Sonia Gandhi gets I-T notice, calls it BJP witch-hunt

NEW DELHI: BJP-Congress hostilities seem set to intensify with the income tax department serving notices on Congress and two companies involved in transactions surrounding the now defunct National Herald newspaper, asking them to explain several aspects, including a loan of over Rs 90 crore from the party.

Party president Sonia Gandhi reacted sharply to the development, calling it "political witch-hunt" and saying that it was going to boomerang on the government. "Income tax notice in National Herald case is political vindictiveness. Political witch-hunt will only help us come back and fight harder," Sonia Gandhi told reporters on Wednesday.

However, sources in the government justified the action of IT department saying that Sonia's aggression was a ploy to cover up the illegality of Congress handing over funds meant for political activities, and therefore exempted from tax, to a private trust in which Sonia and son Rahul are majority shareholders. "This is violation of law and carries the risk of the party losing tax exemption if the transaction is not reversed," said a source.

As per the notice, the party lent Rs 90.25 crore as interest-free loan to The Associated Journal, publisher of now-defunct mouthpiece National Herald which owns assets worth Rs 1,500 crore. The Associated Journal was later taken over by Young Indian, a company incorporated in 2010 with Sonia and Rahul as majority shareholders. Of key importance would be details regarding a loan of Rs 90.25 crore that Congress gave to Associated Journals.

According to BJP leader Subramanian Swamy, who has moved the court against the alleged illegal transaction, the loan was subsequently waived off. Sources said I-T notices have also been sent to Sonia and Rahul and all directors of Young Indian.

National Herald building at Bahadur Shah Zafar Marg in New Delhi. (Getty Images photo)

According to sources, if the Congress and directors of both Young Indian and The Associated Journals cannot satisfactorily explain the loan, then the party could face trouble. Political parties can only utilise their funds for political activities, and it is against this understanding that they are allowed complete income tax exemption under section 13A of I-T Act.

According to indications, the minimum that Young Indian would have to do is to return the loan to the Congress.

It is to be seen how far the IT department could escalate this fight with serious political connotations. The Congress party's defence would be that Young Indian is a section 25 company meant to do non-profit activities, and the transactions were a mere paper exercise.

Sonia Gandhi's aggressive attack on the government over the issue is indicative of Congress' resolve to turn the entire issue to a political stand-off with the ruling NDA.

Congress president Sonia Gandhi with her son and party vice-president Rahul Gandhi. (TOI photo)

Party spokesman Abhishek Manu Singhvi told journalists, "This notice and earlier procedures are going to be given vigorous, robust, comprehensive and befitting reply." He alleged that the entire action smacks of vendetta politics and shows the fear and insecurity of the Modi government.

"This is cheap politics and history shows what happens when one resorts to vendetta," Singhvi said. He said the entire transaction has "none of the ingredients of an offence". "We have much to say to the appropriate forum," he said.

The I-T notice came days after a Delhi court issued summons to key functionaries of the two companies involved in the transactions, including Sonia and Rahul.

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