2024 (4) TMI 502 - SCH - Income Tax

Demand raised during the pendency of appeal before this court - denial of Exemption u/s 13A to Political party registered as such under Section 29A of the Representation of People Act, 1951 - whether Assessee INC is a political party registered under the RP Act and satisfies the description of a 'political party' for the purpose of Section 13A of the Income Tax Act, 1961? - HC 2016 (3) TMI 879 - DELHI HIGH COURT held that ITAT was correct in law in holding that the audited accounts filed by the INC before the CIT (A) could not be accepted as evidence since they were not audited till the assessment was framed and, therefore, the INC was not entitled to exemption u/s 13A of the Act and denying exemption to the INC u/s 13A of the Act and refusing to condone the delay that had occurred in the audit of some of the state units as INC failed to fulfil the three conditions envisaged under clauses (a), (b) and (c) of Section 13A of the Act. HELD THAT - In view of the submission by way of a concession made by the respondent, no coercive action of any nature shall be taken against the appellant(s) till the next date of hearing. The aforesaid concession made by the learned Solicitor General on behalf of the respondent/Department is without prejudice to all rights and contentions that it may have as against the appellant(s) herein and vice versa. Hence, list these appeals including this application on 24.07.2024.

Summary

Issues involved:
The application for stay of findings arrived at by the High Court, pending adjudication of Civil Appeal Nos. 64-65/2018 u/s special leave petitions preferred by the appellant(s). The respondent-Department's decision not to take coercive steps regarding demands totaling approximately Rs.3,500 crores made in March 2024 due to impending elections.

Issue 1: Application for Stay of Findings by High Court

The application was filed in Civil Appeal Nos. 64-65/2018, pending adjudication before the Supreme Court after leave was granted in the special leave petitions by the appellant(s). The application challenged the findings of the Delhi High Court, particularly referencing paragraph 124 of the impugned order. The appellant sought an urgent hearing due to demands made in March 2024, but the matter was listed as per the notified date. The Solicitor General confirmed demands totaling Rs.3,500 crores were made in March 2024 against the appellant(s), but assured no coercive steps would be taken by the respondent-Department until the next hearing in the second week of July 2024. The appellant(s) were relieved from apprehension of coercive action until the next hearing date.

Issue 2: Decision of Respondent-Department Regarding Coercive Steps

The respondent-Department, through the Solicitor General, acknowledged the demands made in March 2024 amounting to approximately Rs.3,500 crores against the appellant(s). Despite the pending appeals and unresolved issues, the respondent-Department opted not to take any coercive measures due to the upcoming elections. The Solicitor General proposed a hearing date in the second week of July 2024, ensuring no coercive action would be pursued until then. The total demand of Rs.3,500 crores was noted to encompass various issues beyond the scope of the current appeals. The appellant(s) were granted relief from any coercive action until the specified hearing date.

This judgment highlights the application for stay of findings by the High Court in the context of pending appeals before the Supreme Court, along with the respondent-Department's decision not to take coercive steps regarding substantial demands made against the appellant(s) in March 2024. The Solicitor General's assurance of no coercive action until the next hearing date provided temporary relief to the appellant(s) amidst the ongoing legal proceedings.