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SC to hear Sonia, Rahul’s plea in tax case

The Supreme Court on Tuesday agreed to hear appeals by Sonia Gandhi and Rahul Gandhi along with party leader Oscar Fernandes challenging a Delhi High Court order directing re-opening of their income tax assessment for 2011-12 related to the National Herald case.

A bench of Justice A.K. Sikri and Justice Abdul Nazeer fixed December 4 as the final date of hearing.

Justice Sikri said there were two options: issue notice and allow the assessing officer to proceed with the re-opening or fix the matter after some weeks and decide it.

The court did not formally issue notice to the income tax authorities as Solicitor General Tushar Mehta said he was present in court.

Senior counsel P. Chidambaram, appearing for Sonia Gandhi, said during the pendency of matter, the re-assessment ordered by the Delhi High Court would not be given effect to.

To which, Justice Sikri said: “Now it will not.”

The Solicitor General said: “There is a difficulty, it may be time barred.”

Justice Sikri said in that case, the apex court stays the High Court judgement and that would take care of issue of the time bar. However, no stay order was passed by the court.

Though there is no formal stay of re-assessment by the tax authorities, Solicitor General Mehta said the assessing officer may or may not proceed in terms of the High Court order.

Chidambaram told the court that Young India acquired the shares of Associated Journals Limited (AJL) which was running into losses so there was no question of Sonia Gandhi, Rahul Gandhi and others having shares in Young India (YI) making any profit.

AJL runs newspaper National Herald that was founded by first Prime Minister Jawaharlal Nehru during freedom struggle.

He said both AJL and YI are registered under Section 25 of the Companies Act and so what gets transferred is only the assets of AJL to YI and the same can’t be monetised. Thus there was question of anyone making monitory gains, he said.

Questioning the issuance of re-assessment notice under Section 148 of the Income Tax Act, Chidambaram said in the instant case, Section 148 is not attracted as it does not apply at all.

Under Section 148 of the Income Tax Act, tax authorities can issue notice for the assessment of income that might have escaped assessment at the relevant time.

The Companies Act says that the companies registered under Section 25 have to ensure that their profits and other incomes are utilized for the sole purpose of promoting its objects — commerce, art, science, religion, charity or any other useful object.

It further says that it has to ensure that its profits are not being distributed for the payment of the dividend to its members and it should apply its profits or other incomes only in promoting its objects.

The law says that companies registered under Section 25 of the Companies Act are non-profit organisations.

The three Congress leaders have moved the top court challenging the September 10 Delhi High Court order by which it had dismissed their plea challenging the Income Tax notice seeking tax reassessment for the financial year 2011-2012.

Rahul, Sonia Gandhi and Oscar Fernandes had moved the High Court against Income Tax notice for tax reassessment as they had allegedly not disclosed their income earned through Young Indian Pvt Ltd (YI) for the year 2011-2012.

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