first draft -...

FIRST DRAFT

IN THE HIGH COURT OF DELHI AT NEW DELHI EXTRA ORDINARY ORIGINAL CRIMINAL WRIT

JURISDICTION

WRIT PETITION (CRL.) NO. OF 2019 IN THE MATTER OF:

A Writ Petition under Articles 226 and 227 of the

Constitution of India.

AND

IN THE MATTER OF: A writ petition for issuance of a writ/direction/ order setting

aside Notice No. Addl-CIT (CR)-02/2018-19/BMA/1264

dated 08.11.2018, issued by the Additional Commissioner

of Income Tax, Central Range -2, New Delhi purportedly

under Section 10 (1) of the Black Money (Undisclosed

Foreign Income and Assets) and Imposition of Tax Act,

2015.

AND

IN THE MATTER OF:

A Writ Petition for issuance of appropriate writ/ direction/

order setting aside Order No. F. No. Pr. CIT (C) -01/2017-

18/2764 dated 22.01.2019 passed by Principal

Commissioner of Income Tax (Central) -1, New Delhi.

Bar and Bench (www.barandbench.com)

AND

IN THE MATTER OF:

A Writ Petition praying for issuance of an appropriate writ/

direction / order declaring that Section 51 of the Black

Money (Undisclosed Foreign Income and Assets) and

Imposition of Tax Act, 2015 (hereinafter referred to as the

Act) is applicable only prospectively and not to cases of

attempted evasion of tax prior to Act coming into force.

AND

IN THE MATTER OF:

A writ petition praying for issuance of an appropriate writ/

direction / order declaring that the provisions of Sections

10 (1), 48(2), 51, 54 and 80 of the Act is null and void;

AND

IN THE MATTER OF:

A Writ Petition praying for issuance of an appropriate writ/

direction/ order declaring that proviso to Section 3 (1) of

the Act does not entitle the Assessing Officer to charge

tax on 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.


AND

IN THE MATTER OF:

A Petition for an appropriate writ/ direction / order

declaring that Notification No. S.O. 1790 (E) dated

01.07.2015 issued by Government of India is ultra vires

the Act and as such null and void.

AND

IN THE MATTER OF:

A Petition for an appropriate writ/ direction / order

declaring that Notification No. GSR 529 (E) dated

02.07.2015 is ultra vires the Act and as such null and

void.

AND

IN THE MATTER OF: A Writ Petition for an appropriate writ/ direction/ order

declaring that Notification No. S.O.1791 (E) dated

01.07.2015 is ultra vires the Act

AND

IN THE MATTER OF: Gautam Khaitan S/o late Shri O.P. Khaitan R/o N-12, Panchsheel Park New Delhi 110 017. ... Petitioner


Versus

1. Union of India

Through the Secretary Ministry of Finance Department of Revenue North Block Central Secretariat New Delhi 110 011.

2. The Principal Commissioner of Income Tax (Central) – 1, ARA Centre, 3rd Floor, Room No. 338 E-2, Jhandewalan Extension New Delhi 110 055.

3. The Addl. Commissioner of Income Tax – Central, Range – 02 & Assessing Officer ARA Centre, 3rd Floor, Room No. 338 E-2, Jhandewalan Extension New Delhi 110 055. ... Respondents

To, The Hon’ble Chief Justice of the Hon’ble Delhi High Court

and His Lordship’s Companion Judges of this Hon’ble Court.

The humble Petition of the Petitioner above named – MOST RESPECTFULLY SHEWETH: 1. The present Petition has been filed under Articles 226

and 227 of the Constitution of India challenging, inter alia,

the legality and validity of various provisions of the Black

Money (Undisclosed Foreign Income & Assets) and

Imposition of Tax Act, 2015 (hereinafter referred to as the


Act) and the Rules made thereunder as well as Order of

sanction dated 22.01.2019 accorded by the Principal

Commissioner of Income Tax, the Respondent No. 2

herein, authorizing Assessing Officer under the Act (the

Respondent No. 3 herein) to institute criminal complaint

under Section 51 of the Act against the Petitioner. The

impugned actions of the Respondents are violative of the

fundamental rights of the Petitioner conferred, inter alia,

under Articles 14, 19, 20 and 21 of the Constitution of

India and has caused and continues to cause grave

prejudice and hardship to the Petitioner.

2. The present writ petition involves the following important

questions for determination by this Hon’ble Court.

A. Whether a person who had undisclosed foreign

income/asset before coming into force of the Act

and which has ceased to exist before the Act came

into force will still be liable under the Act especially

when such foreign asset/income are already subject

matter of assessment and prosecution under the

Income Tax Act, 1961?

B. Whether for an offence under Section 276C of the

Income Tax Act committed prior to the


commencement of the Act, Section 51 of the Act will

be attracted merely because the said foreign asset

(which has already ceased to exist before the Act

came into force) income came to the notice of the

Assessing Officer under the Act, after the Act came

into force, particularly when the provisions of

Section 276C of the Income Tax Act is verbatim

similar to the provision of Section 51 of the Act

except for the enhanced punishment under the said

Section 51?

C. Whether the same action of attempting to evade

tax, which is subject matter of prosecution under

Section 276C of I.T. Act, without any more actions,

on the part of the Petitioner be subject matter of

prosecution under Section 51 of the Act, merely

because undisclosed foreign asset came to the

notice of the Assessing Officer under the Act, after

the Act came into force?

D. Whether the provisions of the Income Tax Act is not

the general law on income tax covering all

undisclosed income and asset, both domestic and

foreign, and the provisions of the Act are only

species thereof covering only the undisclosed


foreign income/asset after the Act came into force

and thus for the undisclosed foreign income/asset

(which has ceased to exist prior to the Act coming

into force) only the provisions of the Income Tax Act

can be resorted to?

E. Whether for the purpose of prosecution under

Section 51 (1) of the Act, an attempt to evade tax

under the Act can happen even before the Act came

into force?

F. Whether Parliament can do indirectly, what it cannot

do directly. Parliament cannot create an offence

retrospectively. However, if the interpretation put

forth by the tax authorities with respect to proviso to

Section 3 (1) of the Act will make even holding an

undisclosed asset before Act coming into force

(which ceased to exist before the Act came into

force) an offence under the Act). For the purpose of

attracting Section 51 (1) is it not required that both

holding of undisclosed foreign asset and attempting

to evade tax under the Act must take place after the

Act comes into force?


G. If the proviso to Section 3 (1) of the Act is

interpreted to mean that an asset which has ceased

to exist before the Act came into force, will be

charged to tax in the year in which such asset

comes to the notice of the Assessing Officer under

the Act, the undisclosed foreign asset, which

ceased to exist even, say, 50/100 years before the

Act came into force can be charged to tax under the

Act without any bar of limitation. Will not such an

interpretation make the said proviso to Section 3 (1)

unjust, arbitrary, retrospective, unreasonable and

violative of Articles 14, 19, 20 and 21 of the

Constitution and as such null and void. This

interpretation will allow charging of tax on

undisclosed asset existing in the past, without any

limitation.

H. (i) Whether Section 3 (1) of the Act will at all be

attracted to an undisclosed foreign asset, which is

never held on or after the Act came into force?:

(ii) Can an asset, which has ceased to exist before

the Act came into force), come to the notice of the

Assessing Officer, after the Act comes into force?.

Is it not the scope of Section 3 that it can charge to

tax such undisclosed asset which exists on or after


the Act comes into force and which accordingly,

comes to the notice of the Assessing Officer after

the Act comes into force?.

I. Whether the provisions of Section 48 (2) of the Act

insofar as it says that it will be no defence that an

order has not been made for any reason

whatsoever for application of provisions of Chapter

V of the Act, thus allows prosecution for wilful

attempt to evade tax, even before an order under

Section 10 computing tax payable under the Act is

made, is null and void, being violative of Articles

14, 19 and 21 of the Constitution since even

imposition of civil liability of penalty under Section

41 of the Act makes an order of computation of tax

under Section 10 as a condition precedent.?

J. Whether provisions of Section 54 (1) of the Act

insofar as it allows presumption of existence of

culpable mental state on the part of the accused,

and that it is for the accused to prove to the

contrary ‘beyond reasonable doubt’, is not

unconstitutional and null and void, being contrary to

the settled principle of Criminal law that an accused

is innocent until proved guilty and the onus is


always upon the prosecution to prove its case

beyond reasonable doubt?

K. Whether Section 10 (1) of the Act which does not

provide for any limitation within which time a notice

can be issued after an information is received and

which does not provide guidance about nature of

information received to trigger action under said

Section 10 (1) having been provided, makes the

said provision unreasonable and arbitrary and as

such null and void?

3. Facts giving rise to filing of the present petition are briefly

stated hereunder.

3.1 The Petitioner is a citizen of India and is a practicing

Lawyer at New Delhi and is entitled to invoke the extra

ordinary writ jurisdiction of this Hon’ble Court under

Articles 226 and 227 of the Constitution of India to

seek redressal of his grievances against the arbitrary

and illegal action of the Respondents.

3.2 The Petitioner has been practicing as an Advocate for

the last more than 25 years. He is a qualified and


highly respected member of the legal community and

society. The Petitioner belongs to an illustrious family

of Advocates and has deep roots in society.

3.3 That in November, 2017, the Petitioner was

prosecuted by the Income Tax Department under

Section 276 (C) (1), inter alia, in respect of relevant

Financial Years 2009 -10 to 2013 -14 ( i.e. assessment

year 2010-11 to assessment year 2014-15). Strangely

even though the aforesaid prosecutions were

launched in November, 2017, the Petitioner

subsequently in October, 2018 received notices for re-

assessment under Sections 147/ 148, for the aforesaid

assessment years. Proceedings in respect of said

prosecutions are pending before the competent Court

of Shri P.S. Rajawat, Learned ACMM – Special Acts

(Central), Tis Hazari Courts, Delhi, wherein the

Learned Court has already taken cognizance vide

Orders dated 11.12.2017 and issued summons for

appearance of the Petitioner. The Petitioner is

annexing herewith a copy of one such complaint

(without annexures) and one such Order dated

11.12.2017 taking cognisance marked Annexure P -1

as specimen of such complaints and orders.


3.4 The Petitioner duly appeared before the said Court at

very first instance and the Learned ACMM taking into

account the bonafide conduct of the Petitioner was

pleased to grant bail to the Petitioner, vide Orders

dated 22.02.2018.

3.5 That when the said re-assessment proceedings under

Sections 147/148 of the Income Tax Act and the said

prosecution proceedings are pending in respect of the

alleged foreign income of the financial years 2009 -10

to 2013-14 (relating to Assessment Years 2010-11 to

2014-15), the Assessing Officer under the Act, the

Respondent No. 3 herein sent a Notice No. F. No.

Addl.CIT (CR)-02/2018-19/BMA /1264 dated

08.11.2018, inter alia, to produce the accounts and /or

documents specified in Annexure to the notice. A copy

of the said notice dated 08.11.2018 (without the

Annexures) is annexed herewith and marked as

Annexure P – 2.

3.6 It is relevant to note that this notice dated 08.11.2018

is in respect of alleged undisclosed assets or income

pertaining to financial years 2009-10 to 2013-14, which

are already subject matter of re-assessment


proceedings and criminal prosecutions as stated

hereinabove.

3.7 The Petitioner through its letter dated 21.11.2018

pointed out that the said notice issued by the

Respondent No. 3 is without any authority of law and

accordingly requested him to recall and/or rescind the

said notice and that in the unlikely event of not

recalling and/or rescinding the notice, a personal

hearing was requested. A copy of the said letter

dated 21.11.2018 is annexed herewith and marked as

Annexure P - 3.

3.8 Subsequent to the said reply dated 21.11.2018, the

Respondent No. 3 adjourned the proceedings to

27.11.2018 and subsequently again to 30.11.2018 for

further submissions and discussions. In response to

the submissions made in letter dated 21.11.2018, the

Respondent No. 3 sent a notice dated 21.12.2018

asking the Petitioner to explain as to why the

undisclosed foreign income and assets may not be

assessed under the Act in the Petitioner’s hand. By a

separate notice of the said date i.e. 21.12.2018

Respondent No. 3 once again asked the Petitioner to


produce documents/ information. Copies of the said

notices both dated 21.12.2018 are annexed herewith

and marked as Annexure P – 4 (Colly.).

3.9 Vide letter dated 24.12.2018, the Petitioner through his

authorized representative submitted before the

Respondent No. 3, inter alia, that the notice under

Section 10 (1) issued for the assessment year 2019-20

relating to previous year 2018-19 was pre-mature,

since the assessment year itself was yet to commence

once again requested for copies of documents which

were the basis for issuing notice under Section 10 (1)

of the Act . A copy of the said letter dated 24.12.2018

is annexed herewith and marked as Annexure P – 5.

3.10 In response thereto, the Respondent No. 3 through his

letter dated 24.12.2018 stated as under:

“You have yourself admitted on page 5 of your reply

that you have received relevant incriminating

documents in the proceeding u/s 276C (1) of the I.T.

Act, 1961. An opportunity is again being given to

you to specify any other document, you may

need........”


implying thereby that the documents which are the

basis for prosecution under Section 276C (1)

proceedings are the same as are the basis for the

proceedings under the Act. Through another letter of

the said date, Respondent No. 3 supplied copies of

some documents. A copy each of both the said letters

dated 24.12.2018 are annexed herewith marked

Annexure P – 6 (Colly.).

3.11 In response to the said notice dated 21.12.2018 issued

by the Respondent No. 3, the Petitioner through his

letter dated 28.12.2018, once again reiterated that the

notice under section 10 (1) was pre-mature and

accordingly requested the Respondent No. 3 to drop

the proceedings as there was no legal basis or

justification for initiating and continuing the same. A

copy of the said letter dated 28.12.2018 is annexed

herewith and marked as Annexure P – 7.

3.12 The Respondent No. 3 through his letter dated

01.01.2019 rejected the contentions of the Petitioner. A

copy of the said letter dated 01.01.2019 is annexed

herewith marked Annexure P – 8.


3.13 Through a letter dated 04.01.2019, the Petitioner once

again made his submission before the Respondent No.

3 submitting that the proceedings under Section 10 (1)

of the Act are arbitrary, unjustified and unjust in the

facts and circumstances of the case as explained in

the said letter. A copy of the said letter dated

04.01.2019 is annexed herewith and marked as

Annexure P – 9. Subsequently the Petitioner through

letter dated 09.01.2019 made further submissions and

again asked for relevant information. A copy of the said

letter dated 09.01.2019 is annexed herewith marked

Annexure P – 10.

3.14 It appears that the Respondent No. 3 instead of giving

further opportunity to the Petitioner without passing

any Order under Section 10 (3) of the Act, in a pre-

determined manner, has sent a proposal dated

25.12.2018 to Respondent No. 2 for initiation of

prosecution of the Petitioner under Sections 50 and 51

of the Act. The said proposal was made behind the

back of the Petitioner. No notice was given to the

Petitioner before sending the said proposal and the

Petitioner was thus denied an opportunity to explain

that no case is made out for initiation of prosecution

against the Petitioner and this has resulted in violation


of principle of natural justice. The Petitioner came to

know of the said proposal from Respondent No. 3 to

Respondent No. 2 only from the show cause notice

dated 04.01.2019 (received on 09.01.2019) from the

Respondent No. 2 to show cause why he should not

grant sanction to initiate proceedings under Sections

50 and 51 of the Act. A copy of the said show cause

notice dated 04.01.2019 is annexed hereto marked as

Annexure P – 11.

3.15 In response to the said show cause notice dated

04.01.2019 given by the Respondent No. 2, the

Petitioner through letter dated 16.01.2019 sent by his

authorized representative (as the Petitioner was

abroad from 12.01.2019 onwards), inter alia, submitted

that no offence under the Act has been committed by

the Petitioner; proceedings under Section 10 (1) of the

Act are pending, and the relevant Assessment Year

has not even commenced, when the proposal for

prosecution in respect of such Assessment Year has

been malafidely sent. The Petitioner also requested for

a copy of the proposal received from Respondent No.

3 in order to furnish his response. It was further

pointed out that the previous year in the case has not

yet come to an end, and further that on the very same


facts, prosecution under Section 276 (C) (1) of the

Income Tax Act has already been initiated for

Assessment Year 2010 -11 to Assessment Year 2014-

15 and that the same are pending and as such on the

very same facts, the proceedings under Sections 50

and 51 of the Act will not be justified as it will amount

to double jeopardy. A copy of the said letter dated

16.01.2019 is annexed herewith and marked as

Annexure P – 12.

3.16 Instead of providing any response to the said

submission of the Petitioner ( made through the

Authorized Representative through the said letter

dated 16.01.2019), the Respondent No. 2

subsequently sent an Order dated 22.01.2019 granting

sanction /authorization under Section 55 of the Act for

launching a prosecution under Section 51 of the Act

and in that respect the Respondent No. 2 authorized

the Respondent No. 3 to institute the criminal

complaint in the Court of competent jurisdiction. A

copy of the said Order dated 22.01.2019 is annexed

herewith marked Annexure P – 13.

3.17 The Petitioner submits that the Respondent No. 2 has

granted sanction for prosecution inspite of pending


prosecutions under Section 276C (1) of the I.T. Act on

the very same facts, in an effort to enable the

Enforcement Directorate under PMLA to initiate

prosecution, since offence under I.T. Act is not a

scheduled offence under PMLA, whereas offence

under Section 51 of the Act is a scheduled offence

which enables the PMLA authorities to take coercive

action under PMLA.

4. SUBMISSIONS (Add Section 80)

4.1 As is evident from the preamble to the Act, the said Act

makes “provisions to deal with the problem of the

Black Money, that is undisclosed foreign income and

assets, the procedure for dealing with such income

and assets and to provide for imposition of tax on any

undisclosed foreign income and asset held outside

India and for matters connected therewith or incidental

thereto”.

4.2 Thus the provisions of the Act can be attracted on any

undisclosed foreign income and assets held outside

India. The use of the word “held” implies that the

assets must have been held, as on the date the Act

came into force. The Act, not being retrospective,


cannot apply to any foreign income prior to Act coming

into force nor to any foreign assets held before the Act

came into force, unless the foreign assets continue to

be held even on or after the date the Act came into

force. In respect of undisclosed foreign income and

assets held outside India only prior to the Act coming

into force, the provisions of the Income Tax Act and

not the Act shall apply.

4.3 The Petitioner submits that the provisions of the

Income Tax Act apply in respect of all undisclosed

income and asset (both domestic and foreign),

whereas the provisions of the Act, ( from the date the

Act came into force) carves out for its application only

undisclosed foreign asset/ income. Thus, there is no

scope for application of provisions of both the Acts for

the same undisclosed foreign asset/ income. The

same is clear from the provision of Section 4 (3) of the

Act which states that income included in total

undisclosed foreign income and asset under the Act

shall not form part of the total income under the

Income Tax Act, thereby clearly signalling that the

same income cannot be subject matter of taxation both

under the Income Tax Act and the Act. Same income

cannot be taxed twice over. The Petitioner further


submits that the provisions of Section 276C provides

for offence for wilfully attempting to evade any

tax/penalty/ interest chargeable or imposable under the

Income Tax Act (covering tax on both domestic and

foreign asset/ income) whereas the provisions of

Section 51 of the Act provides for a similar offence in

respect of wilful attempt to evade tax, penalty, or

interest chargeable under the Act ( in respect of

undisclosed foreign asset/ income only). Thus, it is

submitted that there is no overlapping between the two

provisions. If there is an offence under Section 276C of

the Income Tax Act and a person is being prosecuted

thereunder, he cannot in respect of the same period

and the same offence of attempt to evade tax be

prosecuted under Section 51 of the Act after the Act

comes into force in respect of period prior to the Act

coming into force merely on the ground that the said

foreign asset of period prior to the Act coming into

force came to the notice of the Assessing Officer under

the Act after the Act came into force.

4.4 In the facts of the present case as per the allegations

made by the Income Tax Department itself, the alleged

undisclosed foreign assets and foreign bank accounts

have ceased to exist before the Act came into force.


4.5 Section 1(3) as it was enacted by Parliament reads as

under:

“Save as otherwise provided in this Act, it shall

come into force on the 1st day of April, 2016”.

Thus, all the provisions of the Act as per the original

provision enacted by the Parliament are to come

into effect on 01.04.2016. However, strangely the

Central Government by an Order dated 01.07.2015

in purported exercise of power under Section 86 of

the Act (when the said Section 86 was yet to be in

operation) amended to amend the said sub-section

(3) of Section 1 to the effect that the Act shall come

into force from “1st day of July, 2015”. It is the

respectful submission of the Petitioner that Central

Government, in the absence of the Act being in

operation on 01.07.2015, could not have exercised

power under Section 86 and as such, the said Order

dated 01.07.2015 is ultra vires and null and void. A

copy of the said Order dated 01.07.2015 is annexed

hereto marked Annexure P – 14.


4.6 It is the further submission of the Petitioner that since

the said Order dated 01.07.2015 is null and void, as

submitted hereinabove, the Act came into force only on

01.04.2016 as originally enacted. In view of the

aforesaid, it is submitted that even the Black Money

(Undisclosed Foreign Income and Assets) and

Imposition of Tax Rules, 2015 (hereinafter referred to

as the “Rules”) are null and void, as the said Rules

were made by the Central Board of Direct Taxes, vide

GSR No. 529 (E) dated 02.07.2015 in purported

exercise of powers under Section 85 of the Act,

inasmuch as even the said Section 85 was not in

operation, on the date the said Rules were made.

4.7 The Petitioner further submits that the charging section

being Section 3 of the Act is incapable of being

pressed into service inasmuch as Section 3 (2) read

with proviso to Section 3 (1) is dependent upon the

Rules made under the Act for the purpose of

determination of value of undisclosed assets. Till now,

there are no valid Rules made under Section 85 of the

Act and as such, there cannot be charge of tax under

the Act. Consequently, even the assessment under

Section 10 of the Act being dependent upon

determination of the value of undisclosed foreign asset


in accordance with the Rules is incapable of being

made.

4.8 In the facts of the present case, notice under section

10 (1) as given by the Respondent No. 3 seeking

information for Financial Years 2009-10 to 2013-14 is

clearly impermissible as the attempt is to charge

alleged foreign income and foreign assets for the

period prior to the Act coming into force once the Act

comes into force. The Act is not retrospective in

nature nor does it say anywhere that the provisions of

the Act shall apply in respect of foreign assets or

income prior to the previous year of the assessment

year commencing on 01.04.2016. The same is made

clear by Section 3 (1) of the Act whereunder tax under

the Act is charged for “every assessment year

commencing on or after the 1st day of April, 2016” in

respect of total undisclosed income / assets of the

previous year. Proviso to Section 3 (1) under the Act

is applicable only in respect of undisclosed asset

located outside India and in existence on or after

01.04.2016 to be charged to tax “on the basis of value

in the previous year”, in which such asset comes to the

notice of the Assessing Officer. If there is no such

existing asset, it follows that nothing can come to the


notice of the Assessing Officer. The proviso does not

use the words “information about such asset”.

4.9 It is further submitted that any contrary interpretation of

the provisions of the Act in order that the said

provisions are applicable even in respect of

undisclosed foreign assets /income which ceased to

exist before the Act came into force will result in the

Act being given retrospective effect. Since such

interpretation will also expose the person holding

undisclosed foreign assets and foreign income before

the Act came into force and which ceased to exist

before the Act came into force will make the same an

offence under the Act (which was not an offence

before the Act came into force), it will be

impermissible. This will be creating an offence

retrospectively which is clearly impermissible under

Article 20 of the Constitution of India. There can be no

offence under the Act, prior to the Act itself coming into

force.

4.10 The Petitioner further submits that for attracting the

penal provision of Section 51 of the Act, the person

concerned has to wilfully attempt to evade any tax

/penalty/ interest “chargeable or imposable under this


Act”. “Evasion of Tax” chargeable or imposable under

the Act can arise only after the Act comes into force. It

is inconceivable that a person can attempt to evade tax

chargeable or imposable under the Act before even the

Act comes into force. For such a situation of an

attempt to evade tax before the Act came into force,

there are ample provisions under the Income Tax Act,

1961 e.g. Section 276C. In fact, on the very same

allegations and the materials for which sanction has

been accorded by the Respondent No. 2 for

prosecution of the Petitioner for an offence under

Section 51 of the Act, the Petitioner is already facing

prosecutions for offences under Section 276C of the

Income Tax Act. The said proceedings are already

pending. The present sanction for prosecution will only

entail a second prosecution for the same “actus reus”.

As submitted hereinabove, any prosecution of the

Petitioner under Section 51 of the Act will also

tantamount to prosecution of the Petitioner for an

offence which was not there when Petitioner is alleged

to have evaded tax. This will amount to prosecuting the

Petitioner for an ex post facto offence.

4.11 The Petitioner submits that the Respondent No. 2 has

accorded sanction /authorization under Section 55 of


the Act for launching of prosecution of the Petitioner

under Section 51 (1) mechanically and without any

application of mind, without appreciating that on the

allegations made, he could not have come to a

conclusion that the Petitioner has attempted to evade

tax payable under the Act. Allegations made in the

Notices under Section 10 (1) as well as the show

cause notice pertain to the period prior to the Act

coming into force. Further, it is submitted that the said

order dated 22.01.2019 according sanction is violative

of principle of natural justice inasmuch as in response

to the show cause notice dated 04.01.2019 which was

issued on the basis of a “proposal” received from the

Respondent No. 3, the Petitioner has asked for a copy

of the said proposal in order to respond to the said

show cause notice. Copy of said proposal was never

made available to the Petitioner in spite of request

having been made for the same. Since the said

material (proposal) has been taken into consideration

by the Respondent No. 2 for according the sanction

without giving copy of the said proposal to the

Petitioner, the said order suffers from the vice of the

violation of principles of natural justice and is liable to

be set aside by this Hon’ble Court. The Petitioner

further submits that the proposal could not have been


submitted by the Respondent No. 3 since even his

initial action in issuing notice under Section 10 (1) of

the Act for the assessment year 2019-20 was

premature for assessment as the previous year i.e.

2018-19 is yet to come to an end. The entire

proceedings under the Act, right from notice under

Section 10 (1) to the Order of sanction is malafide and

nothing but for malicious prosecution of the Petitioner.

4.12 The Petitioner submits that the proceedings under the

Act including proceedings under Section 10 (1) and

Section 51 of the Act have been initiated in respect of

alleged foreign asset/ income in respect of financial

years 2009-10 to 2013-14 in spite of the fact that

proceedings for the said period have already been

initiated under Sections 147/148 and Section 276C of

the Income Tax Act with a clear design to expose the

Petitioner to an offence under the provisions of PMLA

inasmuch as offence under the Income Tax Act is not a

“scheduled offence” under the PMLA, whereas the

offence under Section 51 of the Act have been made a

“scheduled offence” under PMLA in view of Section 88

of the Act. Thus, the whole proceedings under the Act

have been initiated and continued only with the

malafide and colourable purpose of prosecuting the


Petitioner under the provisions of PMLA. If it was not

such a design/ purpose, there was no need for

initiating proceedings under the Act, since the alleged

undisclosed foreign asset/ income are already subject

matter of proceedings under the Income Tax Act both

for assessment /reassessment and prosecution.

4.13 The Petitioner submits that tax payable under the Act

is on undisclosed foreign income/ asset. Such foreign

income/ asset is also taxable under the Income Tax

Act. Accordingly, the offence under Section 51 of the

Act for attempt to evade tax under the Act will also be

an offence under Section 276C of the Income Tax Act

as attempt to evade payment of tax under the Income

Tax Act. Thus, attempt to evade tax in respect of

same evasion is an offence both under Section 276C

of the Income Tax Act as well as under Section 51 of

the Act. The maximum punishment under Section

276C of the Income Tax Act is rigorous imprisonment

of seven years, whereas the maximum punishment

prescribed under Section 51 of the Act is 10 years. The

Respondents have a choice to prosecute a person

attempting to evade tax on foreign income/ asset either

under Section 276C of the Income Tax Act or under

Section 51 of the Act, without any guideline in that


regard and as such, Respondents have an unbridled,

um-canalized and arbitrary discretion to adopt

recourse to the provisions of one Act or the other.

Such unbridled, arbitrary power and discretion is eo

instanti violative of the fundamental rights of right to

equality conferred under Article 14 of the Constitution

of India. In fact, on the facts of the case in respect of

alleged income/asset in respect of financial years

2009-10 to 2013-14, the Income tax department have

already initiated prosecutions of the Petitioner under

Section 276C of the Income Tax Act. For evasion of

tax in respect of the very same period, the

Respondents are initiating prosecution under Section

51 of the Act. The Petitioner submits that such

subsequent prosecution for attempt to evade tax in

respect of income/asset for same period under Section

51 of the Act will also be violative of Article 14 of the

Constitution of India. The Petitioner submits that in

case the same is permissible under Section 51 of the

Act, the provisions of the said Section 51 of the Act

shall be violative of Articles 14, 20 and 21 of the

Constitution of India.

4.14 The Petitioner submits that the provisions of Section

48 (2) which allows prosecution under Section 50


and/or 51 even before computation of tax payable

under the Act is made under Section 10 of the Act, is

unconstitutional as being violative of fundamental

rights under Articles 14, 19 and 21 of the Constitution

of India and as such null and void, inasmuch as even

for a civil liability of penalty it has been made

mandatory under Section 41 for an order to be passed

under Section 10, whereas for criminal action of

prosecution, no such safeguard has been provided.

4.15 The Petitioner further submits that the provisions of

Section 54 of the Act which provides for the Court to

presume the existence of culpable mental state on the

part of the accused, unless the accused proves to the

contrary “beyond reasonable doubt” and not on

“preponderance of probability” is opposed to the

settled first principle of criminal law that an accused is

innocent until proven guilty and the onus is always

upon the prosecution to prove its case beyond

reasonable doubt.

4.16 The Petitioner submits that Section 10 (1) does not

provide for any period of limitation from receipt of

information, to issue notice and as such the same is

unreasonable and bad in law. It is further submitted


that the said provision does not provide any guidance

as to the nature of information receipt of which enables

the Assessing Officer to issue notice under Section 10

(1) of the Act and as such unreasonable and arbitrary

violative of Article 14 of the Constitution.

4.17 The Petitioner further submits that there is no

provisions under the Act providing for the mechanism

of taking of cognisance of offence under the Act.

Although, the heading of Section 80 of the Act

mentions about “cognisance of offence” the body of the

section does not provide for the same. Thus, the Act

does not provide the procedure to be adopted for

cognisance of offence under the Act i.e. whether the

cognisance shall be taken of the offence by following

the procedure for a complaint case or a case on a

Police report. The provisions of Cr. P.C. provides for

different procedures for taking cognisance of complaint

case as distinguished from case on a police report.

Such absence of procedure of taking cognisance of

offence under the Act militates against Article 21 of the

Constitution of India, which mandates that no person

shall be deprived of his life and personal liberty except

according to procedure established by law. In the

absence of any such procedure having been


prescribed by the Act, the said provision of Section 80

of the Act, it is submitted, will be violative of Article 21

of the Constitution and as such null and void.

4.18 The Petitioner further submits that initiation of

proceedings for prosecution under Section 51 of the

Act is premature since the time for declaration of

undisclosed foreign asset as granted under Section 59

of the Act has not yet arrived since the Central

Government has not yet validly declared by a

notification in the official gazette the date on or before

which declaration under Section 59 has to be made.

The declaration made vide notification S.O. 1791 (E)

dated 01.07.2015 issued by the Central Government is

not such a date since the said notification has been

issued prior to the Act coming into force and as such,

the said Notification dated 01.07.2015 is clearly illegal

and null and void. In view of the aforesaid, initiation of

proceedings under Section 10 (1) and/or prosecution

under Section 51 is clearly premature and as such,

impermissible.

4.19 Without prejudice to the aforesaid, the Petitioner

further submits that the Notice dated 08.11.2018

issued under Section 10 (1) of the Act for the previous


year 2018-19 relevant to the assessment year 2019-20

is bad in law as time for filing the return of income

under Section 139 (1) of the Income Tax Act has not

yet expired and as such, the question of determination

of tax payable for the previous year 2018-19 does not

and cannot arise before the conclusion of the said

previous year. Consequently, the question of attempt

to evade tax payable under the Act at this stage before

even the conclusion of the previous year is illegal, null

and void.

5. The Petitioner, in the premises, submits that the actions

of the Respondents including grant of sanction for

prosecution by the said Order dated 22.01.2019 passed

by the Respondent No. 2 are liable to be set aside by this

Hon’ble Court and the provisions of Section 3 (1) proviso

10 (1),l 48 (2), 51, 54 and 80 of the Act, as well as the

Rules including S.Os Nos. 1790-1791 (E) both dated

01.07.2015 and GSR 529 (E) dated 02.07.2015 liable to

be declared null and void, inter alia, on the following:

G R O U N D S

A. For that provisions of the Act is incapable of being applied

to an undisclosed foreign asset which has ceased to exist

before the Act came into force.


B. For that exercise of powers under Section 86 of the Act in

making the S.O. No. 1790 (E) dated 01.07.2015 is bad in

law inasmuch as the said Section 86 was yet to come into

effect on the said date, since the whole of the Act

including Section 86 thereof came into force only on

01.04.2016.

C. For that the Rules made by GSR No. 529 (E) dated

02.07.2015 are also bad in law inasmuch as the said

Rules of the Act have been made in purported exercise of

powers under Section 85 of the Act, when the said

Section 85 was yet to come into operation.

D. For that the charging Section (Section 3) is incapable of

being pressed into service inasmuch as the same is

dependent upon Rules made under the Act for the

purpose of determination of value of undisclosed foreign

asset.

E. For that Section 10 (1) of the Act is bad in law inasmuch

as no limitation period is prescribed for issuing any notice

after information is received by the Assessing Officer and

also because no guideline has been provided in the Act


as to the nature of the information, receipt of which can

empower the Assessing Officer to issue such a notice.

F. For that the application of penal provisions of the Act in

respect of any undisclosed foreign asset which has

ceased to exist prior to the Act coming into force will

make the penal provisions including Section 51 of the Act

to be retrospective in nature and as such violative of

Article 20 of the Constitution.

G. For that the action of the Respondents in seeking to

prosecute the Petitioner under Section 51 of the Act in

respect of any action / inaction in respect of undisclosed

foreign asset which ceased to exist before the Act came

into force and for which prosecution under Section 276C

of the Income Tax Act has already been launched makes

the said provision and prosecution under the Act as being

violative of Article 20 of the Constitution as it seeks to

punish a person for an offence twice over. There cannot

be evasion of tax on same undisclosed foreign asset

twice over.

H. For that the action of the Respondent No. 2 for granting

sanction for prosecution of the Petitioner is bad in law

having been made mechanically and without any


application of mind and that too without any

determination as to whether the Petitioner has attempted

to evade tax under the Act. The proceedings under

Section 10 to find out whether the Petitioner has evaded

any tax payable under the Act and the amount of such

evasion, if any, is yet to be determined and as such,

prosecution of the Petitioner at this stage for attempt to

evade tax payable under the Act does not and cannot

arise.

I. For that the action of the Respondents in initiating

proceedings under Section 10 (1) of the Act for

assessment for the previous year 2018-19 cannot arise

now before the conclusion of the said previous year.

J. For that the grant of sanction for prosecution under

Section 51 of the Act when for the very alleged action of

evasion of tax in respect of the period 2009-10 to 2013-14

is already subject matter of prosecution under the Income

Tax Act, 1961 is a malafide and a colourable exercise of

power to expose the Petitioner to prosecution under the

provisions of Prevention of Money Laundering Act

(PMLA), since offence under Section 51 of the Act is a

“scheduled offence” under PMLA, whereas offence under

Income Tax Act is not such a “scheduled offence”.


K. For that the provisions of Section 51 of the Act is also bad

in law since it has not given any guideline to the

authorities as to when the recourse to such provision can

be resorted to in contradiction to prosecution under

Section 276C of the Income Tax Act where the

punishment prescribed is less than the punishment

prescribed under the Act. Thus, giving the Respondents

an unguided power and a discretion to pick and choose

the person who would be prosecuted under Section 276C

of the Act and those who would be prosecuted under

Section 51 of the Act.

L. For that the provisions of Section 54 of the Act which

provides the Court to presume the existence of culpable

mental state on the part of the accused, unless the

accused proves to the contrary “beyond reasonable

doubt” and not on “preponderance of probability” is

opposed to the settled first principle of criminal law that an

accused is innocent until proven guilty and the onus is

always upon the prosecution to prove its case beyond

reasonable doubt.

M. For that the provisions of Section 80 of the Act, which

although mentions about “cognizance of offence” in its

head note, does not provide the procedure to be adopted


for taking cognisance of offence; whether to follow the

procedure for a complaint case or a police case. Such

absence of procedure militates against Article 21 of the

Constitution.

N. For that the action of Respondent No. 3 in initiating

proceedings under Section 10 (1) of the Act for the

previous year 2018-19 relevant to the assessment year

2019-20 is bad in law as time for filing return of income

has not yet expired and as such the question of

determination of tax payable for the previous year 2018-

19 does not and cannot arise before the conclusion of

the said previous year and consequently the question of

attempt to evade tax payable under the Act at this stage

before even the conclusion of the previous year is illegal,

null and void.

O. For that the Respondents have misdirected themselves

both in law and facts of the case.

P. For that the impugned actions of the Respondents are

otherwise bad both in law and facts of the case and as

such set aside by this Hon’ble Court.


6. The Petitioner has no other remedy against the impugned

action of the Respondent, leave alone effective and

efficacious remedy, except by approaching this Hon’ble

Court by of invoking the extra ordinary writ jurisdiction of

this Hon’ble Court.

7. The Petitioner has not filed any other Petition before any

other Court in respect of relief(s) prayed for herein.

8. The present Petition is being made bonafide and is in the

interest of justice.

9. In the premises, the Petitioner most humbly prays your

Lordships to be most graciously pleased to pass:

a) An appropriate writ and/or order and/or direction

declaring that Section 51 of the Act 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), 48

(2), 51, 54 and 80 of the Act are null and void;


c) An appropriate writ and/or order and/or direction

declaring that proviso to Section 3 (1) of the Act

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


01.07.2015 issued by the Government of India is

ultra vires under the Act 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 ultra vires under the Act and null and

void;

f) An appropriate writ and/or order and/or direction


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 may deem fit and proper in the facts

and circumstances of the case.

AND FOR THIS ACT OF KINDNESS THE

PETITIONER AS IN DUTY BOUND SHALL EVER

PRAY.

PETITITIONER

THROUGH:

O P KHAITAN & CO.,

ADVOCATES FOR THE PETITIONER KHAITAN HOUSE

B-1, DEFENCE COLONY NEW DELHI 110 024.

PH. # 46501000 E-mail: [email protected].

NEW DELHI DATED:


mailto:[email protected]

LIST OF ANNEXURE

Annexure P -1 : Copy of one such complaint (without annexures) and one such Order dated 11.12.2017. Annexure P -2 : A copy of the notice dated 08.11.2018 (without the Annexures). Annexure P -3 : A copy of the letter dated 21.11.2018. Annexure P -4 (Colly) :

Copies of the notices both dated 21.12.2018. Annexure P -5 : A copy of the letter dated 24.12.2018. Annexure P -6 (Colly) : A copy each of both the said letters dated 24.12.2018. Annexure P -7 : A copy of the letter dated 28.12.2018 Annexure P -8 : A copy of the letter dated 01.01.2019 Annexure P -9 : A copy of the letter dated 04.01.2019. Annexure P -10 : A copy of the letter dated 09.01.2019. Annexure P -11 : A copy of the show cause notice dated 04.01.2019. Annexure P -12 : A copy of the letter dated 16.01.2019. Annexure P -13 :

A copy of the Order dated 22.01.2019. Annexure P -14 :

A copy of the Order dated 01.07.2015


first draft -...

Documents