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SC to hear final arguments in I-T case against Rahul, Sonia on Dec 4

Last updated on: November 14, 2018 00:11 IST

The Supreme Court on Tuesday said it would hear final arguments on December 4 on the pleas filed by Congress chief Rahul Gandhi and his mother Sonia Gandhi challenging the Delhi high court's verdict in a case related to re-opening of their 2011-12 tax assessments.

The apex court, which observed that the matter required ‘consideration’, did not issue formal notice on the petitions filed by Rahul, Sonia and veteran Congress leader Oscar Fernandes as the Income Tax Department was represented by its counsel.

"Since the respondent (I-T department) has put in appearance, we are not issuing a formal notice. However, we are fixing the matter for final arguments on December 4," said a bench of Justices A K Sikri and S Abdul Nazeer.


Rahul, Sonia and Fernandes have challenged the September 10 judgment of the high court which had refused to give them relief in the case, giving opportunity to the I-T Department to scrutinise their records.

The matter is linked to the National Herald case in which the Congress leaders are also facing a criminal case.

During the hearing in the apex court, senior advocates P Chidambaram, Kapil Sibal and Arvind Datar appeared for the petitioners, while Solicitor General (SG) Tushar Mehta was representing the I-T department.

Chidambaram started his submissions by giving the background leading to the income tax case.

To this, the bench said: "We are not concerned with the background of these proceedings but the question here is about the notice (issued by the I-T department) of the re-assessment of income tax.

“The issue is whether the notice is valid or not. You can raise this before the assessing officer".

Chidambaram said the question was whether the reasons given in the notice were right or not.

He said that Associated Journals Ltd (AJL), publisher of the National Herald newspaper, had decided to issue nine lakh shares to Young Indian (YI), a not-for-profit organisation, and convert them into equity.

He said that some of the shares were acquired by the petitioners.

Chidambaram said YI also acquired AJL's debt of Rs 90.2 crore and this does not give rise to any income in the hands of the Gandhis and Fernandes.

“We (petitioners) were shareholders. It can never give rise to income in my hands. We do not get any income,” he said.

At this juncture, the bench told Mehta, "It (matter) requires consideration." Mehta told the bench that the premise raised by the petitioners was wrong. To this, the bench said, "We have two options. We will issue notice but we will say that assessing officer will proceed with the assessment. However, the final decision will not be given effect to and be placed before this court.

"Second option is that we will hear the matter after two weeks and you all can assist us. The high court judgment is lengthy."

Mehta said he wanted to place on record a summary note of the case prepared by him which was also placed before the high court during adjudication of the case there.

"I would request you to kindly take it (note) on record. Please go through it and have it (matter) next week and see if it requires re-consideration," Mehta told the bench which allowed his request.

When one of the junior counsels assisting the senior advocates for the Gandhis told the court that notice should be issued on the pleas, the Solicitor General said, ‘notice may not be necessary. I am here’.

After the court dictated the order, Mehta urged the bench not to record in the order sheet that formal notice was not being issued.

"It does not matter. Once we are saying that we will hear final arguments, it is not necessary," the bench said.

When Mehta raised the issue of limitation of time in re-assessment of income tax, the bench observed, "Then it will be better if we grant a stay. Then this time will be excluded."

To this, Mehta said that the matter be heard on December 4.

On September 10, the Gandhis and Fernandes had failed to get any relief from the high court which dismissed their challenge on re-opening of their tax assessments for 2011-12.

Denial of any relief by the high court had paved the way for the I-T department to scrutinise the Congress leaders records for the assessment year.

The income tax probe against the Congress leaders has arisen from the probe into a private criminal complaint filed by Bharatiya Janata Party leader Subramanian Swamy before a trial court here in connection with the National Herald case, in which the trio are out on bail.

Sonia and Rahul were granted bail in the case by the trial court on December 19, 2015.

A tax evasion petition (TEP) was also addressed to the finance minister by Swamy.

In the complaint before the trial court, Sonia, Rahul and others have been accused of conspiring to cheat and misappropriate funds by paying just Rs 50 lakh, through which YI had obtained the right to recover Rs 90.25 crore AJL owed to the Congress party.

It was alleged that YI, which was incorporated in November 2010 with a capital of Rs 50 lakh, had acquired almost all shareholdings of the AJL, which was running the National Herald newspaper.

The I-T department had said the shares Rahul has in YI would lead him to have an income of Rs 154 crore and not about Rs 68 lakh, as was assessed earlier.

It has already issued a demand notice for Rs 249.15 crore to YI for the assessment year 2011-12.

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