[ecis2016.org] The Delhi High Court has asked the Income Tax Department to clarify, whether the new Prohibition of Benami Property Transactions Act, would be applied with retrospective effect, on cases before 2016, when the act came into effect
The Delhi High Court, on October 11, 2017, asked the Income Tax (I-T) Department whether it intended to examine, under the new benami law, all accommodation entries made prior to 2016 when it came into effect. The process adopted by an individual or company, to bring unaccounted money back to their business without paying any tax on the same, is termed as ‘accommodation entries’.
You are reading: Will new benami law be given retrospective effect? HC asks tax department
Justice Vibhu Bakhru said that if the newly amended benami law was being interpreted by the tax department in such a manner, as to give it retrospective effect from 1988, when the legislation was first enacted, then, it would lead to the reopening of 20-30-year-old cases, many of which would have gone all the way to the Supreme Court. “You have to take a clear stand on how this Act would be administered,” the court told the tax department and added that the issue would have ‘huge ramifications’. It also asked the department whether 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 Act 2016.
Read also : IRB targets Rs 5,000 crores from its maiden InvIT IPO on May 3, 2017
[ecis2016.org] Lalu family benami assets case: I-T issues attachment order
The court posed the queries to the I-T Department, while hearing Delhi health minister Satyender Jain’s plea against the authority’s decision to attach some assets, on the grounds that they were allegedly linked to him. The I-T Department has also registered a case against Jain, under the new Prohibition of Benami Property Transactions Act. The CBI, too, has registered a case against Jain, on the I-T Department’s recommendation.
According to Jain’s plea, the alleged benami transactions, from the proceeds of which the attached assets were claimed to have been purchased, took place between 2011 to March 31, 2016 and therefore, the amendment which came into effect in November 2016, would not apply. His lawyers sought that either the proceedings under the benami law be stayed, or the tax authorities be directed not to pass a final order, till his petition in the high court is finally decided. The court, however, declined to grant any interim relief and allowed the tax department to proceed in the way they want.
Read also : Supreme Court directs Mumbai Metro to strictly abide by ‘no cutting trees’ undertaking in Aarey colony
During the arguments, the tax department, represented by Additional Solicitor General (ASG) Sanjay Jain, contended that Jain had 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. Hundreds of bighas of land and other assets worth over Rs 30 crores, allegedly purchased in and around Delhi by the four firms, have been provisionally attached by the department under the new benami law, which carries a maximum punishment of up to seven years of rigorous jail term and a hefty penalty. The assets were initially provisionally attached on February 27, 2017 and the order was extended on May 24 by the I-T Department, till the time the adjudicating authority took a final decision.
The court asked the I-T Department, whether it had any material in the instant case, to show that the assets in question were being held by the companies for the benefit of someone else, who was not a shareholder like Jain. Jain has claimed that he was only a minority shareholder in the companies at one point and that he has sold his shares in the entities. The court also said that if the I-T Department finds such assets, bought from proceeds of benami transactions, in the hands of a company, it should tax it there and not in the hands of the shareholder.
Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org
Source: https://ecis2016.org
Category: Lifestyle