CHENNAI: The Madras High Court today allowed the Income Tax department to proceed with its inquiry based on a show cause notice issued to former union minister P Chidambaram's son Karti and other directors of a company under the black money act.
A bench of justices V Bharathidasan and N Seshasayee, however, directed the Principal Director of Income Tax (Investigation), Chennai, to grant a due and proper opportunity to Karti and other directors of the Chess Global Advisory Services Private Limited for presenting their case.
Passing interim orders on a petition by the company and the directors, including Karti, seeking to quash the April 13 show cause notice issued by the department, it posted the matter to June 5 for further hearing.
Besides, the petitioners also filed another petition challenging the validity of section 50 of the Black Money (Undisclosed Foreign Income and Assets) and the imposition of Tax Act, 2015 and seeking to declare it as null and void.
The matter relates to investments and advances made by the petitioners' company to the Totus Tennis Limited of UK and Nanoholdings LLC of USA.
According to the petitioners, all the investments, remittances made by them in the two overseas companies have been fully disclosed both in the original and revised I-T returns.
They alleged that despite a reply given to an earlier notice, the Principal Director of IT had on April 13 issued the show cause notice asking why prosecution should not be sanctioned for the alleged offence under Section 50 of the Black Money Act.
The black money act would be attracted only in the case of "undisclosed foreign asset" or "undisclosed foreign income", the petitioners said contending that there was no such asset or income on their part and sought to quash the notice.
In its order, the bench directed the Principal Director to file a counter and said he may proceed with any inquiry under the show cause notice or take a decision on exercising his power under section 55(1) of the black money act.
He shall proceed unhindered by the pendency of the writ petition but keeping in mind all the relevant provisions of Income Tax and the black money act before taking a final decision, the judge said.