The Congress contended that the actions of the IT department, particularly the initiation of recovery proceedings on February 13, were aimed at causing undue hardship to the party, especially in light of the impending parliamentary elections. They argued that these proceedings violated Section 13A of the Income Tax Act, which provides exemptions for political parties under certain circumstances. The party challenged these proceedings before the Income Tax Appellate Tribunal (ITAT) in an attempt to contest the tax demand and the timing of the recovery actions.

In its ruling on March 8, 2024, the Income Tax Appellate Tribunal (ITAT) determined that the Income Tax authorities were justified in rejecting the income tax exemption claimed by the Congress party. The ITAT emphasized that the Congress failed to establish a compelling prima facie case against the denial of exemption by the Income Tax authorities.

This situation prompted the Congress party to file the current plea before the High Court. Senior Advocate Vivek Tankha represented the Congress during the proceedings and expressed concern over the freezing of the party's accounts. Tankha emphasized that if this freeze persists, it could lead to the collapse of the party.

Tankha pointed out that the schedule for the 2024 Lok Sabha elections is expected to be announced shortly. Given this impending electoral process, he raised a crucial question regarding the viability of a national party's participation in the elections when its financial resources are inaccessible due to the freeze on its accounts.

During the hearing on March 12, the bench made an observation that the situation at hand was something that originated back in 2021. They emphasized that the recent actions taken in February 2024 wouldn't alter the circumstances significantly.

On the opposing side, Advocate Zoheb Hossain, representing the IT department, contested the notion that the initiation of IT proceedings just before the elections was deliberate. He argued against the portrayal of such a perception, asserting that it was inaccurate.

"We have shown that these proceedings have been going on since 2021. This is routine recovery. For four years you don't pay up, then every fifth year there is going to be an election," he said.

Hossain provided details during the hearing, stating that with accrued interest, the total demand against the Congress party stands at ₹135 crore, out of which ₹65.9 crore has already been recovered.

He further asserted that there is no evidence to suggest that the party is facing financial distress, highlighting that its combined assets are valued at approximately ₹1,400 crore.