Delhi HC restrains I-T dept from taking action Gautam Khaitan

Gautam Khaitan Vs Union of India & Ors (Delhi High Court)

Power to make Rules or remove difficulties under the provisions of Sections 85 and 86 of the said Act, could only be exercised by the Central Government, once the said Act came into force on the 1^st April, 2016, the date expressly stipulated by Parliament in this behalf, and not prior thereto.

A fortiori the Central Government further could not have, prior to the said Act coming into force, altered the date on which the enactment came into force i.e. 1^st April, 2016 by exercising the powers available to it under Sections 85 and 86 of the said Act by advancing it to 1^st July, 2015.

In the case at hand, consequently 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.

In this view of the matter, we are of the opinion that, the petitioner has made out a good prima facie case for grant of interim relief; and that grave prejudice will be caused to him if the official respondents are not restrained at this stage from proceeding further and taking action against the petitioner, under the provisions of the said Act.

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FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

CRL.M.A.4336/2019 (Stay)

1. The present writ petition under Articles 226 and 227 of the constitution of India prays as follows:-

a) An appropriate writ and/or order and/or direction declaring that Section 51(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is applicable only prospectively and not to attempts evading the tax under the Act prior to Act coming into force.

b) An appropriate writ and/or order and/or direction declaring that the provisions of Sections 10(1) and 54 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 are null and void;

c) An appropriate writ and/or order and/or direction declaring that proviso to Section 3(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 does not entitle the Assessing Officer to charge tax on foreign undisclosed asset, which ceased to exist prior to the Act coming into force;

d) An appropriate writ and/or order and/or direction declaring that Notification No.S.O.1791 (E) dated 01.07.2015 issued by the Government of India is illegal, ultra vires and null and void;

e) An appropriate writ and/or order and/or direction declaring that Notification No.GSR 529(E) dated 02.07.2015 is illegal, ultra vires and null and void;

f) An appropriate writ and/or order and/or direction declaring that Notification No.S.O. 1790(E) dated 01.07.2015 issued by the Government of India is ultra vires under the Act and null and void;

g) An appropriate writ and/or order setting aside Notice No.Addl-CIT (CR)-02/2018-19/BMA/1264 dated 08.11.2018, issued by the Respondent No.3 as illegal, ultra vires and null and void;

h) An appropriate writ and/or order setting aside Order No.F.NO.Pr.CIT(C) -01/2017-18/2764 dated 22.01.2019 passed by the Respondent No.2 as illegal, ultra vires and null and void; and

i) Any other writ and/or order and/or direction as this Hon’ble Court deem fit and proper in the facts and circumstances of the case.

2. Although the writ petition, inter alia impugns the provisions of Sections 10(1) and 54 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as ‘the said Act’); learned counsel appearing on behalf of respondent No.1/Union of India states that, they do not wish to file a reply thereto and adopt the counter affidavit filed on behalf of respondents No.2 and 3; the Income Tax Department.

3. We have heard learned counsel appearing on behalf of the parties on the application seeking stay of the operation and effect of the order dated 22.01.2019 and further restrain them from taking any action against the petitioner under the provisions of Section 10 of the said Act.

4. The issue before us at this interim stage is, as to whether the Government can exercise powers under the said Act, prior to the statute itself coming into force.

5. Mr. P.V. Kapur, learned Senior Counsel appearing on behalf of the petitioner invites our attention to the provisions of sub-Section (3) of Section 1 of the said Act to urge that, in view of the express provision thereof, which stipulates that the said Act shall come into force on the 1^st day of April, 2016; the Government has exercised its power to issue Notifications under the powers exercisable by them, within the meaning of the provisions of Section 85 and 86 of the said Act, prior to the same coming into effect on 01.04.2016.

6. It is further urged that, the Notifications No.S.O. 1790(E) dated 01.07.2015, S.O.1791 (E) dated 01.07.2015 and GSR 529(E) dated 02.07.2015, purportedly promulgated under the provisions of sub-Section (3) of Section 1, Section 59 and sub-Section (1) of Section 63 and sub-Sections (1) and (2) of Section 85 of the said Act, respectively seek to exercise powers conferred under the said Act, prior to the day on which the said Act comes into force i.e. 01.04.2016, which is impermissible in law.

7. In other words, it is urged that, the Central Government could not have exercised powers under the provisions of Sections 85 and 86 of the said Act to promulgate the impugned Notifications, pursuant to which the subject proceedings have been initiated against the petitioner, prior to the said Act itself coming into force and that the same are consequently without the sanction of law.

8. In this behalf, it has been urged by Mr. Zoheb Hossain, learned Senior Standing Counsel appearing on behalf of the Income Tax Department that, from a plain reading of the provisions of Section 86 of the said Act, it can be observed that, the Central Government was empowered under the provisions of the said Act, inter alia, for the purpose of removing difficulties, to promulgate the impugned Notifications and advance the date on which the said Act is to come into force-in terms of sub-Section(3) of Section 1 of the said Act-from the 1^st day of April, 2016 to the 1^st day of April, 2015.

9. Prima facie, we find ourselves unable to agree with the submission made on behalf of the official respondents.

10. Parliament in its wisdom enacted the said Act and expressly provided therein that save as otherwise provided in the said Act, it shall come into force on the 1^st day of April, 2016. There is, therefore, no gainsaying the legal position that, the power to make Rules or remove difficulties under the provisions of Sections 85 and 86 of the said Act, could only be exercised by the Central Government, once the said Act came into force on the 1^st April, 2016, the date expressly stipulated by Parliament in this behalf, and not prior thereto.

11. A fortiori the Central Government further could not have, prior to the said Act coming into force, altered the date on which the enactment came into force i.e. 1^st April, 2016 by exercising the powers available to it under Sections 85 and 86 of the said Act by advancing it to 1^st July, 2015.

12. The decision of the Hon’ble Supreme Court in State of Rajasthan and Others Shri Noor Mohammad reported as (1972) 2 SCC 454, pressed into service by Mr. Zoheb Hossain, learned Senior Standing Counsel appearing on behalf of Income Tax Department, does not come to their aid, inasmuch as, in that decision the Hon’ble Supreme Court, was not called upon to consider the issue, whether the Government can give effect to a statute prior to the date it is expressly stipulated to come into force by Parliament, in the said enactment.

13. In the case at hand, consequently 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.

14. In this view of the matter, we are of the opinion that, the petitioner has made out a good prima facie case for grant of interim relief; and that grave prejudice will be caused to him if the official respondents are not restrained at this stage from proceeding further and taking action against the petitioner, under the provisions of the said Act.

15. The respondents are, therefore, restrained from taking and/or continuing any action against the petitioner, pursuant to the impugned order dated 22.01.2019, passed by the respondent No.2, till the next date of hearing.

16. Renotify on 04.07.2019.

W. P.(CRL.) 618/2019

Renotify on 04.07.2019.