Supreme Court questions Delhi High Court decision to send Congress back to ITAT in tax matter

The Supreme Court on Tuesday questioned Delhi High Court's decision to ask the Congress party to move the Income Tax Appellate Tribunal (ITAT) for stay on the demand notice issued by Income Tax (IT) department for recovery of nearly ₹105 crore in outstanding taxes [Indian National Congress v Deputy Commissioner of Income Tax, Central-Circle 19 and Ors]..A Bench of Justices BV Nagarathna and N Kotiswar Singh was hearing the Congress' plea against a March 13 Delhi High Court ruling that there was no reason to interfere with the ITAT order.However, the High Court allowed Congress to move a fresh application for stay before the ITAT considering the developments that had occurred in the meanwhile including recovery of an amount of ₹65.94 crores."Why did High Court ask them to go back to ITAT when Congress came in appeal? How can it fail to exercise its jurisdiction?" the top court asked today..Additional Solicitor General N Venkatraman with advocate Zoheb Hossain for the IT Department submitted that issue was only academic now as the recovery had already been made."They were asked to go to ITAT afresh for stay. They did not (initially) comply," the Court was told.However, Senior Advocate Vivek Tankha and advocate Prasanna S for Congress said the High Court should have granted an interim stay.The Court then issued notice on Congress plea. However, it clarified that ITAT can proceed with the party's appeal."Issue notice to the respondents. The pendency of this SLP will not come in the way of the ITAT deciding the appeal before it. Appellant herein (Congress Party) to co-operate," it ordered. .The IT department had issued notice to the Congress party for recovery of ₹105 crore in outstanding tax for the assessment year 2018-19. The IT authorities had in July 2021 rejected the declaration of nil income by the Congress and demanded over ₹105 crore in tax.The demand was raised on the ground that the return had been filed beyond the prescribed time period and also that the party had received “donations” of ₹14,49,000 from various persons, each being in excess of ₹2,000.This was stated to be in violation of Section 13A of the Income Tax Act, which allows a political party to claim exemption from tax in certain cases.The Congress then unsuccessfully challenged the IT department's proceedings before the ITAT and the Delhi High Court.In an order passed on March 8 this year, the ITAT had ruled that the IT authorities had not made any error, and that that Congress was unable to make out a strong prima facie case against denial of exemption.While hearing the case on March 12, the High Court had remarked that there appeared to be no fundamental infirmity in the ITAT order, and that someone in the Congress party office "went to sleep."