Delhi HC stays proceedings against Gautam Khaitan under Black Money Act

The Delhi High Court has retrained the Central Government and the Income Tax Department from taking any further action against lawyer Gautam Khaitan under the provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015..The order was passed by a Division Bench led by Justice Siddharth Mridul in a petition preferred by Gautam Khaitan, assailing several sections of the Black Money Act..Khaitan has claimed that the Centre’s notification declaring the date of enforcement of the Act as July 1, 2015, was ultra vires the Act and hence null and void..It was submitted that the amendment to Section 1(3) to state that the Act would come into force from July 1, 2015, instead of April 1, 2016, was done in exercise of power under Section 86 of the Act. Since Section 86 was yet to be in operation, the Centre could not have exercised power under it, the Petitioner contended..Agreeing with the contention, the Court observed,.“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 1st 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 1st April, 2016, the date expressly stipulated by Parliament in this behalf, and not prior thereto.”.It thus stated that the Central Government could not have, prior to the Act coming into force, altered the date on which the enactment came into force by exercising the powers available to it under the Act..The Court stated,.“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.”.The Court, therefore, concluded that Khaitan had made out “a good prima facie case” for grant of interim stay on proceedings against him under the Act..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, the Court stated..The Court thus restrained the Central Government and the I-T Dept “from taking or continuing any action” against the Petitioner till the next date of hearing..Khaitan was arrested by the Enforcement Directorate pursuant to an investigation under the Act, on January 26. As per the prosecution, Khaitan had deposited nearly Rs. 6,000 crore in offshore accounts. A chargesheet has also been filed against Khaitan in violation of provisions under the Prevention of Money Laundering Act, 2002. .Khaitan is currently on bail in the case..Khaitan was represented by Senior Advocate PV Kapur and Siddharth Luthra with Advocates AT Patra, Madhav Khurana, Roopa Dayal, Adarsh Pridarshi, Saurabh Verma, Birender Bhatt, Sidhant Kapur and VK Naghrath..Respondents were represented by Standing Counsel Zoheb Hossain and Amit Mahajan with Advocate Mallika Hiremath..The matter would be heard next on July 4..Read the order:.Bar & Bench is available on WhatsApp. For real-time updates on stories, click here to subscribe to our WhatsApp.