New Delhi: The Delhi High Court has declined to stay the income tax proceedings against Young Indian Pvt Ltd in the National Herald case, which involves, Congress leaders Sonia Gandhi and Rahul Gandhi, and asked them to approach the tax authorities. A 24-page notice issued by the Income Tax department to Young Indian termed Sonia and Rahul Gandhi as “the real beneficiary of the transaction” carried out to acquire properties worth Rs 2,000 crore. Apart from its indictment of Sonia and Rahul, the notice reveals that I-T department has ascribed a role of complicity on Priyanka Gandhi Vadra as well. Dated January 10, 2017, the notice claims that Priyanka played a role in ascertaining that YI, which has Sonia and Rahul as its majority shareholders, comes in control of 100 per cent shares of this company.
Here’s all you need to know about the case:
What is the I-T asking for?
It wants Congress, AJL and YI to give documents for verifying their claims relating to the entire series of transactions so that it can recompute taxes
What is YI challenging?
Young Indian is questioning the I-T department’s notice on making a reassessment of their income for FY 2010-11, when it took over AJL
What, according to the I-T, has escaped assessment in relation to YI’s income?
- Income accruable from full takeover of a company (AJL) having properties worth at least Rs 1,600 crore
- Rs 1 crore, which was shown as loan from another company by YI while paying Rs 50 lakh to AICC, appears to be laundering of own money of YI and hence taxable
- Rs 50 lakh invested to acquire assets cannot be said to be for charitable purpose and hence, this amount also needs to be disallowed as expenditure and be added as income for reassessment
What is the punishment for wilful failure to report correct income and evading taxes?
A jail term ranging between six months and seven years, with monetary fine
Modus Operandi
Eight steps, the I-T has claimed, constituted “the scheme to take over immovable properties of AJL without paying any taxes on benefits accrued to YI and its majority shareholders”:
- Registered office of AJL was shifted from Lucknow to Delhi and a new company YI was incorporated by some important persons such as Sonia, Rahul, Fenandes and Vora, who were connected with AICC as well as AJL.
- YI had no assets of its own except those transferred by AICC as loan of Rs 90.21 crore, which was camouflaged as sale of loan for a consideration of Rs 50 lakh. The amount was fixed at Rs 90.21 crore in order to ensure that the amount is just sufficient to allot 99 per cent of share of AJL to YI. Rs 1 crore was suspiciously obtained as a loan from a dubious company.
- YI did not carry out any activity consonant with its stated objective but took over real estate business of AJL to its benefit.
- Alleged sale of loan of Rs 90.21 crore by AICC to YI have not been proved through documents because assignment of loan was not acknowledged and confirmed by AJL.
- Takeover of AJL was complete within 3 months from the date of incorporation of YI, which subsequently shifted to Herald House in Delhi, one of the prime properties of AJL without paying any compensation for use of space.
- YI obtained registration under Section 12A of the Act, which entitled it to exemption on its income on May 9, 2011 so that value of all benefits from real estate business of AJL get tax exemption.
- In order to hold 100 per cent shares of AJL by YI, Priyanka Gandhi Vadhera also purchased additional shares through Rattan Deep Trust and Janhit Nidhi Trust.
- YI concealed purchase of loan of Rs 90 crore for Rs 50 lakh in its Profit and Loss Account and the same was camouflaged as expenditure on object of YI. It was not disclosed on the ground of being insignificant investment whereas the reason was to hide real transaction.
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