The Congress on Friday said its main bank accounts had been frozen over an income-tax demand of Rs 210 crore, the action coming in the run-up to the general election and prompting the party to allege “vendetta politics” and an “assault on democracy”.

The income-tax appellate tribunal (ITAT) later allowed the party to operate the accounts pending a hearing next Wednesday, while putting a lien of Rs 115 crore on its accounts and saying the party's expenditure can only come from the remaining amount, Congress treasurer Ajay Maken said.

However, Maken added that “this Rs 115 crore is much more than (what) we have in our current accounts”, implying the purported relief was meaningless. “We don’t have money for regular expenses like paying salaries and electricity bills,” he said.

Never before in India has a major political party faced such a problem, and many in the Congress accused the BJP of conspiring to cripple the party financially before the elections. Some hinted at approaching the Supreme Court.

Maken contrasted the source of the Congress’s now-frozen money with the BJP’s collections from the Narendra Modi government’s electoral bonds scheme, which the Supreme Court on Thursday quashed as opaque and unconstitutional.

“Our four accounts were frozen (the) day before yesterday. The money lying in these accounts are from crowd-funding. That’s frozen,” Maken said.

“But the BJP accounts, which have money from electoral bonds — declared unconstitutional by the Supreme Court — are functional. This is shameful vendetta politics.”

He added: “Democracy is finished in India. Can you imagine the main Opposition party’s accounts being locked down just before the election for ridiculous reasons?”

Maken listed two reasons for the measure, as expounded by the income-tax department.

Indian Youth Congress members during a protest against the Central Government over freezing of some bank accounts of the Congress party, outside IYC office, in New Delhi. PTI picture

“There was a delay of 40-45 days in (the Congress) filing income-tax returns in 2018-19, which was an election year. The total receipt was Rs 199 crore, out of which Rs 198 crore was spent on elections,” he said.

“The other reason was a cash deposit of Rs 14.4 lakh by our MPs and MLAs. We have given the names of the cash donors. But a penalty of Rs 210 crore was raised by the I-T department.”

Maken described the penalty as disproportionate and unreasonable.

Rahul Gandhi said: “Modiji, don’t get scared. The Congress is the name of people’s power, not the power of wealth. We have never bowed down to tanashahi (autocracy) and we never will. Every Congress worker will fight for the protection of democracy.”

Party president Mallikarjun Kharge said: “The power-drunk Modi government has frozen the accounts of the country’s largest Opposition party just before the Lok Sabha elections. This is a deep assault on India’s democracy!

“The unconstitutional money collected by the BJP would be utilised for elections, but the money collected by us through crowd-funding shall be sealed! That is why I have said that there won’t be any elections in the future. We appeal to the judiciary to save the multi-party system in this country and protect India’s democracy.”

Congress general secretary K.C. Venugopal said the government had “once again tried to murder democracy”. He said the party would demonstrate outside income-tax offices in all state capitals on Saturday.

“When one avenue to tilt the balance (electoral bonds) was struck down by the courts yesterday, the government has chosen a new route now,” he said.

“The BJP has hoarded over Rs 6,500 crore through the illegal electoral bond scandal, which remain untouched — but the earnest donations of ordinary INC workers and supporters are frozen.”

Congress leader Jairam Ramesh, speaking to journalists during a halt by the Bharat Jodo Nyay Yatra at Mohania in Bihar’s Kaimur district, said: “The freezing of our party’s bank accounts represents the politics of threat, vendetta, coercion and torture by a government that knows it is not coming back (to power).”

The Youth Congress, which recently collected some money through a membership drive and whose account has also been frozen, held a protest march in Delhi on Friday.

Lawyer Vivek Tankha, who appeared for the Congress before the appellate tribunal, said: “We told the ITAT that one of the largest stakeholders will not be able to participate in the elections if the accounts remain frozen…. We had filed our returns and it has been misconstrued. For that reason, we can’t be punished disproportionately.”

He added: “Very graciously, the court said there won’t be any freeze on the accounts but there will be a lien. The Congress party can operate its accounts.”

However, Maken said: “On our petition, income-tax department and the ITAT have said that we have to ensure that Rs 115 crore (is) kept in the banks…. We can spend an amount over and above that. This means that Rs 115 crore has been frozen. This Rs 115 crore is much more than we have in our current accounts.”

Government sources purportedly told news agency ANI that the Congress’s current dues to the income tax department stood at Rs 115 crore, and that no bank operations had been stopped.

The sources told ANI that the Congress’s tax dues pertained to financial years 2017-18 and 2018-19. The claims owed to a failure to file the returns on time, they said, and the initial dues were Rs 103 crore plus Rs 32 crore in late payment interest.

According to the sources, the tax dues were reassessed at Rs 105 crore on July 6, 2021. After this, the Congress appealed before the Commissioner Appeals but did not pay the mandatory 20 per cent of the tax for initiating the appeal, the sources told ANI.

They said the Congress paid only Rs 78 lakh, and the CIT (Appeal) dismissed its plea. In May 2023, the party moved an appeal before the ITAT but did not apply for any stay on the tax demand, they added. In October, the party paid Rs 1.72 crore.

Nowhere in its appeal did the Congress dispute the amount of tax dues, the sources told ANI.

Additional reporting by Dev Raj from Mohania, Kaimur, in Bihar