Madras HC quashes Black Money Act prosecution against Chidambaram family [Read Judgment]

The Madras High Court yesterday quashed the prosecution proceedings launched by the Income Tax (IT) Department against the Chidambaram family under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Act)..After extending interim protection from prosecution earlier, the Bench of Justices S Manikumar and Subramonium Prasad today set aside the prosecution proceedings altogether, concluding that no case could be been made out against the Chidambaram family to launch a prosecution under the Black Money Act. As stated in its judgment,.“It is an admitted fact that the foreign asset in each case was acquired with money that was disclosed in the books of account of the assessee (and tax paid) and which was remitted through banking channels under schemes approved by the RBI. There is no allegation of Black Money or unaccounted money or money that has escaped tax or money that was remitted through illegal channels. It is not disputed by the Income-Tax department – that the source of investment was tax paid money remitted through banking channels in accordance with schemes approved by the RBI….…In the light of the decisions, on the power coupled with duty and on consideration of the materials, we are of the view that the Sanctioning Authority has failed to consider the above, and has come to an erroneous conclusion that the case deserve prosecution for non-disclosure of the details of the asset in the return filed under Section 139(1) of the Act. Sanction order deserves to be set aside and accordingly, set aside.“.The matter pertains to alleged non-disclosure of assets in relation to the purchase of certain property in Cambridge, UK and investments made by Chess Global Advisory Services Private Limited, in which company Karti Chidambaram is a Director..In relation to the same, the IT Department had issued reassessment notices under Section 10 of the Black Money Act to Nalini Chidambaram, Karti Chidambaram and Srinidhi Chidambaram in 2017. Thereafter, prosecution proceedings were also launched by the IT Department this year, which have now been set aside by the Court..Senior Advocate Gopal Subramanium made arguments for the Chidambaram family. Additional Solicitor General G Rajagopalan appeared for the IT Department..Earlier this year, Justice TS Sivagnanam had dismissed petitions preferred challenging the prosecution. Following an appeal against this verdict, orders in the matter were eventually reserved last June by a Division Bench comprising then Chief Justice Indira Banerjee and Justice PT Asha..However, the matter was posted before a new Bench after the elevation of Justice Banerjee to the Supreme Court last August. The Bench of Justices Manikumar and Subramonium Prasad had concluded hearings in the case last September..Read the Judgment: