HC rejects Gandhis' plea against tax assessment transfer in case linked to arms dealer

The Delhi high court on Friday dismissed petitions by Congress leaders Sonia Gandhi, Rahul Gandhi and Priyanka Gandhi Vadra against the income tax department's decision to transfer their assessments to the Central Circle, which is mandated to check tax evasion, instead of an ordinary assessment in a matter related to fugitive arms dealer Sanjay Bhandari.

The court also rejected separate the 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 on transfer of their assessments to Central Circle.

The Gandhis had 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.

Central Circles, which are mandated to check tax evasion, take over the evidence gathered by IT's investigation wing during searches.

”chis Court 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. Accordingly, the present writ petitions along with pending applications are dismissed,” said a bench of Justices Manmohan and Dinesh Kumar Sharma in its common judgement delivered in all nine petitions.

”Undoubtedly, there can be no 'guilt by association' or 'guilt due to relationship', yet in the present batch of writ petitions, the assessments of the petitioners have been transferred only for the purposes of coordinated investigation and meaningful assessment,” added the bench.

The court clarified it has not examined the ”controversy between the parties on merits”.

The court, in its 44-page verdict, said Central Circle's jurisdiction is not confined to search cases and no assessee has any fundamental or vested legal right to be assessed by a faceless assessing officer.

”Central Circle jurisdiction is not confined to search cases only. Central Circile is also conferred with jurisdiction over non-search case where coordinated investigation is required. The circular dated 25th April, 2014, makes it clear that there is no restriction upon transferring of non-search cases to Central Circle,” the court said. 

Even under the Central Circle, the court added, the assessment proceedings are conducted through the e-proceeding functionality and no prejudice shall be caused to the assessees on account of their cases being transferred there.

The transfer of their cases to the Central Circle was opposed by the Gandhis 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 allegedly linked to Priyanka Gandhi's husband Robert Vadra over a London flat. Vadra has denied any business connections with the accused.

Senior lawyer Arvind Datar, appearing for the Gandhis, had submitted their cases could not have been transferred to Central Circle as there was no question of any search or seizure in their regard.

He had said when a case was transferred from an ordinary circle to the Central Circle, it was mandatory for the IT officer to mention the reason for the transfer.

The IT department, represented by Solicitor General Tushar Mehta, had opposed the petitions and said the transfer orders were issued for ”better coordination, effective investigation and meaningful assessment”, which reflects administrative convenience and exigency.