The Madras High Court on Friday ruled that Income Tax proceedings initiated over the alleged non-disclosure of cash transactions to the tune of Rs 7.3 crore following a property sale near Muttukadu were premature. Justice N Sathishkumar made this observation while allowing the revision petitions moved by Sivaganga MP Karti Chidambaram and his wife Srinidhi Chidambaram.
The issue pertains to criminal prosecution initiated by the department for alleged non-disclosure of income by Karti and his wife to the tune of Rs 7.73 crore in the financial year 2015-16.
The non-disclosure came to light during a joint search conducted by officials from the Income Tax Department and the Enforcement Directorate on December 1, 2015 in connection with the case of Advantage Strategic Consulting Pvt Ltd.
Senior Advocates Kapil Sibal, PS Raman and NR Elango, assisted by Advocates Kunal Vajani, NRR Arun Natarajan and Gladys Daniel appeared for the Chidambarams, argued that that the prosecution has been initiated for filing of false returns which amounts to offence of giving false evidence before a court under the IPC.
The court said that the action initiated was amateur, based on the opinion of the Deputy Director of Income Tax Department as there there was no fault in the Income Tax return filed.
“Unless strong materials seized from accused or any incriminating statement recorded from accused, the prosecution has to wait till the finding recorded by Assessing Officer. In view of the same, complaint filed by the Deputy Director for the offence allegedly committed while filing Returns and false verification filed before the Assessing Authority, this Court is of the view that only the Assessing Authority or any other other officer authorised by that officer is competent to file a complaint, not by the Deputy Director”, held the High Court.
The Court observed, “Therefore, such contention by the prosecution that false statement made while recording statement under Section 131 of the Income Tax Act also amounts to false evidence, therefore, complaint is maintainable, at no stretch of imagination can be countenanced.”
However, the Income Tax Department can charge against the couple “under Section 153 of the Income Tax Act”, the Court said.