party's I-T returns for previous years is sub judice.

The party moved the Income Tax Appellate Tribunal (ITAT) against the recovery and it has directed that status quo be maintained until the matter is heard. However, it is not yet clear whether the amount withdrawn will be restored.

The Congress said the department has enforced its lien by encashing part of the balance lying with banks without waiting for the outcome of the hearing scheduled before the bench.

Senior leader and Congress treasurer Ajay Maken pointed out that the I-T department mandated banks to transfer over Rs 65 crore from Indian National Congress, Indian Youth Congress, and National Students' Union of India accounts to the government — Rs 5 crore from IYC and NSUI, and Rs 60.25 crore from INC.

In a post on X, Maken underscored that national political parties, including the BJP, do not pay income tax. This was pointed out in the ITAT hearing today, Wednesday, which will continue tomorrow.

“Why then is the Congress Party facing an unprecedented demand of ₹210 crores? The funds in question were raised through grassroots efforts, including crowdfunding and membership drives by the IYC and NSUI. This situation raises a crucial question about the state of democracy. Is it under threat?” Maken wrote in his post.

Last week, Maken alleged that the I-T department had frozen the four bank accounts of the party and the Youth Congress, and a demand of Rs 210 crore had been raised in connection with the income tax returns case of 2018-19.

The IT appellate tribunal later allowed the party to operate the accounts pending a further hearing, which came as partial relief since the move had impacted all political activity.

Maken had earlier stated that "democracy will be over if the action of probe agencies goes unchecked" and that the Congress has full faith in the judiciary.

"The Income Tax department had written to various banks to withdraw a sum of Rs 65 crore from different accounts of the Congress and Indian Youth Congress in view of the demand raised by authorities earlier, despite the appellate authorities hearing the case," said Maken.

The Congress leader said the party had written to its bankers not to withdraw any amount as the case was sub judice and hearing in the case before the I-T Tribunal was still on.

The IT department, on its part, informed ITAT that it had not frozen the Congress’s bank accounts but only asked for a lien on the amount according to an earlier demand. 

Party leader Vivek Tankha, who appeared before the tribunal against the order, said he told the tribunal that the Congress would not be able to participate in the Lok Sabha elections if its accounts remained frozen. At the last hearing, the party had sought a stay on the attachment of the bank accounts by the income tax department.