National Herald case: YI asked to deposit Rs 10 cr in IT case

Monday, 19 March 2018

The high court said subject to deposit of the amount, the tax authorities shall not enforce the demand of Rs 249.15 crore made on the company for the assessment year 2011-12.

NEW DELHI: The Delhi High Court today directed Young Indian Pvt Ltd, in which Congress president Rahul Gandhi and his mother Sonia Gandhi are major stakeholders, to deposit Rs 10 crore in the Rs 249.15 crore income tax proceedings against it.

A bench of Justices S Ravindra Bhat and A K Chawla directed the company -- earlier summoned along with Sonia Gandhi and Rahul Gandhi as an accused by a trial court in the National Herald misappropriation of assets case -- to deposit half the amount with the Income Tax department before March 31 and the remaining by April 15.

The high court said subject to deposit of the amount, the tax authorities shall not enforce the demand of Rs 249.15 crore made on the company for the assessment year 2011-12.

The high court also sought the I-T department's response on Young Indian's (YI) plea challenging the demand and the proceedings emanating from it and listed the matter for further hearing on April 24.

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.

Senior advocate Arvind Datar, appearing for YI, told the court that it will have extreme difficulty in raising Rs 10 crore and sought that the amount be fixed at Rs 7.5 crore.

He said the amount was being collected from contributions by individuals and it would therefore be tough to get more money.

He also urged the bench to allow the company to deposit the amount in court, saying it was extremely difficult to get a refund from the I-T department.

Advocate Ashish Jain, representing the I-T department, opposed the oral pleas made on YI's behalf and said the company had to actually deposit Rs 49 crore, 20 per cent of the demand, for its appeal to be heard.

The bench refused to grant both the pleas made orally on behalf of YI and directed it to deposit Rs 10 crore with the I-T department.

The amount was required to be deposited if YI's appeal against the demand was to be heard by the I-T authorities.

The high court also directed the tax authorities to expeditiously hear YI's appeal against the assessment order.

YI has approached the high court seeking a direction to stay the recovery of the demand of tax and interest of Rs 249.15 crore, raised following a notice of December 27, 2017 issued under section 156 of the I-T Act for the assessment year 2011-12.

It has also challenged the order of the I-T authorities rejecting the firm's application and sought a stay on the direction to pay Rs 49.83 crore, that is 20 per cent of the total disputed outstanding demand.

A 2017 office memorandum of the Central Board of Direct Taxes (CBDT) prescribes a deposit of 20 per cent of the disputed Income Tax demand by taxpayers for obtaining a stay pending disposal of the matter by the Commissioner of I-T (Appeals).

Earlier, the aggrieved taxpayer had to deposit only 15 per cent of the disputed I-T demand before approaching the CIT (Appeals).

BJP MP Subramanian Swamy, in a private criminal complaint filed before a trial court, had accused the Gandhis 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.

YI, in its plea, has claimed that it was a charitable company and does not have any income and the Income Tax authorities have wrongly raised a demand of Rs 249 crore for the assessment year of 2011-12.

It has contended that the tax demand was "patently untenable" and the I-T officer had over-assessed the properties of the firm.

On June 26, 2014, the trial court had summoned the Gandhis and others as accused persons as well as Young Indian. The Gandhis and the other accused -- Motilal Vora, Oscar Fernandes, Suman Dubey and Sam Pitroda -- had denied the allegations levelled against them.

On December 7, 2015, the high court rejected their pleas for quashing the summons issued against them by the trial court in the case.

On December 19, 2015, the trial court had granted bail to Sonia Gandhi, Rahul Gandhi, Vora, Fernandes and Dubey, who had appeared before it pursuant to summons. Pitroda was granted bail on February 20, 2016 when he had appeared in the court.

The Gandhis, AICC treasurer Vora, AICC general secretary Fernandes, Dubey and Pitroda were summoned for the alleged offences of dishonest misappropriation of property, criminal breach of trust and cheating read with criminal conspiracy of the IPC.

The I-T department's move to issue the notices followed its probe on Swamy's complaint alleging that the Gandhis had misappropriated AJL's assets while transferring their shares to the newly formed Young Indian.

According to I-T records, 83.3 per cent of Young Indian was held by Sonia Gandhi and Rahul Gandhi, 15.5 per cent by Vohra and the remaining 1.2 per cent by Fernandes.

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