HC questions Centre on giving retrospective effect to black money law

The Delhi High Court Tuesday 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.

The petition has been filed by Gautam Khaitan, a lawyer who has contended that action was being taken against him under the Act for assets which ceased to exist before the law came into force.

"How does it have retrospective effect," a bench of Justices Siddharth Mridul and Sangita Dhingra Sehgal asked the Finance Ministry and the Income Tax Department (ITD) on the plea challenging the legality of various provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Khaitan, represented by senior advocates P V Kapur and Siddharth Luthra, has also challenged a central government notification which gave retrospective effect, from July 2015, to the black money law which was enacted in April 2016. Khaitan is one of the accused in the Rs 3,600 crore AgustaWestland VVIP chopper scam.

In the petition, filed through advocate Pramod Kumar Dubey, 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.

His lawyers urged the bench to stay the sanction order, but the court declined to grant the relief saying it was not going to interfere in the matter at this stage and listed the matter for further hearing on April 10.

During the hearing, Kapur and Luthra contended that before issue 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 opposed the contention saying that when there was an undisclosed foreign asset, there was no need to wait for completion of the assessment.

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".