The Income Tax department has served a fresh notice of Rs 1,700 crore to the Congress for discrepancies in tax returns for previous years, dealing another blow to the cash-strapped party ahead of the Lok Sabha polls, sources said on Friday, reports PTI.

The tax penalties along with interest relate to discrepancies in tax returns for years 2017-18 to 2020-21, the sources said. The fresh notice was received earlier this week.

The Congress is already facing a funds crunch after Income Tax authorities imposed a penalty of Rs 210 crore and froze its funds. The party has not received any relief from the High Court in the case and is likely to move the Supreme Court.

The party has accused the BJP of squeezing it financially and of using tax authorities against it ahead of Lok Sabha elections beginning April 19.

On Thursday, the Delhi High Court rejected petitions by the Congress challenging the initiation of tax reassessment proceedings against it for a period of four years.

Funding for political parties is becoming a central issue in this election, particularly after the Supreme Court struck down electoral bonds - which allow individuals and/or businesses to make anonymous donations to political parties - on grounds it violated citizens' right to information.

The Congress and other Opposition parties welcomed the verdict, which scrapped a scheme that had benefited the BJP the most amid widespread accusations of quid pro quo deals to help donor companies and business people.