By Elton Gomes
The Delhi High Court today dismissed the pleas of Congress president Rahul Gandhi and his mother Sonia Gandhi challenging the reopening of their tax assessments for the year 2011-12 in the National Herald scam case. A bench comprising Justices S. Ravindra Bhat and A.K. Chawla said, “The writ petitions have failed.” Congress leader Oscar Fernandes’ petition challenging his tax assessment for 2011-12 was also dropped by the high court bench, India Today reported.
The Bench said that a loan amounting to about Rs 90 crore was due from Associated Journal Limited (AJL) to the All India Congress Committee. The bench noted that as the loan amount had become irrecoverable, it was assigned to Young Indian Pvt Ltd (YI) for Rs 50 lakh. Young Indian is the company where the Gandhis are the majority shareholder.
On August 16, the high court had reserved its order on the pleas of Sonia Gandhi, Rahul Gandhi, and Oscar Fernandes. The move came after the Income Tax Department asserted that Rahul Gandhi’s tax assessment for 2011-12 should be reopened as some material facts were hidden.
What has the Delhi HC said?
The bench had asked the Income Tax (IT) department to not take any action against Sonia, Rahul, and Oscar Fernandes till the verdict was announced. The Delhi High Court has now said that the IT department has powers to reopen tax proceedings against the Gandhi, and that the petitioners can approach the IT department with their grievances.
“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 said. “The tax evasion petition filed by BJP leader Subramanian Swamy and investigation reports … constituted tangible material which … justified reassessment,” it said further, the Hindu reported.
IT department to assess their tax records
The IT Department will now scrutinise the Gandhi’s records for the assessment year 2011-12. Rahul Gandhi sought quashing of the reassessment notice on the grounds that no income had been left unassessed.
Appearing for the IT department, Additional Solicitor General Tushar Mehta said that the income that escaped assessment in the present case is not based upon the allotment of shares by AJL to YI. A reassessment was sought because it was prima facie found that “income from other sources” stipulated under Section 56 escaped assessment in terms of the fair market value of shares allotted to the assessees by YI in January 2011, Mehta said, the Hindu reported.
The IT department further argued that when fresh shares were allotted to the assessees, the value of their shares amounted to Rs 100 each, but it actually was Rs 8,15,708.16 per share.
What is the National Herald case?
In 2012, BJP leader Subramanian Swamy filed a complaint before the trial court. Swamy alleged that Congress leaders were involved in cheating and breach of trust when Young Indian Pvt Ltd (YI) acquired Associated Journals Ltd, as assets worth crores of rupees had been transferred to YI.
Swamy further alleged that YI, which had then Congress president Sonia Gandhi and Rahul Gandhi on its board of directors, had “taken over” over the assets of the defunct print media outlet in a “malicious” manner in order to make profit and gain assets worth more than Rs 2,000 crore.
Besides the Gandhis, Congress treasurer Motilal Vora, general secretary Oscar Fernandes, journalist Suman Dubey, and technocrat Sam Pitroda have also been named in the case.
Elton Gomes is a staff writer at Qrius
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