The Supreme Court on Tuesday deferred hearing on the plea challenging the reopening of the tax assessment of Rahul Gandhi, Sonia Gandhi and Oscar Fernandes for the year 2011-2012, saying that let Income Tax Appellate Tribunal decide on challenge to withdrawal of registration to Young Indian under Section 12 AA of Income Tax Act.
The bench of Justice D.Y. Chandrachud and Justice Hemant Gupta, while adjourning the hearing, directed the listing of the matter in August.
Section 12AA of the Income Tax Act provides for the registration of a trust or an institution and the sub-section (3) of the Section 12AA provides for the cancellation of registration of such bodies if their activities are not carried out in accordance with their stated object.
Appearing for one of the petitioners - Sonia, Rahul and Oscar Fernandes -- senior counsel P. Chidrambram said a trust is engaged in several philanthropic activities, including grant of scholarships to the students. He wondered if all those who got scholarship would be paying tax if the registration of the trust is withdrawn retrospectively.
Addressing the court on the plea challenging the Income ATax Department re-opening the assessment of Sonia, Rahul and Oscar Fernandes for the year 2011-12, Chidambram told the court that the notice for the same was emailed at 11.28p.m, only 32 minutes before the expiry of the outer limit of four-year re-opening of an assessment.
"If it is done validly, then it does not matter if it (notice) was sent at 11.40 p.m", said Justice Chandrachud, making it clear the timing of notice could not be called into question if it is sent within the limit of four years.
Chidambran said the allotment of shares of Associated Journals Limited, which runs the National Heralds newspaper, to Young Indian does not give rise to taxable income.
The AJL shares were allotted to Sonia Gandhi, Rahul Gandhi and Oscar Fernandes at the value of Rs 10 per share whereas Income Tax Department has contended that it was much higher and stood at Rs 100 per share when they were transferred to three Congress leaders.
The top court by its December 4, 2018, order while allowing the income tax authorities to go ahead with the reassessment of the three had said that they would hold their hands in giving effect to their order.
During January 8 hearing of the matter, the top court was informed that the assessing officer has also passed the order, which has been served upon the Gandhis and Fernandes along with the tax demand.
However, it has not been given effect in view of the December 4 interim order restraining any coercive action.
The three Congress leaders have moved the top court challenging September 10 Delhi High Court order by which it had dismissed their plea challenging the Income Tax notice seeking tax reassessment for the financial year 2011-2012.
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