SC allows I-T Department to reopen tax assessment of Sonia and Rahul Gandhi, but says can't enforce order till case is closed

The Supreme Court on Tuesday allowed the Income Tax Department to continue to re-assess the taxes filed by Congress chief Rahul Gandhi, UPA president Sonia Gandhi and party leader Oscar Fernandes for the 2011-12 financial year. However, the court restrained the I-T sleuths from implementing its order in the proceedings until the final disposal of the case, scheduling the next hearing for 8 January.

The Supreme Court gave the orders after hearing the final arguments on petitions filed by Rahul and Sonia, challenging the Delhi High Court order refusing to give them relief in the case seeking to reopen their tax assessments for 2011-12. The Delhi High Court had rejected their pleas challenging the re-assessment notice on 10 September.

On 16 August, the high court had reserved its verdict on the pleas of the three leaders after the I-T department had contended that Rahul’s tax assessment for 2011-12 was reopened as material facts were concealed. The bench had orally asked the I-T department to not take any coercive step against the Gandhis and Fernandes till it pronounced its verdict.

The income tax cases against the Congress leaders arose 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 his complaint, Swamy had accused Sonia, Rahul and others of conspiring to cheat and misappropriate funds by paying Rs 50 lakh to the Congress, through which the Young India Pvt Ltd had obtained the right to recover Rs 90.25 crore that the Associated Journals Ltd (AJL) owed the party.

In his complaint, the BJP MP claimed that Young India, which was incorporated in November 2010 with a capital of Rs 50 lakh, had acquired almost all the shares of AJL, which published Congress mouthpiece, The National Herald. In this process, Young India had also allegedly acquired AJL’s Rs 90-crore debt.

The I-T Department had alleged that Rahul’s tax assessment for 2011-12 was re-opened because the Congress president had not disclosed that he was the director of Young India since 2010, and therefore, his shares in the company would have earned him an income of Rs 154 crore, not Rs 68 lakh as was assessed earlier. I-T sleuths had already issued a demand notice for Rs 249.15 crore to Young India for the 2011-12 assessment year.

The department’s move followed its investigation into Swamy’s complaint alleging that the Gandhis had misappropriated AJL’s assets while transferring their shares to the newly-formed Young India.

With inputs from agencies