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Saturday, September 18, 2021

HC stays order of Ludhiana courts allowing ED to inspect judicial file on I-T case against Capt, son

The HC ordered that it would be appropriate that since the matter is already stayed on the application by the I-T department, the original record be called for, so that parties can assist on all legal aspects.

Written by Jagpreet Singh Sandhu | Chandigarh |
September 9, 2021 8:35:25 am
the HC also ordered all other connected matters bearing are liable to be preponed from November 18, 2021. (File)

THE PUNJAB and Haryana High Court on Wednesday stayed an order of a Ludhiana court whereby the Directorate of Enforcement (ED) had been permitted to inspect a judicial file regarding the complaint filed by the income tax department against Punjab Chief Minister Capt Amarinder Singh and his son Raninder Singh. “The information is available in court records and there is no such tearing hurry which would require respondent no.2 (ED) to get its hands on it immediately,” it said.

The Bench of Justice G S Sandhawalia passed the order while hearing the petition filed by the CM, challenging the orders dated September 18, 2020. The petitioners also challenged the order of the revisional court dated September 2, 2021, whereby it upheld the order of the JMIC, permitting the inspection.

Counsels for the petitioners, senior advocates Akshay Bhan, and Siddharth Aggarwal, and advocates G S Bedi, Amandeep Singh, and Pawandeep Singh, contended that the information in the form of master-sheets was received by the Director General of the Income Tax (Investigation) Chandigarh. The same was earlier received from Paris (France) on June 28, 2011, by the competent authority — the Foreign Tax and Tax Research (FT&TR) division of the Central Board of Direct Taxes (CBDT), as per the provisions of Article 28 of the Double Taxation Avoidance Convention (DTAC) between India and France.

The petitioners’ counsels further argued that there is an agreement for avoidance of double taxation with France dated September 29, 1992, which further provides that taxes to which the convention shall apply in India which are namely, the Income Tax; surtax; wealth-tax and there is no further reference to any other fiscal statute under the treaty. It was also stated that the communication dated June 28, 2011, was addressed by the department of income tax to the French authorities, with reference to their letter dated June 14, 2011, while referring to the DTAC that information would be kept secret and not utilised other than fiscal (taxation) ends (purposes) and would be utilised strictly as per the rules of confidentiality.

The counsels argued that the orders permitting inspection, in such circumstances, would require a re-look, and while dismissing the revision petition, the revisional court has directed the parties to appear before the trial court on September 9, 2021, despite the fact that there is no summoning order.
Additional Solicitor General of India Satya Pal Jain, representing the Union, in reply contended that the petitioners are mere accused who have yet not put in appearance since the summoning order dated April 24, 2017, was set aside by the revisional court at Ludhiana on November 27, 2018. Also, these issues were never raised before the courts below and only the violation of principles of natural justice were raised, thus inspection be permitted and no interim order be passed in favour of the petitioners.
Justice Sandhawalia, after hearing the arguments, said: “Once the complaint is based on the information which has been received under the convention, as discussed above, there are restrictions on sharing of the information, which has limited it to a certain set of officials. Prima facie, respondent no. 2 (ED) would not be entitled to the information, in view of the apparent legal bar, as has been discussed above. If an interim order is not granted, at this stage and inspection is allowed to respondent no.2, it would amount to rendering the present litigation at the hands of the petitioners infructuous and would be an exercise in empty formality.”

“Merely because the petitioners had not raised this in the same letter and spirit before the courts below, would not divest this court to go into the root of the issue as to whether respondent no. 2 has the authority to have to look into the documents which are barred by the international conventions between India and France. If there was no such bar, respondent no. 2 could have easily obtained the information from respondent no.1 (complainant), which is also under the control of the Ministry of Finance, Department of Revenue, rather than approaching the trial court for the requisite information.”
“.The matter of jurisdiction goes to the root of the matter and the objections which are being raised by the Union of India, would not stand in the way of this court which has been entrusted with the onerous duties to protect the rights of its citizens irrespective of the fact they hold public office or otherwise.The information which is lying is available in court records and there is no such tearing hurry which would require respondent no. 2 to get its hands on it immediately.”, read Justice Sandhawalia’s order.

Thus, while issuing notice to the income tax department and ED, the bench ordered, “The order of inspection of the documents dated September 18, 2020, and the order dated September 2, 2021, upholding the same, would have to be stayed, during the pendency of the proceedings and it is so ordered. It is further clarified that the petitioners need not put in appearance before the trial court.”

The HC ordered that it would be appropriate that since the matter is already stayed on the application by the I-T department, the original record be called for, so that parties can assist on all legal aspects. Meanwhile, the HC also ordered all other connected matters bearing are liable to be preponed from November 18, 2021.

A case against Amarinder Singh is registered under Section 277 (false statement of verification) of the Income Tax Act, while two other cases against Raninder are registered under Section 276-C (evasion of tax) and Section 277 of the same Act, with the income tax department being the complainant in all three cases.

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