HC stays I-T dept move for using black money law retrospectively

NEW DELHI: The Delhi HC stayed on Thursday the prosecution of AgustaWestland VVIP helicopter scam accused Gautam Khaitan by the income tax department under the new Black Money Act.
Restraining the department from taking any action against Khaitan, the court, in an interim order, said “grave prejudice would be caused to him” if the authorities are not stopped at this stage. Khaitan had moved court challenging a central government notification which gave retrospective effect — from July 2015 — to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act which was enacted in April 2016 and prosecuted him under the stringent provisions.
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 on the grounds that the Centre tweaked the rules to prosecute him under the new law for alleged tax evasion prior to the enactment of the act in 2016.
Khaitan is one of the accused in the Rs 3,600 crore scam. He has also challenged in the HC the legality of various provisions of the black money law. In his plea, Khaitan questioned the tax proceedings against him. In January this year the I-T department had granted sanction to lodge a criminal complaint against him under Section 51 of the black money law; the section provides for a jail term of between three and 10 years if found guilty of wilfully attempting to evade tax.
The HC had earlier asked the Centre how it had given retrospective effect (from July 2015) to the black money law which was enacted in April 2016 to deal with undisclosed foreign income and assets. 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.
Khaitan 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 grounds that such asset came to the notice of the assessing officer after the act came into force”.