The Communist Party of India (CPI) finds itself embroiled in a legal tussle with the Income Tax (I-T) Department following the discovery that two of its state units utilised outdated Permanent Account Number (PAN) cards for filing income tax returns.
Recently, after the Income Tax Department issued a notice amounting to approximately Rs 1,700 crore to the Congress party, the CPI now faces a similar challenge. Media reports indicate that the department has demanded dues totalling Rs 11 crore from the CPI, although specific details regarding the notice remain undisclosed, as mentioned by a senior party leader.
In response to the notice, the CPI is actively seeking legal counsel to contest the demands imposed by the Income Tax Department. This development comes in the aftermath of a comparable situation involving the Communist Party of India (Marxist) or CPI(M) in July 2022. During that instance, the Income Tax department revoked the tax exemption of the CPI(M) for the fiscal year 2016-17, citing discrepancies in their tax filings.
Reports suggest that the CPI(M) was slapped with a tax liability amounting to Rs 15.59 crore due to alleged non-disclosure of a maintained bank account in their tax returns for the said fiscal year. Despite the CPI(M)’s attempts to rectify the situation and explain the oversight, the Income Tax Department persisted in reopening the case, ultimately issuing a final order imposing the tax penalty.
Furthermore, the CPI(M) encountered additional scrutiny when the Income Tax Department moved to disallow the claim of exemption under Section 13A of the Income Tax Act. Despite the CPI(M)’s plea for an extension of time to address the matter, their request was denied, leading to the issuance of a final order levying the aforementioned tax penalty for the year 2016-17.
In response to these actions, the CPI(M) has taken legal recourse by filing a writ petition in the Delhi High Court, challenging the order issued by the Income Tax Department.
The unfolding legal saga between the CPI and the Income Tax Department underscores the importance of meticulous compliance with tax regulations and the potential consequences of oversight in financial filings.
On Friday, the Congress party disclosed that it had been served with a fresh notice from the income-tax department, demanding a substantial payment of Rs 1,823.08 crore. Asserting their stance, Congress contended that the Bharatiya Janata Party (BJP) had also contravened income tax laws and should be subject to a demand notice totalling Rs 4,600 crore.
Expressing vehement opposition to the latest income tax demand, Congress announced its intention to stage a nationwide protest over the weekend. They described the demand as an “egregious attack” on democracy and denounced it as a form of “tax terrorism,” especially amidst the upcoming Lok Sabha elections.
In response to this development, Congress has instructed all state units to organise “massive public demonstrations” at both state and district headquarters across the country on Saturday and Sunday (March 29 and 30).
Additionally, Rahul Gandhi, a prominent leader within the Congress party, lambasted institutions such as the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), accusing them of operating under the influence of the BJP-led Central government. Rahul Gandhi emphasised that those who undermine democracy would face repercussions once the government changes hands.
“When the government changes, those who undermine democracy will face action,” the Congress party posted Rahul Gandhi’s warning on X.
“If these institutions had done their job properly, If CBI, ED had done their jobs.. there would have been no problem,” Gandhi said.
