Supreme Court Likely to Hear Indian National Congress’ ₹199-Crore Income Tax Exemption Dispute on Dec 5 [Read Order]
This case arose from the denial of its Section 13A political-party exemption due to late filing of returns and alleged receipt of cash donations above Rs. 2,000.
The Supreme Court is likely to hear the Indian National Congress party’s Rs. 199-crore Section 13A income tax exemption dispute on December 5, 2025, a case that deals with the denial of tax benefits after the party was accused of filing its return late and accepting cash donations above Rs. 2,000.
The dispute concerns the party’s claim of exemption of about Rs. 199 crore under Section 13A of the Income Tax Act, which applies to political parties.
The Assessing Officer had denied the exemption on two grounds, one was that the return was not filed within the time required under Section 139(4B), and another was that the party had received cash donations above Rs. 2,000 in violation of clause (d) of the first proviso to Section 13A of the Income Tax Act. The denial of exemption led to a substantial tax demand, followed by recovery action.
After the Assessing Officer issued the demand and later rejected the stay request for non-payment of 20% of the disputed amount, the Congress moved the Commissioner of Income Tax (Appeals), but the appeal was dismissed. The party then approached the ITAT and filed a stay application.
While the appeal was pending, the tax department initiated recovery under Section 226(3), and bank drafts totalling around Rs. 65.88 crore were obtained and later encashed.
Before the ITAT, the Congress argued that it had a strong case on merits and that the recovery action was harsh, especially close to the election period. The ITAT observed that the party had not complied with the earlier condition of depositing 20% of the demand, had taken repeated adjournments, and had not shown urgency in pursuing the appeal.
The ITAT observed that prima facie violations under Section 13A appeared to exist. It rejected the stay application.
The Congress then approached the Delhi High Court. After hearing both sides, the High Court observed that the ITAT had applied its mind to the issues raised and had given a prima facie assessment, which was all that was required in a stay matter.
The High Court also observed that the party had been slow in taking steps after the first demand notice in July 2021 and had not shown diligence in seeking protection earlier.
The court explained that its refusal to interfere did not amount to approval of the ITAT’s views on the merits of the tax dispute and it was only declining to interfere in the limited scope of judicial review.
At the same time, the court pointed out that around Rs. 65.94 crore had already been recovered, so the Congress could file a fresh stay application before the ITAT, which should consider the changed circumstances.
The party had approached the Supreme Court. On 20 August 2024, the Bench of Justice B.V. Nagarathna and Justice Nongmeikapam Kotiswar Singh issued notice and explained that the pendency of the matter would not prevent the ITAT from hearing the main appeal.
Later, on 16 September 2025, the Supreme Court listed the case for 5 December 2025, when the Supreme Court is likely to hear the dispute concerning the tax exemption claimed by the Indian National Congress.
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