Explained: Why Congress faced Income Tax department's wrath

One of the reasons why the Income Tax Department ordered the freezing of bank accounts of the Congress party was on account of accepting donations in excess of Rs 2,000 in cash amounting to Rs 11.49 lakh, reports have claimed. Media reports cited sources as saying that there are two reasons why the Income Tax Department instructed the freezing of Congress' bank accounts.

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1) Failure to file the income tax return within the specified time limit as prescribed by section 139(4B) of the Income Tax Act, thereby violating the provisions of Section 13 A of the Act for the financial year 2018-19.

2) Receipt of donations exceeding Rs 2,000 in cash, totalling Rs 11.49 lakh.

To recall, the Congress encountered a temporary setback as the Income Tax department froze its primary bank accounts, including those belonging to the Youth Congress. However, the party promptly contested this action, leading to the Income Tax Appellate Tribunal granting relief by unfreezing the accounts until a final hearing next week.

During a press conference earlier today, party treasurer Ajay Maken characterized the freezing of accounts as a "disturbing blow to the democratic process." The freeze is purportedly linked to a tax demand of ₹210 crore imposed by the Income Tax department, a move that the Congress alleges is politically motivated and strategically timed to disrupt the party's election preparations.

Maken expressed concern about the state of democracy, stating, "Democracy doesn't exist; this is like a one-rule party, and the principal opposition party has been subjugated. We seek justice from the judiciary, media, and the people."

The Congress leader stated that the party has initiated legal proceedings in response to the account freeze, currently under consideration by the income tax appellate tribunal. During a press briefing, Maken clarified that they refrained from disclosing this information earlier due to the ongoing hearing.

The party became aware of the account freeze on Thursday, with Congress' lawyer Vivek Tankha confirming the impact on a total of four accounts. Banks have been directed not to accept or process Congress' cheques, while the frozen funds are to be remitted to the Income Tax department.

Maken contended that although the party's accounts were filed 45 days late during the election year of 2018-19, the freezing of accounts constitutes an extreme measure. He argued that there are instances and precedents where such actions were not taken.

Income Tax tribunal grants relief to Congress, allows operation of 'frozen' accounts