The Supreme Court on Tuesday agreed to hear in December the petitions filed by Congress president Rahul Gandhi.
The Supreme Court on Tuesday agreed to hear in December the petitions filed by Congress president Rahul Gandhi, ex-president Sonia Gandhi and former general secretary Oscar Fernandes against the re-opening of their tax assessments for 2011-12 in the National Herald case.
A bench led by Justice AK Sikri, without issuing formal notice to the department, said that the matter requires consideration and posted the matter for further hearing on December 4. “The issue before us is whether the notice for reassessment under section 148 (of the Income Tax Act of 1961) is valid or not. These grounds can be raised before the Assessing Officer,” Justice Sikri said.
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The matter pertains to reassessment of the IT returns of the Gandhis and Fernandes in relation to the National Herald transaction. They have challenged the Delhi High Court’s September 10 judgment that allowed the income tax department to re-assess the tax liabilities of the trio.
Gandhis and Fernandes were represented by senior counsel P Chidambaram, Kapil Sibal and Arvind Datar, while Solicitor General Tushar Mehta appeared for the government.
Chidambaram argued that Associated Journal (AJL) had issued shares to Young India (YI) and Gandhi acquired a particular number of shares of YI. “How does acquisition of shares at par from a company which on that day had acquired a debt mean income in the hands of the shareholder?” the senior counsel questioned.
He further argued that “the company is a Section 25 company (a non-profit organisation) under the Companies Act 1956. On the day the shares are allotted to me, YI acquires a debt of Rs 90 crore which may or may not be recoverable. But if the company acquires an asset, how does the shareholder get an income?”
The income tax probe has started 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 three leaders are out on bail.
The issue involved the assignment of a Rs 90-crore loan advanced by the Congress party to AJL – owner of National Herald – to YI for a consideration of Rs 50 lakh. The debt of Rs 90 crore was subsequently converted into equity.
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 YI had obtained the right to recover Rs 90.25 crore that the AJL owed to the Congress party.
The income tax department had issued a notice to Rahul Gandhi on March 31, 2018, for allegedly concealing information on his status as a Director of Young Indian. Gandhi’s shares in Young Indian allegedly resulted in an income of Rs 154 crore, opposed to the earlier assessed income of Rs 68 lakh. A similar notice was issued to Sonia Gandhi and Fernandes for allegedly not disclosing income arising out of their status as shareholders in YI for the AY 2011-2012.
According to the Revenue, the value of shares held by Gandhis and Fernandes in YI should have been calculated on the basis of its subsequent acquisition of the assets of AJL, thus it had sought to re-open the assessment to compute the “fair market value” of the shares.
The department 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.