The Income Tax department’s has “substantial and concrete” evidence to seek further scrutiny and examination of unaccounted income earned by the Indian National Congress (INC) in the assessment years from 2014-15 to 2020-21 , the Delhi high court said in an order on Friday, specifically mentioning what it said appeared to be “unaccounted transfers” in three of these years by Hyderabad-based Megha Engineering and Infrastructure Limited (MEIL), a company that has been in the news after Electoral Bond data released by SBI showed that the it was the biggest donor of Electoral Bonds to the Bharatiya Janata Party (BJP), contributing ₹584 crore to the party April 16, 2019 and October 13, 2023.

The court’s order is a setback for the Congress, which had challenged the reassessment of its income by the tax department. The court had reserved its order on March 20.

On March 13, the court rejected the Congress’s plea appealing an order of the Income Tax Appellate Tribunal which had rejected its plea seeking a stay on a demand notice for around ₹105 crore issued by the tax department.

The Congress has said its accounts have been frozen, and claimed that the action was politically motivated and aimed at ensuring it didn’t have the resources to contest the Lok Sabha elections. A “systematic effort” is being made by PM Modi to “cripple” the Congress financially, former party chief Sonia Gandhi said in a presser on Thursday.

HT reached out to the Congress for a response on the development, but it declined to comment.

On Friday, a bench of justices Yashwant Varma and Purushaindra Kumar Kaurav in its order dismissing the petition filed by INC said, “On a prima facie examination, it is evident that the respondents (IT department) appear to have collated substantial and concrete evidence warranting further scrutiny and examination under the Act.”

The order referred to the so-called Satisfaction Note, a document prepared by the tax officer investigating the case, following a search, audit or investigation and pointed out that there were detailed references to unaccounted transactions with respect to the 2019 Lok Sabha elections, and 2013 and 2018 Madhya Pradesh assembly elections.

“There is a detailed reference to payments allegedly made to MPs/MLAs and candidates. The said note also carries material seeming to suggest payments and contributions made by government departments and corporations, liquor manufacturers, industry entities and individuals to the petitioner (INC),” the bench said.

The party, represented by senior advocate Abhishek Manu Singhvi, questioned the tax notice on the grounds that the assessment with regard to AY (assessment year) 2014-15, 2015-16 and 2016-17 would be barred by limitation due to the long time gap as provided under Section 153C. It also claimed that the satisfaction note did not make any “explicit reference to incriminating material or assets” that were discovered and also did not establish a correspondence between the assessment years in question and the assets or material. The bench did not agree. “We find, prima facie, that the satisfaction note refers to material pertaining to the three AYs in question,” it said.

The court went through the records presented by the department represented by advocate Zoheb Hossein. It held, “There is specific reference to unaccounted transactions pertaining to AYs 2014-15, 2015-16 and 2016-17. We also take into consideration the indubitable fact that the cumulative figure attributed to income which has allegedly escaped assessment would stand at approximately ₹520 crores.”

The court also criticised the Congress for its delay in approaching it pointing out that the notice was issued on March 7 last year and the satisfaction note prepared by IT department served to the party by June 2023. The assessment process, it added, ought to have completed by March 31, 2024. “The writ petitioner has thus chosen to approach this Court only a few days before the time for completion of assessment would expire and at the proverbial fag end of the proceedings,” the judges held, while dismissing the petition.

Nor did the bench buy the Congress’ argument on limitation.

“We are of the considered opinion that the material gathered in the course of the search would have empowered and enabled the respondent to undertake an assessment for six assessment years immediately preceding the assessment year pertaining to the previous year in which the search was conducted and would also extend to the four additional AYs‘ which would stand included by virtue of Explanation 1 to Section 153A of the Act,” it said.