Freezing of Congress accounts by Income Tax department ‘routine procedure’, sources say

Sources say the Congress accounts were only frozen up to ₹115 crore, contrary to the Congress claim that the action affects all its political activities

Congress president Mallikarjun Kharge with party leaders Sonia Gandhi and Rahul Gandhi during the Congress Working Committee Meeting at the AICC headquarters in New Delhi. File. | Photo Credit: The Hindu

The Income Tax department’s action, freezing the Congress’ main bank accounts, was part of its “routine procedure” against defaulters, carried out in connection to claims for the tax assessment year 2018-19, according to sources close to the government.

Alleging partisan politics, the Opposition party claimed that its accounts had been frozen on “flimsy grounds”. The freezing of its accounts “has affected all political activity” of the party barely weeks before general elections are announced, Congress Ajay Maken said. However, sources close to the government said that the freezing of accounts was only up to ₹115 crore, adding that the Congress was free to undertake other banking activities.

According to the Income Tax Appellate Tribunal order issued on Friday, Revenue department representatives said they “do not claim to have issued any order or direction to the concerned bank(s) for freezing the transactions in the bank account(s), but only for a lien on the amount lying in the bank account(s) upto the outstanding tax demand”.

‘Defaulters face due process’

“The action was based on the assessment year 2018-19, wherein a claim of ₹103 crore was first lodged, and later raised to ₹105 crore, with interest added raising the claim to ₹135 crore,” said a source. The Congress had gone to the IT Commissioner in 2021, but failed to deposit 20% of the claim amount as mandated, leading the IT department to demand the full amount.

The IT Commission dismissed the cases in 2021-22, after which the Congress went to the IT Appellate Tribunal (ITAT) in May 2023. However, it did not ask for a stay on assessment claims, also paying up ₹1.72 crores at that time. According to the Congress, the next hearing at the ITAT is on February 21.

“What has happened is a routine procedure, something that every tax paying citizen has to face if they default on taxes,” said the source. “If they don’t pay up, due process will happen to the assessee,” the source added.