The Supreme Court on Tuesday permitted the Income Tax Department to reopen a 2011-12 tax assessment case against Congress president Rahul Gandhi and former party chief Sonia Gandhi in connection with the National Herald case.
A Bench headed by Justice A.K. Sikri said it would be open to the Assessing Officer of the I-T Department to complete the assessment and pass the assessment order as well, but it would not be given effect to till further orders of the court.
The Bench, comprising Justice Ashok Bhushan and Justice S. Abdul Nazeer, clarified that Tuesday’s order was passed without going into the merits of the case as the limitation period for completing the assessment was expiring. It has posted the case for further hearing on January 8.
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.
However, the Bench said that due to the paucity of time, the matter could not be heard on Tuesday and it was just an interim order which should be equitable to both parties.
The court was hearing the pleas filed by the Congress leaders, including Mr. Oscar Fernandes, against a Delhi High Court decision to allow the I-T Department to re-open their tax assessments for 2011-12.
The acquisition of Associated Journals Ltd — publisher of the National Herald newspaper — by Young Indian, a company in which the Congress president and Ms. Sonia Gandhi are majority stakeholders, is at the heart of the case.
The premise of the Income Tax reassessment notices in this case 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.
However, Congress leaders have maintained that Young Indian (YI) is a charitable institution, i.e., a not-for-profit company. Mr. Rahul Gandhi has argued that no income in fact escaped assessment and that all queries were adequately addressed in the scrutiny assessment.
Moreover, as a shareholder of a non-profit company, he was under no obligation to disclose the value of his shares in the manner that the I-T department has alleged.
