IT assessment case: SC tells Gandhis’ lawyer centralised assessment may be required

A centralised assessment may be required if there are cross transactions between individuals, the Supreme Court said on Tuesday while hearing the petitions 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, which is mandated to check tax evasion.

It also questioned the Aam Aadmi Party (AAP) over a five-month delay in filing a plea against the Income Tax department’s decision to transfer its case for assessment to the Central Circle.

“Insofar as individuals are concerned if there are cross-transactions, centralised assessment may be required,” the bench told senior advocate Arvind Datar, 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 bench also asked senior advocate Abhishek Singhvi, appearing for the Aam Aadmi Party, to explain the delay of five months in filing the petition challenging the IT department’s decision.

“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,” Justice Khanna told Singhvi.

It asked Additional Solicitor General Balbir Singh, representing the Income Tax department, whether in case of faceless assessment officers, review and verification committee are chosen by computer.

“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.

The top court was hearing a batch of petitions challenging the May 26 common order of the Delhi High Court by which it had dismissed the petitions of the Gandhis against the Income Tax department’s decision to transfer their IT assessments to the Central Circle, which is authorised to check tax evasion, instead of an ordinary assessment.

The high court had also rejected separate petitions of 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.

The Gandhis have challenged the January 2021 order issued by the Principal Commissioner (Income Tax) to transfer their cases for assessment year 2018-19 to the Central Circle.

The Central Circle, which is authorised to check tax evasion, takes over the evidence gathered by IT department’s investigation wing during searches.

On May 26, the high court had said it is of the view that the assessments of the petitioners have been transferred to the Central Circle in accordance with law by way of the impugned orders passed under Section 127 of the (IT) Act.

The court clarified it has not examined the “controversy between the parties on merits” and said 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 Gandhis had opposed the transfer of their cases to the Central Circle on several grounds including that they have nothing to do with the Sanjay Bhandari group’s cases.

Bhandari, wanted in India on money laundering charges, has been accused of having business links with Priyanka Gandhi Vadra’s husband Robert Vadra, who has denied any business connections with the fugitive arms dealer.

The Gandhis have contended when a case is transferred from an ordinary circle to the Central Circle, it is mandatory for the IT officer to mention the reason for the transfer.

The IT department had opposed the petitions filed by the Gandhis and AAP in the high court and said the transfer orders were issued for “better coordination, effective investigation and meaningful assessment” which reflects administrative convenience and exigency.

During the hearing on Tuesday, the bench told Singhvi that in the AAP’s case the order was passed on February 22, 2021 but the writ petition against it was filed in the high court after five months in July 2021.

Singhvi said it was a “slight delay” and in a case like this, the court would not let a delay of five months affect issues related to questions of law.

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The senior lawyer said the IT department could not have passed a simpliciter order for transfer of assessment to the Central Circle as there was a procedure for it.

“The high court acknowledges that there exists a procedure but says it is not mandatory,” he added.

Justice Khanna told Singhvi the transfer of the case to the Central Circle is the prerogative of the department and these are administrative orders. The court, he said, is more concerned with the five-month delay in filing the petition challenging the order.

The bench posted the matter for further hearing next week and asked Additional Solicitor General Balbir Singh to explain why the assessment of the trusts were also transferred to the Central Circle.

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