New Delhi: The Supreme Court Tuesday allowed the Income Tax Department to reopen the tax assessment of top Congress leaders Rahul and Sonia Gandhi for 2011-12 in connection with the National Herald case.
The apex court, however, restrained the I-T department from implementing its order in the proceedings against Rahul, who is the Congress president, and his mother Sonia till the pendency of the matter before the court.
The court also said it was not expressing any opinion on the merits of the pleas filed by Rahul and Sonia Gandhi in the case.
The tax matter is related to the National Herald case in which the Congress leaders are also facing criminal proceedings.
A bench headed by Justice A K Sikri posted the matter for further hearing on January 8 next year.
Solicitor General Tushar Mehta, appearing for the I-T department, said the court should not restrain it from implementing the assessment orders against the Gandhis and others. He said the court should hear the matter and pass appropriate orders.
The directions by the apex court came during final arguments in the petitions filed by Rahul and Sonia challenging the Delhi High Court’s order related to a case of re-opening of their 2011-12 tax assessments.
The high court had refused to give them relief in the case, giving the opportunity to the Income Tax (I-T) Department to scrutinise their records.
The department had filed a caveat in the apex court that it should be heard if any appeal is filed against the high court order.
A caveat is a legal procedure by which an application is filed by any party to the litigation to pre-empt an ex-parte order.
On September 10, Gandhis had failed to get any relief from the High Court which dismissed their challenge on reopening of their tax assessments for 2011-12.
Denial of any relief by the high court had paved the way for the Income Tax Department to scrutinise Congress leaders records for the assessment year 2011-12.
“…The assessees’ rights to urge them are reserved in the income tax proceedings,” the high court had said, while “dismissing” the three separate petitions filed by Gandhis and Fernandes, which were decided through a common order.
The income tax probe against the Congress leaders has arisen from the investigation into the private criminal complaint filed by BJP leader Subramanian Swamy before a trial court in connection with the National Herald case, in which the trio are out on bail.
Sonia and Rahul were granted bail in the case by the trial court on December 19, 2015.
A tax evasion petition (TEP) was also addressed to the finance minister by Swamy.
In the complaint before the trial court, Sonia, Rahul and others have been accused of conspiring to cheat and misappropriate funds by paying just Rs 50 lakh, through which Young Indian (YI), the not-for-profit organisation, had obtained the right to recover Rs 90.25 crore that the Associated Journals Ltd (AJL) owed to the Congress party.
It was alleged that YI, which was incorporated in November 2010 with a capital of Rs 50 lakh, had acquired almost all shareholdings of the AJL, which was running the National Herald newspaper.
In this process, YI had also acquired AJL’s debt of Rs 90 crore.
The tax department had said the shares Rahul has in YI would lead him to have an income of Rs 154 crore and not about Rs 68 lakh, as was assessed earlier.
It has already issued a demand notice for Rs 249.15 crore to YI for the assessment year 2011-12.
Earlier in March, Young Indian requested the court to stay the recovery of tax and interest of Rs 249.15 crore raised in pursuance to a December 27, 2017 notice issued under section 156 of the IT Act for the assessment year 2011-12.
The company has submitted that it is a charitable firm and does not have any income and that Income Tax authorities have wrongly raised a demand of Rs 249 crore for the assessment year 2011-12.
The department’s move followed its probe on a complaint alleging that the Gandhis had misappropriated AJL’s assets while transferring their shares to the newly formed YI.
The high court had noted in its order that the premise of the reassessment notices was that the non-disclosure of the taxing event– allotment of shares of YI– deprived the assessing officer of the opportunity to look into the records.
It had said that in Rahul’s case, the non-disclosure of share acquisition constituted tangible material justifying reassessment.
In case of Sonia and Oscar, the bench said returns filed by them were processed under Section 143(1) of the Income Tax Act, which pertains to ‘Notice or intimation’, and are not treated as “assessments”.