The Delhi High Court on Monday rejected the pleas of Congress president Rahul Gandhi and his mother Sonia Gandhi challenging the reopening of their tax assessments for 2011-12.
A Bench of Justices S. Ravindra Bhat and A.K. Chawla also dismissed a petition of Congress leader Oscar Fernandes, who too had challenged the reopening of his tax assessment for the same year (2011-12).
Narrating a brief background about the case, the Bench said a loan amounting to about ₹90 crore was due from Associated Journal Limited (AJL) to the All India Congress Committee.
As the loan amount became irrecoverable, it was assigned to YI, a company where the Gandhis are the majority shareholder, for a consideration of ₹50 lakh.
Non-disclosure
The entire premise of the Income Tax reassessment notices is that the non-disclosure of the taxing event — allotment of Young Indian shares (and the absence of any declaration as to value) deprived the Assessing Officer (AO) of the opportunity to look into the records.
“Had he (Mr. Gandhi) disclosed in his returns or any related documents about the event (share acquisition), the primary fact would have been on the record,” the Bench noted. “The tax evasion petition filed by BJP leader Subramanian Swamy and investigation reports … constituted tangible material which … justified reassessment,” it said.
The IT Department will now scrutinise their records for the assessment year 2011-12.
The main ground on which Mr. Gandhi had sought quashing of the reassessment notice was that no income had escaped assessment. Additional Solicitor General (ASG) Tushar Mehta, appearing for the IT department, had submitted that the prima facie “reasons to believe” of the AO that the income escaped assessment in the present case are not based upon the allotment of shares by AJL to YI.
The re-assessment was resorted to because it was prima facie found that “income from other sources” stipulated under Section 56 escaped assessment with respect to the fair market value of shares allotted to the assessees by YI on January 22, 2011, he said.
The IT department had argued that at the time when fresh shares were allotted to the assessees, the value of their shares was not ₹100 each but was ₹8,15,708.16 per share.
The rejection of the pleas of the top Congress leaders will pave the way for the IT Department to scrutinise their records for the assessment year 2011-12.
