In a major setback to Congress president Sonia Gandhi and son Rahul, Delhi High Court on Friday allowed the Income Tax (I-T) department to continue its investigation in the National Herald case. The tax authorities had started investigation on a complaint filed by BJP leader Subramanian Swamy in 2012 on allegations that Gandhis had misappropriated Associated Journals (AJL)'s assets, the parent company that owns the National Herald, while transferring their shares to the newly set up company Young India Ltd.
According to tax records, 83.3 per cent shares of Young India Ltd are held by Sonia and Rahul, 15.5 per cent by Congress veteran Motilal Vora and the remaining 1.2 per cent by party loyalist Oscar Fernandes.
The Young Indian Private Limited, a company floated by the Gandhis, had challenged Delhi's Patiala House Court order to the income tax authorities to investigate its money dealings in acquiring the rights to recover Rs 90.25 crore owed by National Herald's publishers, AJL, to the Congress by paying Rs 50 lakh. The company had challenged the income tax notice for re-assessment of its assessment year 2011-12 accounts in the light of the Patiala House court's directive.
The High Court dismissed the company's petition as withdrawn, directing it to raise all objections in it before the assessing officer, saying it can come back to the court if not satisfied with his decision. It upheld the IT department's right to investigate into the alleged activities, telling the company not to be arrogant in refusing to submit the documents sought. Senior advocate and Congress spokesman Abhishek Manu Singhvi, who appeared in the case, withdrew the petition sensing the mood of the Bench of Justices S Muralidhar an Chander Shekhar. "We are not inclined to entertain your writ petition. It is better you withdraw it and approach the income tax assessing officer," the Bench said.
Its stand was in tune with the higher courts always asking parties to exhaust the first avenues before approaching them. The Bench said the company has not moved the assessing officer raising its grievance and better it first approaches the IT department and submits its documents.
Singhvi said the company was given full liberty to object to reopening the assessment. "We will now await the assessing officer's decision in accordance with law as all jurisdictional questions raised in the writ petition were kept alive and allowed to be raised before the assessing officer.
In August, the Patiala House court had issued notices to Sonia, Rahul and five others on Swamy's plea for certain documents from the AJL and the Congress Party. His charge is that the interest free loan of Rs 90.25 crore was given by the Congress to AJL and then it was transferred to a new company floated by Sonia and others violating provisions of the Income Tax Act, 1961.
Later at the Congress party briefing, Singhvi decried the government agencies circulating an unsigned note to the media to circulate misinformation and distort the National Herald case. Explaining the case, he said a notice was issued to Young India to reopen assessment of six years despite no pending income tax proceedings. The thrust of the writ petition before the High Court was that the Income Tax Department has no jurisdiction to reopen proceedings and he withdrew the case when the High Court told him that he can raise all the points raised in the writ before the Income Tax Department.
"Now this is a specific order, is this what you have been told, and is this what you are reporting? He said the unsigned note circulated by government and being reported by media is that direction was issued by the Court to the Department to investigate the case. "We will apologise to you if the order shows this. Is it not contempt of court? Some of you are told to publish that the order says Sonia Gandhi and Rahul Gandhi have been asked to appear. This is all Government agencies are doing, feeding the press misinformation when our grievance is known to all. " Singhvi asked.
& Analysis
- A closely held company, Young Indian, was incorporated in November 2010 with a capital of Rs 50 lakh and it acquired almost all the shareholding of Natinal Herald publisher Associated Journals Limited and all its properties said to be worth Rs 5,000 crore.
- The thrust of the writ petition before the High Court was that the Income Tax Department has no jurisdiction to reopen proceedings. The court order makes it clear that income tax proceedings will continue in the case
National Herald Case Timeline
1938 Jawaharlal Nehru starts National Herald under the umbrella of Associated Journals Ltd. Paper shuts down temporarily in 1942 during the quit India movement.
March 2008 Paper closes down due to financial problems.
March 2011 Sonia and Rahul Gandhi starts a company Young Indian
November 2012 Subramanian Swamy who subsequently joins BJP files case against Sonia and Rahul Gandhi along with their companies in a Delhi court accusing them of cheating and misappropriation of funds in acquiring ownership of the paper.
June 2014 Delhi Court summons Sonia and Rahul.
August 2014 ED registers preliminary enquiry in alleged misappropriation of funds in Associated Journals Limited through Young India.
August 2015 ED decides to close the case citing technical reasons.
December 2015 HC rejects Gandhis’ plea for quashing summons issued by trial court and also makes scathing observations on their questionable conduct regarding how they took control of the publication.
December 2015 Sonia and Rahul Gandhi along with few other Congress leaders appear before a metropolitan magistrate in Patiala House. Gets bail.
February 2016 Sonia, Rahul Gandhi and three others appeals in the Supreme Court challenging the Delhi High Court order refusing to quash the summons issued to them.
February 2016 SC exempts Sonia Gandhi and Rahul Gandhi from personal appearance during Patiala House court hearing.
December 2016 A trial court dismisses Subramanian Swamy’s request for financial documents claiming it to be nothing but a fishing enquiry which is not permitted under the law.
May 2017 Delhi HC clears the way for the Income Tax department to investigate Sonia and Rahul Gandhi.
—Compiled by DNA-Research N Archives
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