The Supreme Court on Tuesday said that centralised assessment may be required for income tax purposes where there are cross-transactions between individuals.
Justice Sanjeev Khanna, presiding over a two-judge bench, said this while hearing a clutch of petitions by Congress leaders Sonia Gandhi, Rahul Gandhi and Priyanka Gandhi Vadra, certain trusts linked with the Gandhis and Aam Aadmi Party (AAP), challenging the decision of the Income Tax authorities to transfer their tax assessment from faceless to central circle.
The Delhi High Court had dismissed the petitions on May 26 following which they approached the SC.
Appearing for the Gandhis, Senior Advocate Arvind P Datar told the bench, also comprising Justice S V N Bhatti that after the faceless was introduced in 2019, several proceedings were started. But then following the search in a case involving alleged arms dealer Sanjay Bhandari, there is an arrest and the matters of his clients were tagged together “because of Robert Vadra, who is the son-in-law of one of the parties”.
Fugitive arms dealer Bhandari is wanted by agencies in India on multiple counts.
Responding to Datar’s submission, Justice Khanna said that “insofar as individuals are concerned…if there are cross-transactions, centralised assessment may be required”.
The court also pointed out to Senior Advocate A M Singhvi, who appeared for AAP, that there was a five-month delay in filing the appeal and said that “in cases like this, delay can be fatal”.
Singhvi said this was because of overlapping subject matters. He added that the HC had said that it is not looking at the files but it relied on the IT Department’s counter which said about the Satyender Jain case.
He said that if at all the department had to transfer, it could not have been a simpliciter transfer order. The HC acknowledges that there is a two-step procedure but had said that it is not mandatory, he added.
Singhvi said it is not a case where the court would let the five-month delay affect the legal issues involved.
Justice Khanna said it is important to note that the matter is not being transferred out of Delhi. He said it is the IT Department’s prerogative to transfer. “I am not concerned with the politics but only the legal provisions,” he said, adding that the two-step procedure is only an administrative order.
Fixing the matter for hearing next on October 9, the bench said it would also require clarity whether it is the computer that chooses the officers, verification committee etc. in the case of faceless assessment.
Justice Khanna also asked about the stage of proceedings and said that original files be produced.