New Delhi: The Punjab and Haryana High Court Wednesday upheld a Ludhiana court’s order allowing the Enforcement Directorate (ED) to inspect confidential files related to overseas assets of former Punjab chief minister Captain Amarinder Singh and his son Raninder Singh, obtained by the Income Tax (I-T) Department. This has come as a shot in the arm for the agency’s probe against the two under the Foreign Exchange Management Act (FEMA), 1999.
Disposing of petitions filed by Amarinder Singh and his son, the high court observed that being an organ of the state, the ED has the right to inspect additional documents obtained by the I-T Department from the French authorities on the foreign assets.
The I-T department had filed a prosecution complaint against the father-son duo in November 2016, alleging tax evasion by concealing their foreign assets, five years after it had obtained these documents.
Amarinder and his son had moved the high court in 2021, contending that allowing the ED to inspect income tax documents was a violation of a double taxation treaty with France, as the information was confidential and could only be shared with persons or authorities involved in the assessment or collection of taxes. They obtained a stay on the ED inspection, pending further proceedings before the high court.
Deciding the matter on Wednesday, the high court questioned Amarinder and his son’s position in challenging a lower court’s orders and allowed the ED access to the documents, stating it is the I-T department’s responsibility to oppose the order if it considers the inspection of the papers to be a violation of the terms of the Double Taxation Avoidance Agreement between India and France.
“Information regarding the foreign assets concerning the petitioners has been placed on record in the form of documents before the magistrate by the I-T department, which has been sought by another government department/ED for the purpose of investigation. It is not a case that the information has been demanded for public dissemination; rather, it is only for carrying out investigation against the petitioners,” Justice Tribhuvan Dahiya observed in his judgment.
“They have no right to object to it by alluding to the Avoidance of Double Taxation Agreement. It is the Government of India which has entered into this agreement with the French Republic, where under the information has been handed over to the I-T department,” Justice Tribhuvan Dahiya said.
“The ED is permitted to inspect the record of the complaints before the magistrate and access the information/documents; however, the same shall not be disseminated publicly unless permitted in accordance with law,” he added.
An ED official said the judgment would allow them to take the FEMA case forward. Under FEMA, an Indian citizen cannot hold foreign assets or foreign bank accounts without clearance from the Reserve Bank of India (RBI).
“The judgment will finally allow the agency to take the case initiated under FEMA to a logical conclusion. It would expedite the case that otherwise was left frozen due to a lack of access to potential incriminating materials. The judgment sets the precedent for inter-agency coordination on information-sharing in the future as well,” the ED official, who is privy to the matter, told ThePrint.
However, inspection of the documents, along with allegations of the I-T department of tax evasion, alone cannot justify a probe against Amarinder Singh and his son under FEMA provisions.
“For a FEMA probe, illegal outward remittance of foreign currency, or any illicit management of foreign currency, has to be there. Mere evasion of tax does not make one an accused under FEMA, even while the suspect could be liable under the Income Tax Act,” another ED official privy to the application of FEMA provisions told ThePrint.
Both Amarinder and Raninder have denied the charges against them before IT officials and the Ludhiana court in the past.
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Real estate in Dubai & Swiss bank account
The saga began in 2015, when the ED started inquiring about foreign-held assets of Amarinder Singh’s wife, former Union minister Preneet Kaur, and their son Raninder. The agency had received complaints about two bank accounts, purportedly of HSBC Bank.
The bank denied having these two accounts in its registry.
Next year, the ED learned that the I-T department had filed a prosecution complaint against Raninder and Amarinder Singh before a Ludhiana court, prompting a summons to the father-son, and then moved an application in court to gain access to the complaint and the obtained documents.
On the court’s orders, the ED examined the prosecution complaint and other relevant documents filed by the I-T department in its complaint against the father-son duo.
The I-T department received these documents in 2011 from the French authorities, which allegedly contained details of overseas assets controlled by Amarinder and Raninder in Switzerland and the United Arab Emirates.
The assets allegedly included bank accounts maintained with HSBC Private Bank (Suisse) S.A., a subsidiary of HSBC Private Bank Holdings in Switzerland, and HSBC Financial Services (Middle East) Limited.
The documents allegedly further revealed that Raninder was a signatory to the Jacaranda Trust—which held ownership of business entities like Chillingham Holdings Limited, Allworth Venture Holdings Limited, Limerlock International Limited and Mulwala Holdings Limited—and that Amarinder was one of the beneficiaries of the Jacaranda Trust and its holdings.
Inspection of documents by the I-T department further revealed that Amarinder had allegedly requested the transfer of a Dubai-based immovable property, which was owned by one of the companies owned by Jacaranda Trust, which, in turn, his son controlled.
The I-T department alleged that documents obtained from French authorities revealed that the Raninder Singh-controlled Jacaranda Trust used to own several assets and that Raninder was a settler of the UK-based trust, formed in 2005. Amarinder was summoned in March 2016 to explain his relationship with the Jacaranda Trust.
The I-T department then filed its prosecution complaint on alleged tax evasion against the father-son duo in November 2016.
Meanwhile, the ED was carrying out its parallel investigation. As Raninder denied having any overseas assets or trusts controlled by him and his family members during questioning, the agency sought certified copies of the documents related to those assets from the Central Board of Direct Taxes (CBDT), the parent body of the I-T department.
However, the department refused to share those documents with ED in February 2017, citing that the scope of those documents was limited for tax purposes and that they were not supposed to be shared with any other law enforcement agency.
The ED then sought information from the Foreign Exchange Department of the RBI, which denied giving any permission to Raninder Singh for opening an overseas bank account or acquiring a foreign asset.
Upon learning that the I-T department had filed another complaint against Amarinder, which relied on additional information from Swiss authorities for prosecution, the ED approached the Ludhiana court once again.
The Ludhiana court passed an order allowing the ED to inspect documents obtained from the French authorities, which was upheld by the sessions court there. However, those orders remained suspended as both Amarinder and Raninder filed three petitions before the Punjab and Haryana High Court to stop the ED from examining those documents.
The high court Wednesday allowed the ED to inspect the documents.
This is an updated version of the report.
(Edited by Sugita Katyal)
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