Recovery proceedings are valid against INC: ITAT Delhi

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Recovery proceedings are valid against INC: ITAT Delhi

 

Indian National Congress Vs Deputy Commissioner of Income Tax (Stay Application No.61/Del/2024, In ITA No.1609/Del/2023)

 

Facts:

  1. The assessee is a Political Party registered under Section 29A of the Representation of the People Act, 1951. The Assessing Officer completed an assessment under Section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment year 2018-19 vide an order dated 6th July, 2021 at an income of Rs.1,99,15,26,560/-, as against Nil income declared by the assessee in the return of income filed on 2nd February, 2019, thereby resulting in a demand of Rs.105,17,29,635/-

 

  1. The assessee, alleged that the initiation of the recovery proceedings under section 226 (3) of the Act are so timed that the assessee would not be left with enough resources to contest the Parliamentary Elections. The learned Senior Counsel submitted that the intention is not merely to recover the outstanding demand, but to bring the activities of the assessee to a standstill, as it would not be able to meet out even the basic maintenance and establishment expenditure.

 

  1. The assessment order was passed on 6th July, 2021; the assessee approached the Assessing Officer on 20th October, 2021 seeking stay on the recovery of demand during the pendency of the appeal filed before the CIT(A) on 6th August, 2021; and, the said application was disposed-off by the Assessing Officer on 28th October, 2021, whereby, the Assessing Officer gave an option to the assessee to deposit 20% of the total demand and the balance of the demand would not to be enforced during the pendency of appeal before the CIT(A).

 

  1. Having waited for almost two years, the Assessing Officer issued a letter on 9th January, 2023 seeking payment of the entire outstanding demand; the assessee again sought stay on the recovery of demand under Section 220(6) of the Income Tax Act, On the basis of the aforesaid sequence of events, it was submitted that the Assessing Officer has not shown any malice while initiating recovery proceedings by issuing notices under Section 226(3) of the Act; rather, the assessee has been provided a reasonable time to organize its affairs.

 

ITAT Delhi held as below:

  1. Having regard to the legal position and the material on record, it is reasonable to conclude that the income tax authorities have not made any error in denying the exemption claimed by the assessee under Section 13A of the Income Tax Act due to violation of clause (d) of the first Proviso as well as third Proviso to Section 13A of the Act.

 

  1. Consequently, in our view, the Applicant has been unable to make out a strong prima facie case against the interpretation of Section 13A of the Act as adopted by the Revenue to deny the exemption, so far it is relevant for the purposes of examining the merits of the present Application.

 

  1. The chronology of events does not justify an inference that the recovery proceedings have been done in an undue haste. When the assessee first approached the Assessing Officer for stay during pendency of the Appeal with the CIT(Appeals), the Assessing Officer was willing to keep the recovery in abeyance requiring the assessee to pay 20% of the disputed demand. The assessee has also not demonstrated its keenness to expeditiously settle the issue inasmuch as the Appeal of the assessee pending with the Tribunal.

 

  1. We do not find that the recovery notice under Section 226(3) of the Act issued by the Assessing Officer on 13th February, 2024 is lacking in bona fides, so as to require us to intervene.

 

  1. The stay application is dismissed.

 

The copy of the order is as under:

 

INDIAN NATIONAL CONGRESS ITAT STAY REJECTION ORDER_240308_180433

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