The Delhi high court on Monday dismissed petitions by Congress president Rahul Gandhi and former party president Sonia Gandhi challenging the reopening of tax assessment proceedings for the year 2011-12 by the Income Tax department in connection with the National Herald case, and said the department has the powers to do so. A plea by Congress leader Oscar Fernandes was also dismissed.
A bench of justices S Ravindra Bhat and AK Chawla said the petitioners could raise the issue with the tax department.
Sonia Gandhi and Fernandes are shareholders in Young Indian, and the tax department claims they did not disclose their income from the company. Similarly, the tax department’s claim is that Rahul Gandhi withheld information of his directorship of Young Indian, which would have resulted in him having an income of ₹154 crore and not about ₹68 lakh, as was assessed for the year in question.
Appearing for the three, senior advocate P Chidambaram contended that there was no income at all and that there was no tangible evidence for reassessment.
He submitted that the disclosure of interest in a not-for-profit company was not necessary.
The IT department’s argument is that the valuation of Young Indian’ shares should be based on its acquisition of Associated Journals Ltd, which publishes National Herald.
{{/usCountry}}The IT department’s argument is that the valuation of Young Indian’ shares should be based on its acquisition of Associated Journals Ltd, which publishes National Herald.
{{/usCountry}}According to the IT department, Young India (YI) obtained the right to recover ₹90.25 crore that the Associated Journals Ltd (AJL) owed to the Congress party for ₹50 lakh.
However, the court said that the disclosure of the taking over of the shares by the trio should have been given, adding that the acquisition of certain shares or property can lead to income.
Separately, the tax department is pursuing a demand for ₹249.15 crore of tax from YI for the assessment year 2011-12.
The income tax cases against the Congress leaders came after a complaint was filed by Bharatiya Janata Party (BJP) leader Subramanian Swamy before a trial court in connection with the National Herald case.
BJP spokesperson Sambit Patra said the call for Monday’s Bharat Bandh by the Congress was aimed at diverting the attention of the people from the case. The Congress, supported by several Opposition parties, called the bandh to protest rising prices, especially of fuel. “The whole (Gandhi) family today is known as a family that cheats, a family that goes for tax evasion, a family that conspires against the law of the land...” he added.
Congress’s chief spokesperson Randeep Singh Surjewala said the case and the tax department’s efforts were driven by politcal vendetta. “ Modi ji and his Income Tax department blinded by revenge and personal vendetta against Shri Rahul Gandhi and Shrimati Sonia Gandhi, facing imminent defeat in 2019 as also in the four election going states....” he said.
Surjewala also claimed that the loan on the books of Associated Journals acquired by YI was “non-payable”. “This must be the first time in the history of India that corporate law has been rewritten by Modi-ji that a non repayable loan becomes profit in the hands of shareholders of the company – think about it, if this is the formula if applied to all of India’s companies, what kind of catastrophe we are looking at?” he said.