UPDATE 1-India's Gandhi says Modi's government in 'witch hunt' as Congress probed on taxes
(Updates to add new details)
By Aditya Kalra
NEW DELHI, July 9 (Reuters) - Sonia Gandhi, president of India's ousted Congress party, on Wednesday accused the new Narendra Modi-led government of a "political witch hunt" after tax authorities began probing her party as she and her son face allegations over misusing funds.
The Gandhis are the torchbearers of a dynasty that has led India for most of its post-independence era since 1947 but that was dealt its worst ever election defeat by Modi in the general election that ended in May.
Last month an Indian court summoned Sonia and her son Rahul to answer allegations that they used $15 million of party funds to pay off debts accrued by a now defunct newspaper publishing business several years ago. The Gandhis were directed to appear in court on Aug. 7.
A Congress official said the party had received "notices" from India's tax authority, a communication in which the recipient is asked to explain apparent irregularities in his tax declarations.
The official said the notices pertained to income tax and were related to the court case involving Gandhi and her son, although he did not give further details.
"This kind of political witch hunt will only help us and help us to come back faster," Gandhi was quoted as saying by NDTV news channel.
The May election saw the Congress party win just 44 of the 543 seats in the lower house of parliament, compared to 206 in 2009, raising the prospect that the Gandhi family, which has given the country a long line of leaders since independence, will gradually lose its political influence.
Before becoming prime minister, Modi said he would not resort to vindictive politics, especially in reference to Sonia Gandhi's son-in-law Robert Vadra who has been accused of corrupt land transactions, allegations he denies.
Media reports said Vadra had written to India's corporate affairs ministry about closing six of his companies. Officials at the ministry were not immediately available for comment, but the ministry website listed the firms as "under process of striking off".
"We are not into vindictive politics ... But the proceedings as per law are going on and will take its own course," BJP minister Prakash Javadekar told reporters when asked about Sonia Gandhi's comments.
The court case against Sonia and Rahul Gandhi involves Associated Journals Limited, the publisher of three newspapers, including the National Herald, an English daily founded and edited by Rahul's great-grandfather Nehru.
In 2008, the company shut down with an unpaid debt of about$15 million, according to allegations in a copy of the court order.
The case accuses the Gandhis of setting up a firm called the Young Indian Company to buy the debt using party funds. Associated Journals allegedly had real estate assets worth at least $335 million.
"The legal team will study the (income tax) notices and a befitting reply will be given," said the Congress party official, who did not wish to be named.
The defeated Congress party faces its first big test in the new government's maiden parliament session this week. Sonia Gandhi is pushing for Congress to be declared the leader of the opposition, as the second largest grouping in the house. (Editing by Frank Jack Daniel and Raissa Kasolowsky)