The Supreme Court on Tuesday (3rd October) heard a bunch of petitions filed by Congress leaders and AAP challenging the decision of the Income Tax department to transfer their tax assessment from faceless to Central Circle.
The petitions have been filed by Congress leaders Sonia Gandhi, Rahul Gandhi and Priyanka Gandhi Vadra, and trusts linked to them, challenging the transfer of their Income Tax assessments to the Central Circle. The Aam Aadmi Party has also filed a similar plea with the Supreme Court.
The Gandhis had moved SC following the dismissal of their petitions on 26th May by the Delhi High Court. The SC will now hear the case on 9th October.
In a setback to the Gandhis and AAP, the apex court said that “centralised assessment may be required for income tax purposes where there are cross-transactions between individuals”.
Faceless tax assessments are done through electronic mode with the aim to eliminate the human interface between the taxpayer and the income tax department.
The Central Circle, on the other hand, is authorised to check evasion and takes over evidence gathered by the IT department’s investigation wing during searches. This is what the Congress and AAP are essentially contesting in the court.
Senior Advocate Arvind P Datar told the SC that several proceedings were launched after the faceless assessment was introduced in 2019. But then following the search in a case involving alleged arms dealer Sanjay Bhandari, there was an arrest and matters of his clients were tagged together “because of Robert Vadra, who is the son-in-law of one of the parties”.
The two-judge bench said, “Insofar as individuals are concerned…if there are cross-transactions, centralised assessment may be required.”
Advocate Datar was appearing for the members of the Gandhi family, Sanjay Gandhi Memorial Trust, Rajiv Gandhi Charitable Trust and Rajiv Gandhi Foundation, Jawahar Bhawan Trust and the Young Indian.
The SC also questioned AAP over a five-month delay in filing a plea against the IT department’s decision to transfer its case for assessment to the Central Circle.
Justice Khanna, presiding over the two-judge bench, told senior advocate Abhishek Manu Singhvi, “In a case like this, a delay of even one month is fatal. You have to explain why there was so much delay in filing the petition. We will be dealing with each case separately.”
The court sought original files on the matter asking the Additional Solicitor General Balbir Singh whether review and verification committee are chosen by computer in case of faceless assessment officers. Singh was representing the Income Tax department.
“I don’t want explanations, but a factual answer. Also, would like to know the stage of proceedings. You please get the original files of the matter,” Justice Khanna told Singh.
Delhi High Court had dismissed the petitions
In January 2021, the Principal Commissioner (Income Tax) issued an order to transfer the cases of Gandhis for assessment year 2018-19 to the Central Circle. The Gandhis moved court challenging the same.
On 26th May, the Delhi High Court dismissed the petitions filed by Gandhis against the Income Tax department’s decision to transfer their faceless tax assessments to Central Circle.
The HC said that it is of the view that the transfer of assessment to the Central Circle was as per law by way of the impugned orders passed under Section 127 of the (IT) Act.
In a big setback, the court also said that the Central Circle’s jurisdiction is not confined only to search cases, and no assessee has any fundamental or vested legal right to be assessed by a faceless assessing officer.
The HC had also rejected separate petitions filed by Sanjay Gandhi Memorial Trust, Jawahar Bhawan Trust, Rajiv Gandhi Foundation, Rajiv Gandhi Charitable Trust, Young Indian and the Aam Aadmi Party, raising similar legal issues over transfer of their assessments to the Central Circle.
Why is the Congress opposing the Central Circle tax assessment?
The SC’s response about centralised assessment was in reference to the close links between proclaimed offender and fugitive Sanjay Bhandari and Robert Vadra, Rahul Gandhi’s brother-in-law, as submitted by Senior Advocate Datar representing the Gandhis.
It is notable in this context that the same Central Circle 27 which has been handling the cases linked to Robert Vadra, will now be reassessing the tax filings of Sonia, Rahul, Priyanka and their many “not-for-profit” foundations.
Moreover, as a potential investigation stares at the Vadra Congress, the Congress has tried to distance itself from Robert Vadra. It has reportedly maintained in the past that Robert Vadra is a private individual and the party leadership has nothing to do with his business activities.
On 4 January 2022, Income Tax officials interrogated Robert Vadra linked to the investigation into alleged tax evasion. Vadra had allegedly purchased properties in the United Kingdom through shady arms dealer Sanjay Bhandari.
Vadra is also accused of receiving kickbacks from a petroleum deal conducted in 2009 into the properties. Bhandari and Vadra’s close links and their alleged manipulation of defence deals under the UPA regime have also been under scanner.
Sanjay Bhandari’s name cropped up when Deepak Agarwal, a hawala operator, was being scrutinized in an entirely separate case involving funding to the Aam Aadmi Party. It was discovered that Rs. 69 crore to seven of Bhandari’s companies came from the same hawala operator.
It was only then that his phones were tapped and the raids conducted. The raids, as people are well aware, opened the pandora’s box thus exposing Robert Vadra’s deep involvement with Bhandari.
Congress corruption comes full circle
In October 2022, the Rajiv Gandhi Foundation (RGF), a non-governmental organisation linked with the Gandhi family, had its Foreign Contribution Regulation Act (FCRA) licence revoked by the Centre for alleged violation of the foreign funding law. Licence of Rajiv Gandhi Charitable Trust (RGCT) has also been cancelled. Both the organisations cannot receive foreign funding anymore.
In July 2020, the MHA formed an inter-ministerial committee led by an Enforcement Directorate (ED) officer to investigate three foundations linked to the Gandhi family, Rajiv Gandhi Foundation (RGF), Rajiv Gandhi Charitable Trust (RGCT), and Indira Gandhi Memorial Trust, for alleged violations of the Money Laundering Act, Income Tax Act, and FCRA.
In August last year, the Enforcement Directorate (ED) had temporarily sealed the office of Young Indian located inside Congress-owned National Herald building in Delhi.
The action by the central investigation agency was taken as a part of a money laundering investigation. As per reports, ED officials said they sealed the office as there was no one present when they reached to raid Young India’s office.
