Show Jain’s link with firms from which he gained: HC

NEW DELHI: Delhi health minister Satyendar Jain’s petition challenging an income-tax attachment order made the high court closely examine the amended benami laws.

While hearing Jain’s arguments seeking to quash tax evasion proceedings, Justice Vibhu Bakhru on Wednesday told the income-tax department to show the material linking him to the companies from which he allegedly benefited. “What material do you have to show that the company was holding assets for him over and above his share? Where is the link between him and the companies. Will you now go after shareholders who at some point of time held shares in a company?” the court asked the department.

HC asked additional solicitor general Sanjay Jain to explain if the I-T department intends to re-open all old accommodation entries retrospectively before the 2016 amend- ments, saying if that indeed is the stand of the government, it has “huge implications”.

Accommodation entries refer to the manner in which an individual or company routes in unaccounted money back to legitimate business without paying any tax. Justice Bakhru underlined that in 20/30-year-old cases the issue of tax liability may have been “settled right up to Supreme Court” and wondered how the department intends to tackle these under the new benami Act.

“You have to take a clear stand on how this Act would be administered,” the court told the department, asking it to explain if assets held now by a company, in which accommodation entries have been made in the past, would be construed as being a benami transaction under the Prohibition of Benami Property Transactions (PBPT) Act 2016 for which the department can go after the shareholders.

The court posed the queries to the department while hearing Jain’s plea against the authority’s decision to attach some assets on the ground that they were allegedly linked to him. Senior advocate Amarendra Saran, appearing for Jain, termed the entire I-T attachment procedure illegal, arguing that in any case the November 2016 amendment can’t apply to prior transactions.

The department has registered a case against Jain under the new Act. The CBI, too, has registered a case against Jain on the I-T department’s recommendation.

Saran had earlier pointed out to the court that proceedings have been initiated under a penal provision of the PBPT Act, which came into existence on November 1, 2016 through an amendment, even as the department had admitted that the transactions were made between March 2011 and March 2016. The senior lawyer maintained since the provision, which came into force in November 2016 was penal in nature, it could not have been retrospectively applied to transactions allegedly made prior to its enactment. This would be violative of the constitutional protection given to the petitioner under Article 20 (no retrospective application of a penal law), he added.

During the arguments, ASG Jain alleged that Jain funded four companies in which he used to be a director prior to his election, and they in turn had bought land from the proceeds. The assets were initially provisionally attached on February 27 and the order was extended on May 24 by the department till the time the adjudicating authority took a final decision.

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