Thursday, April 18, 2024

Delhi HC upholds IT transferring tax assessments of Sonia Gandhi, Rahul, Priyanka, AAP from faceless to Central circle

The High Court of Delhi on Friday upheld the decision taken by the Income Tax authorities to transfer the tax assessments of Congress leaders Sonia Gandhi, Rahul Gandhi and Priyanka Gandhi Vadra, along with the Aam Aadmi Party, from faceless assessment to its central circle.

The Division Bench of Justice Manmohan and Justice Dinesh Kumar Sharma, while noting that their assessments have been transferred to the central circle in accordance with law, dismissed the writ petitions filed by the Gandhis and AAP.

The Bench had earlier reserved its verdict on March 15.

The High Court further vacated its interim order from March 2021, through which the order passed by the Income Tax department was stayed.

The Division Bench further upheld the decision to transfer assessments of Sanjay Gandhi Memorial Trust, Rajiv Gandhi Foundation, Rajiv Gandhi Charitable Trust, Young Indian and Jawahar Bhawan Trust.

All these non-profit organisations were associated with the Gandhi family.

The petitions by the Gandhis had challenged the decision of the Income Tax Principal Commissioner. The Commissioner had said that Gandhis’ assessments were transferred based on ‘search and seizure’ in arms dealer Sanjay Bhadari’s case.

The petitioners claimed that they had nothing to do with Bhadari. They argued that only the rarest of the rare cases go out of faceless assessment and even then, they were marked to the concerned assessment officer, not the Central circle.

Appearing for the Gandhis, Senior Advocate Arvind Datar contended that faceless assessment was the rule because it avoided human contact and the scope of unhealthy practice.

Terming the IT department’s decision as arbitrary and unreasonable, the Counsel for AAP submitted that the order was passed in complete violation of the statutory provisions. He said there was no investigation pending against the party and therefore, there was no reason to transfer its assessment.

The IT department stated that the transfer in all these cases were within the city and only when the transfer was from one city to another, that an IT officer had to give a hearing to the assessee.

The department further said that even though the faceless assessment had come into being, it could neither degrade, nor undo the powers of transfer available under Section 127 of the Income Tax Act.

The High Court ruled that no assessee has any fundamental or vested legal right to be assessed by a Faceless Assessing Officer.

The Bench said the jurisdiction of the central circle was not confined to search cases only and it was conferred with the jurisdiction over non-search cases also, which required coordinated investigation.

It further said that the power to transfer cases under Section 127 of the Income Tax Act was in no manner trammelled upon or negated by the introduction of faceless assessment.

As per the Bench, the concept of E-assessment was introduced in 2019, while the concept of Faceless Assessment was introduced in 2020, yet the Jurisdictional Assessing Officer continued to exercise concurrent jurisdiction with Faceless Assessing Officer.

It said the transfer of assessments of the petitioners was not in violation of the guidelines issued by the Central Board of Direct Taxes (CBDT) because the transfer was done for the purposes of coordinated investigation.

The High Court further rejected the petitioners’ contention that the power of transfer under Section 127, after the faceless assessment came into force, was a two-step process.

The Gandhis, as well as the five charitable trusts, were represented by Senior Advocate Datar, along with Advocates Kavita Jha, Vaibhav Kulkarni and Anant Mann appeared for Gandhis.

Advocates Amar Dave, Vivek Jain and Abhinav Jain appeared for AAP. 

The Income Tax department was represented by Solicitor General Tushar Mehta, Additional Solicitor General (ASG) Balbir Singh and Senior Standing Counsel Zoheb Hossain, along with Advocates Vipul Agarwal, Sanjeev Menon, Prasanjeet Mohapatra, Shyam Gopal, Vivek Gurnani and Monica Benjimin.


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