2019 (5) TMI 1070 - HC - Income Tax

Power of Central Government u/s 85 86 - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - to promulgate the impugned Notifications, pursuant to which the subject proceedings have been initiated against the petitioner, prior to the said Act itself coming into force and that the same are consequently without the sanction of law.? - Act, it shall come into force on the 01.04.2016 - whether notifications issued making them effective prior to 01.04.2016 are ultravirus? - Grant of interim relief - Seeking stay of the operation - HELD THAT - 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. A fortiori the Central Government further could not have, prior to the said Act coming into force, altered the date on which the enactment came into force i.e. 1st April, 2016 by exercising the powers available to it under Sections 85 and 86 of the said Act by advancing it to 1st July, 2015. 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. In this view of the matter, we are of the opinion that, the petitioner has made out a good prima facie case for grant of interim relief; and that 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 respondents are, therefore, restrained from taking and/or continuing any action against the petitioner, pursuant to the impugned order dated 22.01.2019, passed by the respondent No.2, till the next date of hearing. Renotify on 04.07.2019.

Summary

Issues:
Challenge to the retrospective application of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Analysis:
The petitioner sought a writ to declare Section 51(1) of the Act applicable only prospectively, challenging the retrospective application of the Act. The issues raised included the nullification of Sections 10(1) and 54 of the Act, and the legality of certain notifications issued by the Government. The petitioner also challenged specific orders and notices issued by the Income Tax Department. The main contention revolved around whether the Government had the authority to exercise powers under the Act before its official commencement date.

During the hearing, the respondent, Union of India, did not file a reply and adopted the counter affidavit. The court considered the application for a stay on the order dated 22.01.2019 to prevent any action under Section 10 of the Act against the petitioner. The core issue at the interim stage was whether the Government could utilize powers under the Act before its effective date.

The petitioner's counsel argued that the Government's actions, through various notifications, were impermissible as they were issued before the Act's commencement. Conversely, the Income Tax Department contended that the Government had the authority to advance the Act's enforcement date under Section 86. However, the court disagreed with this interpretation, emphasizing that Parliament had expressly stated the Act's commencement date as 1st April 2016.

The court referenced a Supreme Court decision to support its position that the Government cannot enforce a statute before the date specified by Parliament. Consequently, the court held that the official respondents were not authorized to exercise powers under the Act before its commencement. As a result, the petitioner was granted interim relief to prevent further actions under the Act until the next hearing date.

In conclusion, the court restrained the respondents from taking any action against the petitioner based on the impugned order, highlighting the importance of adhering to the statutory commencement date set by Parliament. The case was scheduled for further proceedings on 04.07.2019.