Could Congress Fall Apart? IT Department May Request Payment from Party Nearly Twice Its Total Net Worth

The Income Tax Department is expected to demand almost twice as much money from the Congress as it does from its entire net worth of around Rs 1,430 crore, which may send the party into an existential crisis.

The Congress said on Friday that it has received income tax demand letters totaling Rs 1,823 crore for five assessment years and that it still needed to serve demand notices for three further assessment years.

According to sources who spoke with News18, the total money that may be recovered from the Congress when the remaining demand letters are served by March 31 may exceed Rs 2,500 crore. Given that the Congress has a net worth of about Rs 1,430 crore, this might be the largest threat the party has faced to date. The Congress claimed to have a corpus of around Rs 657 crore, net assets of approximately Rs 340 crore, and cash and financial equivalents of approximately Rs 388 crore, totaling approximately Rs 1,430 crore, in its most recent IT filing for Assessment Year 2023–2024.

In summary, even after going bankrupt, the Congress may not be able to pay this much money—Rs 2,500 crore—because it exceeds its net value. The assessee is offered the opportunity by the IT Department to pay 20% of the requested sum in order to halt the recovery process.

The Delhi High Court has not granted the Congress party any relief with relation to the reevaluation of their returns for a period of seven years. Earlier this week, their requests were denied. Congress held a press conference led by Sonia Gandhi last week because they were afraid of receiving a sizable demand letter for these seven years, a government source told News18.

Congress will now petition the Supreme Court to halt the IT Department’s actions. IT demand notifications for the fiscal years 1993–1994; 2016–17; 2017–18; 2018–19; and 2019–2020 have been sent to Congress so far. The highest demand, at Rs 918 crore, is for 2018–19. In addition, this was the year of the national Lok Sabha elections in 2019.

In the next few days, the Congress will receive three further demand notifications from the IT Department for the assessment years 2014–15, 2015–16, and 2020–21. The reason for this whole move is because the IT Department claims to have uncovered “incriminating material” concerning cash payments to the Congress totaling Rs 520 crore during searches on two business entities in 2019.

According to the IT Department, as the restrictions of Section 13(A) of the Income Tax Act are being broken, Congress is thus unable to claim exemption from paying income tax on its income. From the Congress bank accounts, the IT Department has already retrieved Rs 135 crore for infractions found in the IT Returns for the assessment year 2018–19.