HC restrains I-T dept from taking action against Khaitan in black money case

Accused challenged I-T department’s January 22 order granting sanction to lodge a criminal complaint against him

The Delhi High Court on Thursday restrained the Income Tax Department from taking any action against VVIP chopper deal scam accused Gautam Khaitan against whom a black money case has been lodged.

A Bench of Justices Siddharth Mridul and Anu Malhotra said Khaitan, an advocate by profession, has made out a “good prima facie” case for grant of interim relief and grave prejudice would be caused to him if the authorities are not restrained at this stage from proceeding further.

“The respondents [I-T department and Finance Ministry] are, therefore, restrained from taking and/ or continuing any action against the petitioner [Khaitan], pursuant to the impugned order dated January 22, passed by the respondent No 2 [I-T department], till the next date of hearing. Renotify on July 4,” the Bench said.

The court’s interim order came on a plea by Mr. Khaitan, represented by senior advocates P.V. Kapur and Siddharth Luthra, challenging a Central government notification which gave retrospective effect, from July 2015, to the black money law which was enacted in April 2016.

Mr. Khaitan is one of the accused in the ₹3,600 crore AgustaWestland VVIP chopper scam. He has challenged the legality of various provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

In the petition, filed through advocate Pramod Kumar Dubey, Mr. Khaitan has also challenged the I-T department’s January 22 order granting sanction to lodge a criminal complaint against him under Section 51 of the Act which provides for jail term between 3 to 10 years if found guilty of wilfully attempting to evade tax.

The Bench said, ”... at this stage we are prima facie of the considered view that, the official respondents could not have exercised powers granted to it under the provisions of Sections 85 and 86 of the said Act, prior to the enactment itself coming into force, in terms of the provisions of sub-Section (3) of Section 1 of the said Act.”

The High Court had earlier asked the Centre as to how it gave retrospective effect - from July 2015 - to the black money law which was enacted in April 2016 to deal with undisclosed foreign income and assets.

Mr. Khaitan has contended in the plea that action was being taken against him under the Act for assets which ceased to exist before the law came into force.

Earlier, his counsel had argued that before issuance of show cause notice and grant of sanction, tax assessment has to be carried out for the years in question which has not been done in the instant case as the assessment year was 2019-20.

However, the tax department had opposed the contention saying that when there was an undisclosed foreign asset, there was no need to wait for completion of the assessment.

Mr. Khaitan, in his plea, has sought a declaration that under the black money law, the assessing officer was “not entitled to charge tax on a foreign undisclosed asset, which ceased to exist prior to the Act coming into force, only on the ground that such asset came to the notice of the assessing officer after the Act came into force”.

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Printable version | Jun 3, 2020 6:40:37 PM |

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