Will income tax department reopen investigation into Sahara papers?

The Sahara papers seized by the I-T department in 2014 named Narendra Modi as the recipient of Rs 42 crore or more in cash

Congress leaders Jairam Ramesh, Ajay Maken and Pawan Khera during a press conference in New Delhi on 29 March (photo: PTI)
Congress leaders Jairam Ramesh, Ajay Maken and Pawan Khera during a press conference in New Delhi on 29 March (photo: PTI)

A.J. Prabal

So, did the Congress fail to file income tax (I-T) returns? No. Did it fail to submit income and expenditure statements to the Election Commission of India (ECI)? No. Did it fail to provide the names and addresses of donors to the I-T department? Probably yes.

As per the party’s claim, it had delayed, not denied, the submission of names, addresses and PANs (permanent account numbers) of donors who paid altogether Rs 14 lakh to the party during 2017-18, details which the party claims to have submitted to the department eventually. There were, the Congress claims, 23 such donors, all party MPs and MLAs.

Is the Congress the only party which failed to furnish details on this count? No. On the basis of the BJP’s tax returns published on the ECI website, the Congress claims that at a cursory glance, the BJP has not provided details of donors who donated Rs 42 crore to the party.

But why then has the Congress been penalised and not the BJP, is what the party is asking, and accusing the I-T department of double standards and deliberately crippling the country's principal Opposition party before the crucial Lok Sabha elections.

Since the department has gone back in time to 1994-95, i.e. 30 years ago, to find violations in the returns, how long is it allowed to wait before swinging into action? Can it also establish that no other party has committed similar violations in the last 30 years?

I-T rules require that names and other details of donors who contribute more than Rs 20,000 be disclosed by political parties. What was the validity and purpose of this rule when the government brought in the electoral bonds scheme, allowing anonymous donors to donate unlimited amounts to political parties?

Even after the Supreme Court has declared electoral bonds as unconstitutional, the Union government and the BJP have continued to defend the scheme. By their logic, not disclosing details of donors who contributed Rs 14 lakh would appear to be a frivolous offence, not warranting the draconian steps initiated by the I-T department.

The second basis that prompted the demand for income tax and penalty, according to the department, are certain diaries which were seized during an investigation in 2019 from various people, and entries allegedly mentioned in those diaries.

If diary entries provide cause for action, Congress treasurer Ajay Maken wondered aloud at a media briefing on Friday, would the department take action on the basis of the Jain hawala diaries, which named several BJP leaders? Or on the basis of the Sahara papers seized by the department in 2014, which named Narendra Modi as the recipient of Rs 42 crore or more in cash from the Sahara Group alone?

Would the department reopen the diaries seized in Karnataka, which mentioned BJP leader and former chief minister Yediyurappa as a recipient?

Finally, since political parties are exempt from income tax under the Income Tax Act, it is safe to assume that no political party in India has paid a paisa to the I-T department since Independence.

Why then has the department raised a demand for Rs 1,830 crore as income tax from the Congress, unilaterally confiscated Rs 135 crore, and froze all 11 bank accounts of the party and its front organisations in New Delhi?

The department has claimed that it did not freeze any account, that the party was free to pay 20 per cent of the tax demand, and regain access to the accounts.

The Congress has claimed that the deposits it had in the accounts were less than the 20 per cent it has to pay, and hence the accounts were practically ‘frozen’. What is more, paying the 20 per cent would have amounted to an admission that the party had indeed violated the conditions for exemption.

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Published: 30 Mar 2024, 4:13 PM