The Congress on Wednesday sought judicial intervention to “save democracy” as Rs 65 crore was withdrawn from its bank accounts by the income tax department even as the dispute is sub judice.

This is the first such incident in post-Independence history because political parties are exempted from paying tax both under the Representation of the People Act and the Income Tax Act. The exemption can be withdrawn only in case of the failure of a political party to furnish details of donations received, and violation of deadlines in filing return documents. The Congress filed income tax returns for 2018-19 after some delay but it had moved the Income Tax Appellate Tribunal for settlement of the issue.

The Congress is clearly treating the income tax action as an act of political vendetta by the Narendra Modi government; many senior leaders smell a conspiracy to deliver a financial blow to the already cash-strapped main Opposition party just before a critical parliamentary election. The Congress has strongly protested party accounts being frozen at the instance of the income tax department.

Congress treasurer Ajay Maken posted on X: “Alarming Update: Concerns rise over the actions of Central Government agencies, potentially threatening the multi-party system in India. If unchecked, democracy in India will be over. Without intervention of judiciary, our democratic principles will be endangered.”

Promising to make more revelations “within a few hours”, he also said: “Since yesterday evening, Congress has been a victim of the anti-democratic attitude of the Government machinery. We have full faith in the judicial system of India.”

Later in the evening, he posted another message: “Yesterday, the Income Tax Department mandated banks to transfer over Rs 65 crore from the Congress, Youth Congress and NSUI accounts to the Government — Rs 5 crore from IYC and NSUI, and Rs 60.25 crore from Congress, marking a concerning move by the BJP Government.”

He also asked: “Is it common for national political parties to pay income tax? No. Does the BJP pay income tax? No. Why then is the Congress party facing an unprecedented demand of Rs 210 crore? During today’s ITAT proceedings, we presented our case. The hearing is set to continue tomorrow. The funds in question were raised through grassroots efforts, including crowdfunding and membership drives by the IYC and NSUI. This situation raises a crucial question about the state of democracy. Is it under threat? Our hope now lies with the judiciary.”

According to Section 13A of the Income Tax Act, any income of a political party from the following sources is exempt from tax — income from house property, income from other sources, capital gains, and income by way of voluntary contributions the political party receives from any individual. Both the Representation of the People Act and the Income Tax say no relief will be given if the party does not submit a report of its books on time.