File photo: Congress President Rahul Gandhi and UPA chairperson Sonia Gandhi at an election rally. Photograph:( DNA )
UPA chairperson Sonia Gandhi and Congress chief Rahul Gandhi were granted bail in the case by the trial court on December 19, 2015.
The Supreme Court Tuesday fixed December 4 for final arguments in the petitions filed by Congress chief Rahul Gandhi and his mother Sonia Gandhi challenging the Delhi High Court's order related to a case of re-opening of their 2011-12 tax assessments.
The high court had refused to give them relief in the case, giving the opportunity to the Income Tax (I-T) Department to scrutinise their records.
The Supreme Court did not issue any notice on their petitions as the I-T department was represented by its counsel.
The department had filed a caveat in the apex court that it should be heard if any appeal is filed against the high court order.
A caveat is a legal procedure by which an application is filed by any party to the litigation to pre-empt an ex-parte order.
After a brief hearing, a bench comprising justices A K Sikri and S A Abdul Nazeer said, "Since the respondent (I-T department) has put in an appearance, we are not issuing a formal notice. However, we are fixing the matter for final arguments on December 4."
The appeals were filed by Rahul, Sonia and veteran Congress leader Oscar Fernandes. They have challenged the September 10 verdict of the high court.
The income tax matter against the Congress leaders is linked to the National Herald case in which they are also facing a criminal case.
Senior advocates P Chidambaram, Kapil Sibal and Arvind Datar appeared for the Congress leaders.
When Chidambaram tried to make a submission by narrating the backgrounds leading to the income tax case, the bench said, "We are not concerned with the background but the question here is about the notice (issued by the I-T department) of the reassessment of income tax. The issue is whether the notice is valid or not".
At the outset, the bench was of the view that the Gandhis can raise the issue before the assessing officer.
However, Chidambaram said the question is about the income tax notice to them and it has to be determined whether it is correct or not.
Solicitor General Tushar Mehta, appearing for the I-T department, said the premise raised by the Gandhis and Fernandes is wrong. But, the bench said the issues raised in the petitions requires consideration. During the hearing, the bench also said there are 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.
"The second option is we will hear the matter after two weeks and you all can assist us. The high court judgment is lengthy", the bench said.
On September 10, the Gandhis had failed to get any relief from the Delhi High Court which dismissed their challenge on reopening 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 assessees' rights to urge them are reserved in the income tax proceedings," the high court had said, while "dismissing" the three separate petitions filed by Gandhis and Fernandes, which were decided through a common order.
The income tax probe against the Congress leaders has arisen 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 which the trio is 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 Young Indian (YI), a not-for-profit organisation, had obtained the right to recover Rs 90.25 crore that the Associated Journals Ltd (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.
In this process, YI had also acquired AJL's debt of Rs 90 crore.
The tax 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.
The department's move followed its probe on a complaint alleging that the Gandhis had misappropriated AJL's assets while transferring their shares to the newly formed YI.
The high court had noted in its order that the premise of the reassessment notices was that the non-disclosure of the taxing event-- allotment of shares of YI-- deprived the assessing officer of the opportunity to look into the records.
It had said that in Rahul's case, the non-disclosure of share acquisition constituted tangible material justifying reassessment.
In case of Sonia and Oscar, the bench said returns filed by them were processed under Section 143(1) of the Income Tax Act, which pertains to 'Notice or intimation', and are not treated as "assessments".