The Congress Party advanced Rs 90 Crores to company Associated Journals Ltd (AJL) being publisher of the newspaper “ National Herald” with the condition that the amounts to be urtilised by the letter to write –off its accumulated debts and recommence its news paper .A charitable non-profit company Yong Indian (YI) was incorporated and by a deed of assignment of Rs. 90 crores in favour of YI  was executed by the congress party  on 28-12-2010. There was transfer of    YI shares from its existing shareholders to  Sonia Gandhi and Oscar Fernades. In a fresh allotment assessees. Viz. Rahul Gandhi , Sonia Gandhi , Motilal Vohra , Oscar Fernades were allotted 1900, 1350 600mand 60 shares of YI on payment of Rs1.90 Lakhs Rs.1.35 lakhs Rs  Rs 60  and Rs 500 respectively .YI issued a cheque for Rs 50 lakhs subsequently on 26-2-2011 to the congress party as part consideration for the assignment of Rs 90 Crore debt to it and AJL allotted Rs.9.02 crores equity shares to YI  in 2011.  YI applied for section 12AA exemption on 29-03 -2011 . The exemption was granted by  on 9-5-2011 by a certificate , with effect from financial year 2010-11 .The assessment of Rahul Gandhi was completed u/s 143(3) of the Act. As late as on 31-03 2018 , Rahul Gandhi  received an e.mail  from the Assessing Officer , intimating that  notice  under section 148 . The assessee received it  on 2-4-2018  through speed  post. The Assessing Officer  furnished the reasons recorded. ‘ Reason to believe ‘ alleging that difference between the ‘Fair Market Value ‘ of the shares  of the Young Indian (YI)  and the cost of acquisition of those shares by Rahul Gandhi  was his income. In support of this position , the revenue relied upon  a letter written by its Department of Investigation dated 11-05-2015 and a letter dated 8-06-2015 and a Tax Evasion Petition (TEP)  addressed to the Finance Minister by  Subramanian Swamy .

The assessee challenged the reassessment proceedings on various grounds such as;(1)there was no tangible material  (ii)The assesses were share holders of a non profit and charitable company hence no obligation to disclose value of shares , (iii) Section 56(2)(vii) is in applicable  in the issue of fresh shares (iv) second proviso to  section 56 (2) (vii)( c ) (ii) enacts certain exceptions as the institution s registered under section 12AA , section 56 (2)(vii)  could not apply ,(v) order subsequently cancelling the registration granted to YI on 26-10-2017  with retrospective effect was of no avail, (vi) the reliance placed upon the TEP was vitiated because the revenue had acted on stale grounds , before issuing the reassessment notice the Assessing Officer should have made independent investigations as to whether there was  any obligation with respect to value of underlying assets of YI in the light of the fact that it was a charitable institution .

Dismissing the petition the Court held that the reassessment notice was issued by following due process of law and the revenue had tangible material to form the opinion that the income has escaped the assessment. Court held that entire premise of the reassessment notice is that the non disclosure of the taxing event. i.e. allotment of shares ( and the absence of any declaration as to value). Deprived the Assessing Officer of the opportunity to look in to records. In the case of Rahul Gandhi, no  doubt the assessment  originally  completed , was under section 143(3) Had he disclosed in his returns or any related documents  about the event ( Share acquisition)  the primary fact would have been on the record ; the Assessing Officer’s subsequent action in pursing that aspect or letting go of it, after inquiry might well have justified the change of second and impermissible opinion on the same subject. However , that is not the case . The TEP and investigation reports of subsequent vintage ( after completion of Gandhi’s assessment ) therefore, constituted tangible material which in terms of ruling in CIT  v. Kelvinator of India Ltd  (2010) 320 ITR 561 (SC)  justified reassessment.  In the case of other two assesses ( Mrs Soni Gandhi and Oscar Ferandes) the returns filed by them were processed  under section 143(1) . Such instances are not treated as ‘assessment’ Dy.CIT v. Zuari  Estate Development & Investment  CO Ltd ( 2016) 236 Taxman 1 (SC) is an authority on the subject.(W.P  8293/2018; W.P.(C) 8482/2018 and W.P.(C) 8483/2018 are accordingly dismissed.( W.P.(C) 8482/2018, C.M. APPL.32580-32582/2018, dt. 10.09.2018) ( AY.2011-12)

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