Amidst allegations of ‘tax terrorism’, the Income Tax department in the Supreme Court on April 1 stated its resolve to not take any ‘coercive steps’ against the Indian National Congress on tax demands to the tune of approximately ₹3,500 crore raised in March in view of the General Elections.

Trouble had been mounting for the Congress with fresh notices from the Income Tax department raising a tax demand of ₹1,745 crore for the assessment years 2014-15 to 2016-17. With the latest notice, the Income Tax department had raised a total demand of ₹3,567 crore from the Congress. The fresh tax notices related to 2014-15 (₹663 crore), 2015-16 (around ₹664 crore) and 2016-17 (around ₹417 crore). The authorities had ended the tax exemption available to political parties and had taxed the party for gross receipt based on a Delhi High Court order of March 2016.

The Congress has challenged the High Court order that gross receipt was taxable. “Gross receipt is never taxable. Only total income is taxable. We are a political party, not a profit-making organisation,” Mr. Singhvi argued. He raised the issue that Section 13A of the Income Tax Act provided tax exemption to political parties.

Mr. Mehta said the total of over ₹3,500 crore was a “block assessment” of the past seven years. This was excluding the ₹135 crore recovered from the party through attachment.