Family members of former Finance Minister and Congress strongman P Chidambaram got a major relief in a legal battle against the Centre as the Madras High Court on Friday quashed a sanction order by an income tax official to prosecute them under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act of 2015.
Nalini Chidambaram (lawyer wife of Chidambaram), Karti P Chidambaram (son) and Srinidhi Karti Chidambaram (daughter-in-law) had challenged the prosecution process launched against them by the Department of Income Tax under the above mentioned Act. They had contended that the Principal Director of Income Tax (Investigation) was not the competent officer to launch prosecution under Section 50 of the Act and hence the complaint filed against them should be quashed.
Justices S Manikumar and Subramonium Prasad who heard the petition quashed the sanction orders issued by the Income Tax official stating that the sanction had not been given in accordance with law. The judges also quashed the private complaints lodged by the Income Tax Department against the family before the Metropolitan Magistrate Court in Chennai.
The judges ruled that the sanction had not been given in accordance with the law. The petitioners had told the court that the Principal Director of Income Tax (Investigation ) was not the competent authority to launch prosecution under Section 50 of the Act and hence the complaint filed against them should be quashed. The Chief Metropolitan Magistrate Court at Egmore Chennai was not designated as a special court under the act, they argued.
The cases were filed after it has been found by the Income Tax department that Karti, his mother and wife had purchased a property in London (5, Holben Close, Barton, Cambridge, UK). The IT Department found that the property was purchased for Rs 5.37 crore but this was not disclosed in the IT returns filed by them.
The petitioners also contended that if any proceedings were initiated by the Chief Metroplitan Magistrate based on the prosecution complaint filed by the second respondent (Principal Director), who is incompetent to file the complaint, it would cause prejudice to the respondents. “The petitioner does not have any undisclosed foreign asset and hence does not come within the purview of the Black Money Act,” the petitioners had claimed.
But G Rajagopal, additional solicitor general who appeared for the Government said the Income Tax department would definitely challenge Friday’s decision of the Madras High Court as the Chief Metroplitan Magistrate Court was the competent court for the trial of the case and there was no discrepancy in the principal director initiating prosecution proceedings against the petitioners.
It may be remembered that two judges of the Madras High Court had earlier dismissed the petitions filed by Nalini Chidambaram and others challenging the competence of the Income Tax department to prosecute them under the Act.