The Writ Petitions filed by former Union Minister P Chidambaram’s wife Nalini Chidambaram, Son Karti P. Chidambaram and daughter-in-law Srinidhi Karti Chidambaram was dismissed by the Madras High Court.
The first Writ of Prohibition sought to prohibit the Principal Chief Commission of Income Tax, Chennai, from sanctioning prosecution against them under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act of 2015. The second writ petition i.e. Writ of Mandamus, sought to direct the Deputy Director of Income Tax (Investigation), Unit 3 (3) to pass an order forthwith under Section 10 (3) of the Tax Act of 2015, pursuant to the notices issued under Section 10 (1) of the Tax Act of 2015.
The petitioners were issued a notice under Section 10(1) of Act 22 of 2015 by the Deputy Director of Income Tax regarding the investments made by the petitioner in acquiring assets abroad, particularly, in respect of the property, in Cambridge and the sale consideration effected by the assessee for the financial year 2014-15, relating to the AY 2015-16, and that, the assessee has not disclosed the said Foreign assets/Foreign interests fully in Schedule FA of the return of income filed by him for the AY 2016- 17 on 30.07.2016, and for the purpose of making an assessment in the assessee’s own case under Act 22 of 2015, the assessee was directed to furnish certain information/documents. Meanwhile, Deputy Director of Income Tax (Investigation), Unit 3 (2), the fourth respondent, issued summons to the petitioner and had ordered to produce certain documents.
The Counsel for the petitioner submitted that no material evidence was available in the hands of the authorities for initiating proceedings under the provisions of Act 22 of 2015. He further contended that despite providing all the demanded information and nine months had elapsed, the Deputy Director of Income Tax hadn’t passed orders under Section 10 (3) of the Act. The counsel argued that the summons issued by the fourth respondent i.e. Deputy Director of Income Tax (Investigation), Unit 3 (2) clearly showed that two Authorities are examining the same matter and that it was sheer harassment on the assessees. The Counsel pointed out that there was no intention for the Authorities to finalize the matter, but, only to harass the assesses. The Counsel concluded that the petitioners apprehended that prosecution will be initiated, and since the petitioner is cooperating with the assessment proceedings, a Writ of prohibition should be issued, prohibiting the respondent/Department from initiating prosecution, in terms of Section 48 of the Act.
The petitioner claimed that they were the only family in the country to have been subjected to multiple searches within two years and harassed by the Income Tax department, the Central Bureau of Investigation and the Enforcement Directorate under the laws related to foreign exchange management and money laundering. However, Justice T.S. Sivagnanam held that Writ of Prohibition could not be issued in anticipation of an action by the authorities. “I am not a criminal court to grant anticipatory bail. You may seek it at an appropriate time.” said the judge.
The senior standing counsel for the Revenue A.P. Srinivas informed the court that the officials were at present only enquiring into monetary transactions carried out by the petitioners for purchasing a property at Cambridge in the U.K. He further argued that the mere issuance of summons could not be a ground to seek a writ of prohibition against prosecution. Agreeing to the averments of the Counsel, the judge directed the assessing officers to complete the enquiry within the time stipulated under the Black Money Act.
“Under normal circumstances, this Court would direct the Statutory Authorities to perform their functions expeditiously when no timelines are fixed under the relevant statute, and if there is slackness, the Court would fix a peremptory time limit. However, the Court cannot exercise such power in the instant case, on the account of the time limit fixed under Section 11 (1) of the Act. …The language employed in the statute, includes ‘offence and prosecution’, as contained in Chapter V, as independent of other proceedings, which are enunciated under the Act. Section 48 commences by stating that, Chapter V is not in derogation of any other law or any other provision of Act 22 of 2015. In such circumstances, based on the apprehension of the petitioner, the Court cannot issue the writ of prohibition, to prevent the Authorities from initiating prosecution. If done, it would under Section 48 of the Act be inoperative. “said the Court.
Under the Liberalized Remittance Scheme (LRS) scheme introduced by the Reserve Bank of India (RBI), Indians can remit funds abroad for permitted current or capital account transactions. The Scheme also allowed designated bankers to allow remittances up to $1.25 lakh per financial year and the limit was increased to $2.5 lakh a year with effect from May 26, 2015.Such transactions would also include the purchase of a property abroad. Utilizing LRS, the petitioners had jointly purchased a property worth £5.35 lakh at Cambridge, for which Mr Karti Chidambaram transferred £1.67 lakh in March and April 2015 from his bank account.
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