Rahul Gandhi challenged in the Delhi high court the reopening of his 2011-12 assessment by the tax department.... Read More

NEW DELHI: Congress president Rahul Gandhi on Wednesday challenged in the Delhi high court the reopening of his 2011-12 assessment by the tax department for not disclosing that he was a director in Young Indian company, an accused in the National Herald misappropriation of assets case .

A bench of Justices S Ravindra Bhat and AK Chawla listed the matter for further hearing on August 14, after Additional Solicitor General (ASG) Tushar Mehta opposed issuance of any interim order by the court.

The ASG, however, assured the bench that till the next date, no coercive step would be taken against Gandhi by the tax department.

The assurance came after the bench asked the ASG what coercive steps would the tax department take in the matter.

The court put the query to the ASG after the lawyers for Gandhi urged the bench to order that no coercive steps be taken in the matter till the next date.

Gandhi's lawyers were seeking an interim order from the court as the case related to the assessment is listed in the Income Tax Appellate Tribunal on Thursday.

They also sought orders prohibiting the media from reporting or publishing the court proceedings, but the bench rejected the oral plea.

According to the tax department, Gandhi's assessment for the years 2011-12 was decided to be reopened as he did not disclose that he was a director in the company - Young Indian Pvt Ltd (YI) - since 2010.

As per the tax department, the shares Gandhi has in YI would lead him to have an income of Rs 154 crore and not about Rs 68 lakh, as was assessed by it earlier.

The department has in the instant case applied section 147 of the Income Tax Act, which provides for bringing under the tax net any income which has escaped assessment in the original assessment.

Gandhi's lawyers said the query put to their client during the scrutiny of his assessment was whether he had any interest in any company or sister concern in which he was a director and he had replied in the negative as YI was a Section 25 company, a non-profit entity, and hence no director would have any interest in it.

To this, the bench remarked, "in which event, it is a nice conduit".

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

YI, which was incorporated in November 2010 with a capital of Rs 50 lakh, had acquired almost all the shareholding of Associated Journal Ltd (AJL), the owner of the National Herald newspaper.

The IT 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 Young Indian.

BJP MP Subramanian Swamy , in a private criminal complaint filed before a trial court, had accused Sonia Gandhi, Rahul and others of conspiring to cheat and misappropriate funds by paying just Rs 50 lakh, through which the YI had obtained the right to recover Rs 90.25 crore which the AJL owed to the Congress party.

All the accused, also including Motilal Vora, Oscar Fernandes, Suman Dubey and Sam Pitroda, have denied the allegations levelled against them.

