'Don't Pass Any Assessment Orders Against AAP, Gandhis Now' : Supreme Court To IT Dept While Hearing Plea Challenging Transfer To Central Circle

A bench of Justices Sanjiv Khanna and SVN Bhatti was hearing a clutch of special leave petitions challenging an order passed by the Delhi High Court in May this year upholding the transfer orders.

Earlier this month, Senior Advocate Abhishek Manu Singhvi, appearing for the Delhi's ruling Aam Aadmi Party, criticised the high court's observation that even after the concept of e-assessment and faceless assessment were introduced in 2019 and 2020 respectively, the jurisdictional assessing officer would continue to exercise concurrent jurisdiction with the faceless assessing officer. "This had led to overlapping subject-matter and is contrary to a Central Board of Direct Taxes circular that has clearly demarcated the matters that can be dealt with each. There is also a non-application of mind."

"The only special leave petition by a political party is AAP's and the only section that deals with political parties is Section 13A of the Income-tax Act," he added, before alleging that the relevant provision has not been mentioned a single time either in the transfer order, or in the high court's decision. Even though Satyendar Jain's case finds no mention in the records and the only place it is referred to is in the counter-affidavit, the senior counsel further argued, the High Court relies on it to arrive at an erroneous conclusion. Doubting the legality of the transfer order, Singhvi said that owing to a non-compliance with the two-step procedure mandated by law, the concurrent vested rights of the petitioner-party are taken away. 

"Normally, we interfere only when there is lack of subject-matter jurisdiction," Justice Khanna told Singhvi, stressing the distinction between territorial and subject-matter jurisdictions. The judge also questioned the political party over a five months' delay in filing the petition, saying, "In cases like this, delay can be fatal."

The Congress leaders and the charitable trusts were represented by Senior Advocate Arvind Datar, who told the bench that his clients' cases had been tagged with the assessment of Sanjay Bhandari, who allegedly has links with Robert Vadra, Priyanka Gandhi Vadra's husband, even after proceedings under Section 143 had already begun. "Suddenly, because in Sanjay Bhandari's case, there is a search, they tag all these as supplementary cases."

Insofar as the three individuals are concerned, centralised assessment may be required if there are cross-transactions, Justice Khanna told Datar. At the same time, he posed a question to Additional Solicitor-General Balbir Singh, representing the income tax authority, "Why the trusts?"

With an instruction to the law officer to clarify whether the assessment officers and the review and verification committees are selected manually, and the stage of the current proceedings, the Justice Khanna-led bench had adjourned the hearing. Additionally, the court had also asked the income tax authorities to furnish the original files relating to the transfer orders. 

The hearing today was adjourned after Advocate Zoheb Hossain made a request on behalf of the Department to seek time. During the brief courtroom exchange, Singhvi urged the court to direct the income tax authorities to defer the petitioners' assessment. "They are hotfooting the assessment; let them defer it for two weeks," the senior counsel exclaimed.

Hossain protested. "May I only point out, their challenge to the reassessment notice is being considered by a division bench of the Delhi High Court. They have been asked to cooperate. So my learned friend can't..."

"We are not passing any interim order but don't pass any assessment order," Justice Khanna interjected, cautioning the respondent-authorities from passing any assessment order in the meantime. Addressing Additional Solicitor General Balbir Singh, the judge said, "Otherwise what will happen is if an assessment order is passed, will this appeal not become infructuous? What you are saying...if we allow it, we'll the quash assessment order also. You say so, and I'll record it, Mr Singh."

Justice Khanna also asked, "When is limitation expiring?"

"March 2024," Hossain replied.

There's time, the judge noted, before adjourning the hearing until November 7.

Background

The current controversy is over a decision of the income tax authorities to transfer the tax assessments of Congress leaders Rahul Gandhi, Sonia Gandhi, and Priyanka Gandhi Wadra, Aam Aadmi Party, and several charitable trusts including Sanjay Gandhi Memorial Trust, Rajiv Gandhi Foundation, and Rajiv Gandhi Charitable Trust for the assessment year 2018-19 from their respective jurisdictions to the central circle.

The petitioners challenged these transfer orders issued under Section 127 of the Income Tax Act. While clarifying that the introduction of e-assessment and the faceless assessment scheme did not alter the power to transfer cases from one assessing officer under a principal commissioner to another assessing officer under a different principal commissioner, provided they did not have concurrent charges, the Delhi High Court dismissed their petitions. Without delving into the merits of the disputes between the parties, a bench led by Justice Manmohan upheld the transfer orders passed by the income tax authorities.

The petitioners have appealed against this order by way of special leave.

Case Details

Aam Aadmi Party v. Commissioner of Income Tax (Exemption) & Ors. | Special Leave Petition (Civil) No. 13038 of 2023