TMI Blog2018 (11) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... the case on hand, the assessee have furnished the details of the assets in Schedule FA of the Income-Tax returns, under Section 139(5). Thus, even taking it for granted that the assessee have omitted to furnish the details in the returns under Section 139(1) of the Act, in the light of the decision of Central Board of Direct Taxes, prosecution cannot be launched, but at best, there could only be penal proceedings. As per Section 196(d) of Income Declaration Scheme, 2016, the provision of the scheme shall not apply, in relation to any undisclosed foreign income and asset which is chargeable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015). Under the Scheme, even in case of (i) failure to furnish a return, under Section 139 of the Income Tax Act; (ii) failure to disclose in a return of income furnished by him under the Income-tax Act, before the date of commencement of this Scheme; and (iii) in the case of escaped assessment, by reason of omission or failure to furnish a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise, the assessee can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Order and without giving an opportunity to the noticees/assessees, proceeded to sanction prosecution and filed the complaints against the Petitioners on 11.05.2018, in view of the foregoing discussions, it is not necessary to delve into the said aspect. In the light of the decisions, on the power coupled with duty and on consideration of the materials, we are of the view that the Sanctioning Authority has failed to consider the above, and has come to an erroneous conclusion that the case deserve prosecution for non-disclosure of the details of the asset in the return filed under Section 139(1) of the Act. Sanction order deserves to be set aside and accordingly, set aside. Going by the definition of Section 50 of the Black Money Act, read with Section 2(11) of the Act, and in the light of the above discussion and decisions, we are of the view that the offence under Section 50 is not made out. Consequently, complaints filed in C.C.Nos.4482 to 4485 of 2018 dated 11.05.2018 are quashed. Principal Director of Income Tax (Investigation), Chennai jurisdiction/competence under section 55 Block Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UDUCHERRY) TO SANCTION PROSECUTION TO FILE THE COMPLAINT AGAINST THE WRIT PETITIONERS: (ii) W.P.Nos.13005 and 13071 of 2018 are for issuance of declaration, declaring that the Principal Director of Income Tax (Investigation), Chennai, 2nd respondent is not an authority having jurisdiction/competence under section 55 Block Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, to sanction prosecution or file a prosecution compliant for offences under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 against the petitioners. (C) WRIT PETITIONS, TO DECLARE SECTIONS 48 AND 50 OF THE BLACK MONEY ACT, AS UNCONSTITUTIONAL AND VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION OF INDIA: (iii) W.P.Nos.13006, 13008, 13009, 13041, 13042 and 13070 of 2018 are for issuance of declaration, declaring that Sections 48 and 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 are arbitrary, violative of Article 14 and 21 of Constitution of India, unless the true scope and meaning of the provisions of Chapter V of the Black money (undisclosed Foreign Income Assets) and Impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the 1st respondent under Section 55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 according sanction to prosecute the petitioner for offence under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the consequential prosecution complaint C.C.No.4483 of 2018 dated 11.05.2018 filed by the 2nd respondent before court of the Chief Metropolitan Magistrate, Egmore, Chennai and quash the same as without authority of law and illegal because of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and especially. (viii) W.P.No.22330 of 2018 is for issuance of a declaration, calling for the records relating to the order dated 10.05.2018 passed by the 1st respondent under Section 55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 according sanction to prosecute the petitioner for offence under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the consequential prosecution complaint C.C.No. 4485 of 2018 dated 11.05.2018 filed by the 2nd respondent before C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3043 of 2018, W.P. No.22331 of 2018) is that the Reserve Bank of India introduced the Liberalized Remittance Scheme (LRS) on February 4, 2004, vide A.P. (DIR Series) Circular No.64, dated February 4, 2004 read with GOI Notification G.S.R. No.207(E), dated March 23, 2004, as a liberalization measure to facilitate resident individuals to remit funds abroad for permitted current or capital account transactions or combination of both. The permissible capital account transactions by an individual under Liberalized Remittance Scheme (LRS) of the RBI include, amongst others, purchase of property abroad. 7. During 03.06.2014 till 26.05.2015, under the Liberalised Remittance Scheme, Designated bankers/Authorised Dealers were permitted to allow remittances by resident individuals up to USD 1,25,000/- per Financial Year. The Scheme is available to all resident individuals including minors. In case of the remitter being a minor, Form A2 must be countersigned by the minor s natural guardian. Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions. The scheme, however, provides that clubbing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in the Parliament on 31.05.2016. The assets of the Spouse, i.e. Mrs.Nalini Chidambaram, including the foreign asset located in Cambridge, UK, was included in the list of assets owned by Mrs.Nalini Chidambaram. 12. Mrs.Nalini Chidambaram has filed return of Income for AY 2016-17 on 14.10.2016, under Section 139(1) of the Income Tax Act. Simultaneously, tax audit report was also filed electronically annexing the audited balance sheet of the Petitioner. Schedule 3 deals with the Immoveable Property, refers to the 1/3rd share of property, in Cambridge valued at ₹ 1,55,21,181/-. 13. It is submitted by Mrs.Nalini Chidambaram that she filed her return of Income for AY 2016-17 on 14.10.2016 under Section 139 (1) of the IT Act. In the original return of income, due to a human error committed in the office of her Chartered Accountant, Part-B of Schedule FA, dealing with immovable properly held abroad, was not filled up. However, in the original return of income itself, the said amount of ₹ 1,55,21,181 being the value of the foreign asset located in Cambridge, UK, was included among ₹ 23,45,17,597 in Schedule - AL relating to Assets and Liability at the end of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 139 (1) of the IT Act, showing the Cambridge property valued at ₹ 1,55,21,181 /- in Part C of Schedule FA. According to the her, if the assessing officer considers the documents furnished by her objectively and in accordance with law, the assessing officer will have no other option, except to drop all the proceedings against her under the Black Money Act and pass a NIL assessment order under section 10(3) of Act 22 of 2015. 18. It is the further case of Mrs.Nalini Chidambaram that even before the Income Tax Officer passed the assessment order under the Income Tax Act for the AY 2016-17 and under Section 10(3) of the Black Money Act, two show cause notices dated 13.04.2018, were issued to her, by the Principal Chief Commissioner of Income Tax (Tamil Nadu and Puducherry), 2nd Respondent herein, under section 55(1) of the Black Money Act for prosecution of the Petitioner u/s 50 of the Black Money Act for the AY 2015-16 and AY 2016-17. 19. In the show cause notice, for the AY 2015-16, it was stated that as per the information received by the Assessing officer, it has been noticed that she has made investment in Cambridge property remitting ₹ 77,60,470/- directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karti P.Chidambaram (writ petitioner in W.P.Nos.13008 to 13010 of 2018) has stated that on 24.03.2015, she made an application to her banker, Indian Overseas Bank, Nungambakkam Branch, to transfer GBP 83,000 from her savings bank account with the said Branch, to the account of their legal counsel, M/s.Hewitsons, LLP Client Account, which is an escrow account maintained by the legal counsel to complete the purchase of the Cambridge property. The said amount was remitted to M/s.Hewitsons, LLP Client Account on 24.03.2015. 25. Mrs.Srinidhi Karti P.Chidambaram has further stated that on 07.04.2015, she made an application to her banker, Indian Overseas Bank, Nungambakkam Branch, to transfer GBP 84,000 from her savings bank account with the said Branch, to the account of her legal counsel, M/s. Hewitsons, LLP Client Account for purchase of the Cambridge property. The said amount was remitted to M/s. Hewitsons, LLP Client Account on 09.04.2015. Remittances limits were revised and Authorised Dealers were authorised to permit remittances by resident individuals up to USD 2,50,000 per Financial Year, with effect from 26.05.2015. 26. Mrs.Srinidhi Karti P.Chidambaram has further stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karti P Chidambaram has further stated that on 04.08.2017, the Deputy Director of Income Tax (Inv.), Unit - 3(3) issued a notice to her u/s 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, alleging that the investments made by her, with respect to AY 2016-17 were not disclosed fully in Schedule - FA of the Return of Income filed for the said assessment years. The authority called upon her to furnish certain documents/information in relation to the investments made by her in the foreign property. 30. Mrs.Srinidhi Karti P Chidambaram has further stated that on 17.08.2017, her Authorized Representative appeared before the Deputy Director of Income Tax (Inv.), Unit - 3(3) and submitted that for issuing notice u/s 10(1) of the Black Money Act to any person, the jurisdictional fact is that the noticee should have undisclosed foreign assets within the meaning of Section 2(11) of the Black Money Act. 31. She further submitted that the said jurisdictional fact is completely absent in her case since the investment made by her in the foreign property has been disclosed in her Return of Income and as a result, the assets did not qualify a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stated that on 04.09.2017, her Authorized Representative explained to the Deputy Director of Income Tax (Inv.), Unit - 3(3) that the Petitioner had invested only a sum of ₹ 1,55,07,510/ on the purchase of 1/3rd of the Cambridge Property. The Authorised Representative, however, without prejudice, submitted the information and documents called for by the Deputy Director o f Income Tax (Inv.), Unit - 3(3) and requested for further time to submit the other information/documents. 36. Mrs.Srinidhi Karti P. Chidambaram has further stated that on 11.09.2017, the Authorized Representative of the Petitioner provided the remainder of the information and documents called for by the Deputy Director of Income Tax (Inv.), Unit - 3(3). 37. Mrs.Srinidhi Karti P. Chidambaram has further stated that on 01.11.2017, the Deputy Director of Income Tax (Inv.), Unit - 3(3) issued summons to the Petitioner under Section 8 of the Black Money Act, calling upon her to produce her statement of net wealth from 2014 to 2017, an explanation on the basis on which part of the foreign remittance has been classified as 'Advance for financial interest and necessary proof to substantiate her claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was posted on 27-04-2018. During the proceedings, through her Authorised Representative, petitioners filed written submissions objecting to the show cause notice. Their counsel also advanced oral arguments stating among others, that they have filed a revised return under section 139(5) of the Income Tax Act disclosing all the assets located outside India in Schedule FA and such a revised return substitutes/effaces/obliterates the original return and hence the only return on record is the revised return filed by her on 04.09.2017 for the AY 2016-17 wherein the sum of ₹ 1,55,21,181 was disclosed in Part B of Schedule FA as a matter of abundant caution). Hence there is no failure on her part to disclose the foreign assets in the Schedule FA much less a wilful failure. The allegation that the revised return was not filed voluntarily but only after the section 10(1) notice is untenable. 42. On 26.03.2015, Mr.Karti P Chidambaram (writ petitioner in W.P.Nos.13041 to 13043 of 2018) wrote to the Manager, Indian Overseas Bank, Nungambakkam Branch requesting for foreign remittance of GBP 83,000 from the Petitioner's account. The purpose of the investment was stated as investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty were only towards general maintenance of the property and are as such only current account expenses and not capital account expenses. Therefore, there was no requirement for him to have actually disclosed the amounts transferred to the caretaker of the property for maintenance. There was however a clerical error committed in the office of his Chartered Accountant while filling up the said Part-B of Schedule-FA. Although the entire amount of ₹ 96,92,229 had been disclosed, the beneficiary was mentioned as Hewitsons LLP instead of L.Mooney who is the caretaker of the property. A perusal of the bank forms and delivery reports provided by Indian Overseas Bank, Nungambakkam Branch, Chennai will make it abundantly clear that the funds were transferred and received only in the bank account of the caretaker of the property. 46. On 30.11.2015, Mr.Karti P Chidambaram remitted ₹ 33,64,360 equal to GBP 33,104/ - (British Pounds) to the bank account of the caretaker of the property, towards maintenance, repairs and general upkeep of the property that was purchased. The transfer was made from the Petitioner's bank account in Indian Overseas Bank, Nungambakkam Branch to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the funds were transferred and received only in the bank account of the caretaker of the properly. 51. The details of the application made by the petitioner to his Banker namely Indian Overseas Bank, Nungambakkam Branch, Chennai and the amount in Pounds/ Rupees remitted to the account of M/s.Hewtisons, LLP , U.K are given below: Date of Application to the Banker Amount (in foreign currency) Amount (in Rs.) 26.03.2015 GBP 83,000 77,60,500 07.04.2015 GBP 84,000 77,85,120 10.04.2015 GBP 84,000 76,86,000 30.11.2015 GBP 33,104 33,64,360 28.01.2016 GBP 35,194 34,32,823 TOTAL 3,00,28,803 52. Out of the total sum of ₹ 3,00,28,803/ , ₹ 2,03,36,572/- in British pounds was sent to the Beneficiary Hewitsons LLP Client account in Lloyds Bank, Cambridge, UK. who was the legal counsel for comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shares In India) in US based Company, namely, M/s.Nano Holdings, LLC. The investment was approved by the Board of Directors of Chess Global Advisory Services Private Limited. Since the investment was only in preferred units and not in any equity instruments, it does not confer any ownership rights upon Chess Global Advisory Services Private Limited. The only return on investment will be dividend and redemption of the preferred units. The registered owner of the 0.77% preferred units, as per the statutory records of Nano Holdings, LLC, is Chess Global Advisory Services Pvt. Ltd. and not the Petitioner. Therefore, all the income will only accrue to the Company and the Petitioner does not have any beneficial interest or ownership, in any form or manner, in the investments made in Nano Holdings, LLC. Therefore, the Petitioner had not made any disclosures in this regard in his return of income. 56. Mr.Karti P Chidambaram has further stated that on 04.08.2017, the Deputy Director of Income Tax (Inv.), Unit - 3(3), Chennai issued a notice to the Petitioner u/s 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, alleging that the invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i P Chidambaram, has further stated that on 01.11.2017, the Deputy Director of Income Tax (Inv.), Unit - 3(3) issued a summons to the Petitioner under section 8 of the Black Money Act, calling upon him to produce further information/documents. On 06.11.2017, the authorized representative of the Petitioner appeared before the Deputy Director of Income Tax (Inv.), Unit - 3(3) and provided the details called for by him in the summons dated 01.11.2017. On 14.11.2017, the authorized representative of the Petitioner again appeared before the Deputy Director of Income Tax (Inv.), Unit - 3(3) and provided further details as called for by the said authority during the hearing on 06.11.2017. 61. A show cause notice, dated 13.04.2018 was issued to Mr.Karti P Chidambaram, by the 2nd Respondent under section 55(1) of the Black Money Act for prosecution of the Petitioner u/s 50 of the Black Money Act for AY 2016-17. It was alleged that the Petitioner had failed to furnish the information with respect to the foreign asset located outside India: (i) The correct amount of investment i.e, ₹ 3,00,23,9161 in immovable property at 5, Holben Close, Barton, Cambridge CB23 7AQ. (ii) Inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself proved that the opportunity to show cause, as to why prosecution should not be launched under Section 50, was only an empty formality, and the 2nd Respondent has predetermined to sanction prosecution, even though, it has been proved to the hilt before the Deputy Director of Income Tax (Inv.), Unit - 3(3) that, they have no undisclosed foreign asset, within the meaning of Section 2(11) of the Black Money Act. They had raised valid grounds to withdraw the show cause notice. Hearing itself was held in haste, without giving sufficient time, on another day, to make a detailed representation. From the haste, in which the hearing was concluded, it would be futile to wait for an objective order in accordance with law on the show cause notice. 66. Mrs.Nalini Chidambaram and her family members have further stated that they have been subjected to harassment for the last 3 years by the Central Agencies. Multiple searches were conducted by CBI and Enforcement Directorate, both under FEMA and PMLA, issued with several summons, even in the absence of a predicate offence, registration of an FIR under the Prevention of Corruption Act, without naming any public servant. 67. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a private limited company incorporated under the Companies Act, 1956. Mr.Karti P Chidambaram, Mr.A.Palaniappan and Mr.Goutham Tharanath Maroli are the Directors of M/s.Chess Global Advisory Services Private Limited. The Petitioner- Company has duly filed its return of income every year under the Income-tax Act. 71. On 20-04-2005, the Petitioner Company was incorporated with the Registrar of Companies, Chennai as Chess Healthcare Solution Private Limited. The main business activity of the Petitioner Company is to provide management consultancy and internal audit services. On 18.09.2013, the Company s name was changed to M/s.Chess Global Advisory Services Private Limited. On 13-03-2015 M/s. Totus Tennis Limited was incorporated in the United Kingdom as a wholly owned subsidiary of the Petitioner Company. The primary business activity of Totus is to identify and train talented sports persons and conduct tennis tournaments. 72. The 1st Petitioner company invested in Totus Tennis Ltd, UK, through its banker State Bank of India, Nungambakkam Branch (Authorized Dealer), Chennai details of which are given below: (a) Amount transferred for investment in equity shares of Totus Tenn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Company, was filed with the RBI. iii) On 31-10-2016, the Form APR (Annual Performance Report), for the financial year ended 31-03-2016, in respect of the investment made by the 1st Petitioner Company in its wholly owned foreign subsidiary, M/s.Totus Tennis Limited and the investment made in NanoHoldings, LLC was filed by the 1st Petitioner Company with the RBI through the Authorized Dealer, viz. State Bank of India, Nungambakkam Branch. iv) On 27-12-2016 the 1st Petitioner Company filed the annual accounts in Form-AOC 4 with the Ministry of Corporate Affairs. Complete details of the investments made in the whollyowned foreign subsidiary, Totus Tennis Limited, including the consolidated statement of accounts of the Indian and Foreign Company were disclosed. The investment made in Nano Holdings, LLC was also fully and truly disclosed. 75. The facts of the case that are relevant to the Writ Petition are as follows: TOTUS TENNIS LIMITED a) For AY2016-17, the original return of income of the Petitioner-Company was filed on 15-10-2016, within the due date. For that assessment year, the only investment in a foreign asset was made on 01-07-2015 in equity shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NGS, LLC a) On 20-08-2015, a sum of Rs. 3,27,62,5001-, was invested in preferred units of Nano Holdings, LLC, a company incorporated in the United States of America. In the original return of income, this investment is reflected in the Balance Sheet as on 31-03-2016, under heading II - Assets, subheading B(iii) - Investment in Preference Share . It was not reflected in Schedule-FA because the Petitioner- Company was advised by the Chartered Accountant that the investment in preferred units did not fall under any of Parts A to G of Schedule-FA. b) However, again on the advice of the Chartered Accountant, the Petitioner- Company filed a revised return for AY2016-17 on 04.09.2017 under section 139(5) of the Income Tax Act within the due date. In the revised return, the sum of Rs. 3,27,62,5001- was disclosed in Part B of Schedule-FA as a matter of abundant caution . 76. It will be seen from the above facts that all investments, remittances etc. made by the Petitioner- Company in Totus Tennis Limited and in NanoHoldings, LLC have been fully disclosed both in the original return of income as well as in the revised return of income. In particular, they were fully disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Tax Act 2915, hereinafter referred to as the Black Money Act. Details of the proceedings that took place thereafter, including the notices sent by the 2nd Respondent under section 10(1) and 8 of the Black Money Act and the dates when the 1st Petitioner thorough its authorised representatives submitted the documents sought for by the 2nd Respondent, are given below: Date of notice from the 2 nd Respondent Date of submission of documents by the AR of the Petitioner 16.08.2017 04.09.2017 18.09.2017 01.11.2017 06.11.2017 79. It is submitted by the petitioner-Company that a scrutiny of the details sought for by the 2nd Respondent shows that the 2nd Respondent was only conducting a fishing and roving enquiry and most of the information sought for did not relate to the objects of the Black Money Act, 2015. Despite giving all particulars sought under the Black MoneyAct, the 2nd Respondent has not passed any order for the last 12 months on the reply given by the 1st Petitioner to the notice under Section 10(1) of Black Money Act . If the 2n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the assets located outside India in schedule FA and such a revised return substitutes/effaces/ obliterates the original return and hence the only return on record is the revised return filed on 04.09.2017 for the AY 2016-17 wherein the sum of ₹ 80,01,110 in Totus Tennis Limited and ₹ 3,27,62,500 in NanoHoldings LLC was disclosed in Part B of Schedule FA. Hence there is no failure on the part of the Petitioner to disclose the foreign assets in the Schedule FA, much less a wilful failure. The allegation that the revised return was not filed voluntarily but only after the section 10(1) notice was stoutly refuted. 83. Being aggrieved with the show cause notice the Petitioner-Company filed W.P.No.11715 of 2018 on 01.05.2018 praying to quash the Show Cause Notice dated 13-04-2018 bearing File. No. Pr.DIT (Inv)/Prosecution /2018-19 for the Assessment Year 2016-17 issued by the Respondent No.1. In W.M.P.No.13688 of 2018 the Petitioners sought for stay of the show cause notice. The learned counsel for the petitioners wrote a letter dated 01.05.2018 to the 1st Respondent asking for a copy of the order to be passed on the Show Cause Notice dated 13.04.2018. 84. It transpi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in C.C.Nos.4482 to 4485 of 2018 on 11.05.2018 under Section 200 of Cr.P.C. for an offence under Section 50 r/w Section 56 of the Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015 for the AY 2016-17 against her on 11.05.2018. 89. Petitioners have submitted that the sanction orders, dated 10.05.2018, passed by the 1st Respondent and the prosecution complaint filed by the 2nd Respondent under Section 50 read with Section 55 of the Black Money Act, dated 11.05.2018, are without jurisdiction. The Chief Metropolitan Magistrate, Egmore, Chennai is also not the designated special court to try any prosecution complaint under the Black Money Act. 90. According to the petitioners, the 1st Respondent is yet to comply with the above direction. Except filing a review petition to review the order dated 12.06.2018 the 1st Respondent has not taken any steps to pursue the Review Petition. On 20.06.2018, the petitioners received summons in C.C.Nos.4482 to 4485 of 2018 from the Metropolitan Magistrate Court, Egmore directing her to appear in person on 25.06.2018. 91. On 25.06.2018, they filed applications in C.C.No.4483 of 2018 asking for copy of the prosecut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome or even more than one revised return of income as long as they are filed within time. The revised return of income is the only relevant return of income that can be relied upon or referred to. The revised return of income obliterates or effaces any earlier return of income. It is also settled law that a return of income has many schedules and all the schedules are part of the 'return of income' referred to in Section 139 of the Income-tax Act. 96. Apprehending that with a malafide intention the 2nd Respondent, with post haste, may sanction prosecution against the Petitioner-Company and its Directors, the Petitioner-Company filed W.P.No.11715 of 2018 praying as follows: Issue a WRITOF CERTIORARI or any other Writ, Order or Direction calling for the records relating to the Show Cause Notice dated 13.04.2018 bearing File. No. Pr.DIT (Inv)/Prosecution/2018-19 for the Assessment Year 2016-17 issued by the Respondent NO.1 and all proceedings consequential to the said Show Cause Notice and quash the same as without jurisdiction 97. Mr.Gopal Subramaniam and Mr.AR.L.Sundaresan, learned senior counsels appearing for the petitioners submitted that: (i) The Black ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (subject to Appeal, further Appeals to the Tribunal, High Court and Supreme Court) can the provisions of Chapter V be invoked. Any other construction would lead to an absurd result that while prosecution may be sanctioned and actually instituted, the Assessing Officer may find that there is no undisclosed foreign asset (or income). Meanwhile the assessee may have undergone trial and may have even been convicted. (vi) Learned senior counsel further submitted that the question will then arise, what will happen to the trial or conviction. On the one hand there will be a finding by the Assessing Officer that there is no undisclosed foreign asset (or income), meaning that everything was disclosed and on the other hand there will be a sanction for prosecution, trial or even a conviction on the allegation that the assessee did not furnish any information relating to the foreign asset (or income). According to the learned senior counsel, the Black Money Act, 2015, does not intend such contradictory results and hence there is a need to read the provisions of Chapter III and Chapter V of the Act harmoniously. (vii) Referring to Section 55 of the Act, learned senior counsel submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petitioners believe that in no other case, assessees concerned have been threatened with prosecution before the conclusion of the proceedings under Section 10 of the Act. Petitioners have been singled out for discriminatory and unfair treatment. (x) Learned senior counsel for the Petitioners submited that the offence under Section 50 is made out only if, in the return of income under sub-section (1) or sub-Section (4) or sub-Section (5) of Section 139 of the Income-tax Act, there has been a wilful failure to disclose any information relating to the foreign asset. In the present case, information relating to the foreign assets were disclosed in the return of income read with the balance sheet pertaining to AY 2016-17. A return of income includes all the schedules. Omission, if any, in the original return under Section 139(1) was corrected in the revised return under Section 139(5) of the Income-tax Act. The original return and the revised return were filed on the advice of her Chartered Accountant. The only return that is relevant and can be referred to is the revised return of income filed under Section 139(5) within the due date. There was no failure on the part of the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and motivated by malice in law sanctioned prosecution against the Petitioner when the facts of the Petitioner's case do not warrant the sanction for prosecution for offence under section 50 of the Black Money Act. 98. Learned senior counsel further submitted that the 2nd respondent is not the competent authority to file the prosecution complaint before the jurisdictional magistrate. Section 84 of the Black Money Act states that the provisions of, among other sections, section 280D of the Income Tax Act shall apply with necessary modifications as if the said provisions referred to undisclosed foreign income and asset instead of Income Tax Act. Section 280D of the Income Tax Act states that the provisions of the Code of Criminal Procedure, 1973 shall apply to the proceedings before a Special Judge which is competent to try offences under the Income Tax Act. Reference has been made to section 195 of the Cr.P.C, 1973 which states that no Court shall take cognisance except on a complaint made in writing of the Court or of some other Court to which that Court is subordinate. Section 195 (4) reads as follows: For the purpose of clause (b) of sub-section 1, a Court shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first class as Special Court for such area or areas or for such cases or class or group of cases as may be specified in the notification. Explanation: In this sub-section, High Court means the High Court of the State in which a Magistrate of first class designated as Special Court was functioning immediately before such designation. 101. Mr.AR.L.Sundaresan, learned senior counsel submitted that the Chief Metropolitan Magistrate, Egmore, Chennai has not been designated as the Special Court for the purpose of the Black Money Act by the Central Government and therefore, the 2nd Respondent erred in law in filing the prosecution complaint against her, under section 50 of the Black Money Act before an incompetent Court. The Chief Metropolitan Magistrate, Egmore, Chennai has no jurisdiction to take cognizance of the prosecution complaint filed by the 2nd Respondent against the Petitioner. 102. Learned Senior Counsel further contended that a prosecution for offence under section 50 of the Black Money Act at the instance of an authority who is not competent to sanction prosecution and a prosecution complaint filed by an incompetent authority before a Magistrate who is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year , which is part of the original return of income filed for the assessment year 2016-17, is devoid of merits, as the original return of income filed on 31.07.2016 and from the accompanying documents, it could never be inferred as to whether the investments made included the investments made outside the country in a foreign asset. Thus, she has failed to provide or to make available information relating to the foreign asset in the return of income filed originally on 31.07.2016. (v) As far as Mr.Karti P.Chidambaram, is concerned, the foreign remittance applications submitted by him to the banks show the purpose as Investment in real estate abroad or Purchase of Immovable Property and therefore, the entire amount of ₹ 3,00,23,916/- should have been shown by him, as Investment in the immovable property in Part C of Schedule FA. Even by his own admission, sum of ₹ 96,92,229/- was remitted for the purpose of maintenance and repairs of the property purchased to L.Mooney, stated to be the caretaker of the Cambridge property. However, the same is disclosed in the return of income in Column C of Schedule FA as 'Advance for Financial Interest' in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial interest. Further Form W-8BEN has been signed by the petitioner, Mr.Karti Chidambaram, in his individual capacity as total beneficial owner and not as a representative of any organization/corporation. (ix) The contention that the foreign remittances of ₹ 79,00,815/- made to Totus Tennis Limited towards advance for allotment of shares were reflected in the balance sheet as on 31.03.2016 under heading II - Assets, sub-heading D (iii) - Loans and Advances to Related Parties , which is part of the original return of income filed, is factually incorrect that the foreign remittances of ₹ 79,00,815/- made to Totus Tennis Limited towards advance for allotment of shares were not reflected in the return of income. In the balance sheet filed online as a single page attachment to Form 3CD, the investment made in Totus Tennis Limited, UK does not feature. The said contention of M/s.Chess Global Advisory Services Pvt. Ltd., is completely devoid of merits. From the original return of income filed on 15.10.2016 and from the accompanying documents, it could never be inferred whether the investments shown included the investments made outside the country in a foreign entity. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Section 54 of Black Money Act are very clear. The Court shall presume the existence of such culpable mental state and it is for M/s.Chess Global Advisory Services Pvt. Ltd., to prove that he had no such mental state in the prosecution. As per Section 54(2) of Black Money Act a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability. The mere assertion made by M/s.Chess Global Advisory Services Pvt. Ltd., that the return of income was filed on the advice of the Chartered Accountant and there is no willful failure on their part to disclose information relating to the asset is not borne out by the facts on record. In the return of income filed on 15.10.2016 for the impugned Assessment Year, the return has been verified and digitally signed by the petitioner solemnly declaring that the information given in the return is correct and complete. (xii) After filing the original return of income on 15.10.2016, M/s.Chess Global Advisory Services Pvt. Ltd., did not revise its return of income until receipt of notice under Section 10(1) of the Black Money Act. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, under Section 139(1) of the Income Tax Act. A return filed under Section 139(1) of the Income Tax Act, can be revised only if the petitioners subsequently discover any omission or any wrong statement therein. The said benefit is not available to the petitioners, who deliberately omitted to mention certain required details in the original return filed under Section 139(1), but later desires to take shelter under the provisions of Section 139(5) of the Income Tax Act, 1961. It was only after issue of notice, dated 02.08.2017 (In respect of Mrs.Nalini Chidambaram); notice, dated 04.08.2017 (in respect of Mrs.Srinidhi Karti Chidambaram); notice, dated 16.08.2017 (in respect of M/s.Chess Global Advisory Services Pvt. Ltd.,), under Section 10(1) of the Black Money Act, wherein the assessee was called upon to provide specific details of the immovable property held in United Kingdom that the assessee furnished the relevant details of the foreign asset in the second revised return of income on 21.08.2017 (in respect of Mrs.Nalini Chidambaram) and 22.08.2017 (in respect of Mrs.Srinidhi Karti Chidambaram), which are not bonafide and voluntary. (xvi) Placing reliance on a decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully and truly by such petitioner details of foreign assets and income in a return of income filed under Section 139(1) itself attracts prosecution under section 50 of Black Money Act and attempt in any manner to evade tax, penalty or interest attracts prosecution under section 51 of the Black Money Act. The contention that proceedings should be initiated and completed U/s 10 of the Black Money Act before invoking the provisions of Chapter V particularly Section 50 read with Section 55 is not tenable. Section 10 deals with assessment of undisclosed foreign income and asset. As per section 2(11), undisclosed asset located outside India means an asset held by the petitioner in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory. The provisions of Section 50 (falling under chapter V) are attracted for failure to furnish in a return of income filed any information about an asset (including financial interest in any entity) located outside India. Thus, it can be seen the proceedings under section 10 and proceedings under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961, the word Commissioner has been defined, inter-alia, to include a person appointed as Principal Director of Income-tax. Since Commissioner is also one of the competent authorities for according sanction under section 55 of Black Money Act, the same automatically covers Principal Director of Income-tax also. Further Sec.2(15) of the Black Money Act states that all other words and expressions used herein and not defined under the Income Tax Act shall have the meanings respectively assigned to them in the Act. (xxii) The contention that all the proceedings under the Black Money Act against the petitioner ought to be dropped on the ground being without the jurisdiction, is devoid of merits. The ground raised that the sanction order passed by the first respondent and the complaint filed by the second respondent are totally misconceived in law and without jurisdiction, is wholly devoid of merits. (xxiii) It is trite law that there should be strict interpretation of unambiguous provisions of law. There is no scope for convenient interpretation of law. Hence the ground that since the Black Money has not been defined in the Act and in the absence of bla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be filled up regarding the foreign asset. Then only Schedule AL comes and instructions clearly says that the assets referred to in Schedule FA shall not be included in Schedule AL. The ratio laid down in the case Price Water House Coopers Pvt Ltd is not applicable to the facts of the petitioner's case. (xxvii) The case laws were relied on by the petitioner are distinguishable and not relevant to decide the issue in question. The action of respondent 1 and 2 are as per law and as per jurisdiction. Heard the learned Senior Counsels for the parties and perused the materials available on record. 104. The Black Money Act, 2015, was enacted to deal with the problem of Black Money, that is undisclosed foreign income and asset. If an asset is purchased outside the country, from a source, within the country, which is disclosed, then Black Money Act, cannot be attracted. 105. The Object of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, is extracted hereunder:- An Act to make provisions to deal with the problem of the Black money that is undisclosed foreign income and assets, the procedure for dealing with such income an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed. 4. Scope of total undisclosed foreign income and asset: (1) Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be,- (a) the income from a source located outside India, which has not been disclosed in the return of income furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the Incometax Act; (b) the income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished within the time specified in Explanation 2 to subsection (1) or under sub-section (4) or sub-section (5) of section 139 of the said Act; and (c) the value of an undisclosed asset located outside India. (2) Notwithstanding anything contained in sub-section (1), any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income-tax Act in accordance with the provisions of section 29 to section 43C or section 57 to section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of undisclosed foreign income and asset of any person for the relevant financial year or years. (3) The Assessing Officer, after considering such accounts, documents or evidence, as he has obtained under sub-section (1), and after taking into account any relevant material which he has gathered under sub-section (2) and any other evidence produced by the assessee, shall by an order in writing, assess the undisclosed foreign income and asset and determine the sum payable by the assessee. (4) If any person fails to comply with all the terms of the notice under sub-section (1), the Assessing Officer shall, after taking into account all the relevant material which he has gathered and after giving the assessee an opportunity of being heard, make the assessment of undisclosed foreign income and asset to the best of his judgment and determine the sum payable by the assessee. 15. Appeals to the Commissioner (Appeals):- (1) Any person, (a) objecting to the amount of tax on undisclosed foreign income and asset for which he is assessed by the Assessing Officer; or (b) denying his liability to be assessed under this Act; or (c) objecting to any penalty imposed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission was not wilful or unreasonable. (7) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons therefor. (8) Every appeal preferred under section 15 shall be heard and disposed of by the Commissioner (Appeals) as expeditiously as possible and endeavour shall be made to dispose of such appeal within a period of one year from the end of the financial year in which the appeal is preferred. (9) On the disposal of the appeal, the Commissioner (Appeals) shall communicate the order passed by him to the assessee and to the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner. 17. Powers of Commissioner (Appeals):- (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers, namely:- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sident other than not ordinarily resident in India within the meaning of clause ( 6 ) of section 6 of the Income-tax Act, who at any time during the previous year, held any asset (including financial interest in any entity) located outside India as a beneficial owner or otherwise, or was a beneficiary of such asset or had income from a source outside India and wilfully fails to furnish in due time the return of income which he is required to furnish under sub-section ( 1 ) of section 139 of that Act, he shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine: Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return of income under sub-section ( 1 ) of section 139 of the Income tax Act if the return is furnished by him before the expiry of the assessment year. 50. Punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India:- If any person, being a resident other than not ordinarily resident in India within the meaning of clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplaints by one or more Inspectors of tax) under this section. 59. Declaration of undisclosed foreign asset: Subject to the provisions of this Chapter, any person may make, on or after the date of commencement of this Act but on or before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year beginning on 1st day of April, 2016- ( a ) for which he has failed to furnish a return under section 139 of the Income-tax Act; ( b ) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Act; ( c ) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise. 84. Application of Provisions of Income-tax Act:- The provisions of clauses (c) and (d) of sub-section (1) of section 90, clauses (c) and (d) of sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Central Government may, by notification in the Official Gazette, specify the class or classes of persons to whom the provisions of the first proviso shall not apply: Provided also that every company [or a firm] shall furnish on or before the due date the return in respect of its income or loss in every previous year : Provided also that a person, being a resident other than not ordinarily resident of India within the meaning of clause (6) of section 6, who is not required to furnish a return under this sub-section and who at any time during the previous year- (a) holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or (b) is a beneficiary of any asset (including any financial interest in any entity) located outside India, shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed: Provided also that nothing contained in the fourth proviso shall apply to an individual, being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Official Gazette. Explanation 4.- For the purpose of this section beneficial owner in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person. Explanation 5 - For the purposes of this section beneficiary in respect of an asset means an individual who derives benefit from the asset during the previous year and the consideration for such asset has been provided by any person other than such beneficiary. 139(4). Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under subsection (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. (4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re capital company or venture capital fund referred to in clause (23FB) of section 10; (f) trade union referred to in sub-clause (a) or association referred to in sub-clause (b) of clause (24) of section 10; (fa) Board or Authority referred to in clause (29A) of section 10; (g) body or authority or Board or Trust or Commission (by whatever name called) referred to in clause (46) of section 10; (h) infrastructure debt fund referred to in clause (47) of section 10, shall, if the total income in respect of which such research association, news agency, association or institution, (person or) fund or trust or university or other educational institution or any hospital or other medical institution or trade union or body or authority or Board or Trust or Commission or infrastructure debt fund is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de India which has not been disclosed in the returns submitted by the petitioners. 110. It is the case of the respondents that the assesses did not disclose the details of the foreign asset, in the return submitted under Section 139(1) of the Act and only after the issuance of the notice under Section 10 of the Act, a further return under Section 139 (5) has been submitted and thus the offence under Section 50 of the Act is attracted. At the risk of repetition, Section 50 of the Black Money Act, 2015 is reproduced hereunder: Section 50. Punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India:- If any person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, who has furnished the return of income for any previous year under sub-section (1) or sub-section (4) or sub-section (5) of section 139 of that Act, wilfully fails to furnish in such return any information relating to an asset (including financial interest in any entity) located outside India, held by him, as a beneficial owner or otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the remittance made towards purchase of the property. (v) A statement of all assets held by you either in your name or where you hold beneficial interest, both in India and abroad, including dates of acquisition. This notice is issued by the undersigned in terms of Notification No.1, issued by the DIT (Inv.), Chennai Pursuant to the Notification No.39/2017/13/2015-ITA-I in S.O.1590(E) dated 16th May, 2017 issued by the Central Board of Taxes, New Delhi. The above information/documents shall be produced or caused to be produced either personally or through a representative duly authorized in writing in this behalf on 16.08.2017 at 11.30 a.m. at the office of the undersigned at No.46 (Old No.108), MG Road, Nungambakkam, Chennai - 600 034. Sd/-KANNAN NARAYANAN,I.R.S. Deputy Director of Income Tax (Inv.), Unit 3(3), Chennai. 112. Reply given by the Chartered Accountant on behalf of Nalini Chidambaram, to the Deputy Director of Income Tax (Investigation), Chennai/third respondent, dated 17.08.2017, is extracted hereunder:- Rajagopal and Badri Narayanan CHARTERED ACCOUNTANTS New No.38/23, Venkatesa Agraharam, Mylapore, Chennai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the notice under Section 10(1) of the Act 22 of 2015 to my client. 11. Since the jurisdictional fact to invoke the provisions of Act 22 of 2015 is not present, your notice itself is without jurisdiction. Hence, I request you to first decide the question whether you had the jurisdiction to issue the notice under reply, before calling upon my client to answer further questions or produce further documents that have to relevance to the notice under Act 22 of 2015. 12. In the light of the above, I request you to withdraw the notice issued under Section 10(1) of Act 22 of 2015 to my client. 113. Similar notices, under Section 10(1) of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act, 2015, dated 04.08.2017, 04.08.2017 and 16.08.2017, for the Assessment Years 2015-16 and 2016-17, issued to Ms.Srinidhi Karti Chidambaram, Shri Karti P. Chidambaram, and Principal Officer, M/s Chess Global Advisory Services Private Limited, Chennai respectively, calling for the abovesaid documents, to be produced, on or before 16.05.2017, are extracted hereunder: (Ms.Srinidhi Karti Chidambaram) Pursuant to receipt of information to the effect that you have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Tax Act, 2015 114. Similar replies have been filed by Ms.Srinidhi Karti Chidambaram, Shri Karti P. Chidambaram, and Principal Officer, M/s Chess Global Advisory Services Private Limited, Chennai respectively, through their Chartered Accountants. 115. Bare reading of Section 10 of the Black Money Act makes it clear that when proceedings are taken under Section 10 of the Black Money Act, it is for the assessment or reassessment of the undisclosed foreign income and assets. Thus, the respondents have proceeded on the premise that the petitioners have not disclosed the foreign assets/financial interest in their return filed, under the Income Tax Act. 116. As per Section 49 of the Black Money Act, 2015, punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India can be inflicted if any person, being a resident other than not ordinarily resident in India within the meaning of clause ( 6 ) of section 6 of the Income-tax Act, who has furnished the return of income for any previous year under subsection ( 1 ) or sub-section ( 4 ) or sub-section ( 5 ) of section 139 of the said Act, fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des every person who is in default under the Black Money Act. 121. Section 2(11) defines Undisclosed asset located outside India . This definition only includes undisclosed asset which is located outside India, held by an assessee in his name or where the assessee is mere beneficiary owner (Binamidhar). For an asset become undisclosed located outside India , the assessee should have no explanation about the source of investment for purchasing the asset or the explanation given by him to the Assessing Officer is unsatisfactory. 122. Section 2(12) defines Undisclosed foreign Income and Assets . This definition means the total amount of undisclosed income and asset from a source located outside India and the value of the undisclosed asset located outside India. 123. Analysis of Section 2(11) and 2(12) of the Black Money Act, would show that Section 2(11) applies when an assessee has undisclosed foreign asset, from a source of income, within the country. On the other hand, to attract Section 2(11) of the Act, an assessee must have undisclosed foreign income and undisclosed foreign asset. If the assessee, has not disclosed the foreign asset and he has no source of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lain the source of asset, then the value of the asset is reduced from the undisclosed foreign income. A reading of 4 and 5 therefore show that, they take in their ambit undisclosed asset, outside India, without there being any source of income in India, provided the assessee has not been able to explain the source. 127. If the assessee has a foreign income and a foreign asset which is undisclosed in the return, then no explanation need be called for. The moment of a person has foreign income and a foreign asset which may or may not have been purchased form the foreign income, the explanation of the assessee need not be called for and the value of the asset will come within the scope of Section 4. However, the value of the asset can be deducted from the total income for the purpose of Black Money Act, if the assessee is able to explain the source of income. 128. Mr.Gopal Subramanium, learned Senior Advocate for the petitioners has contended that an assessee can file the revised return of income under Section 139(5) of the Income Tax Act, provided it is filed within the prescribed time. He submitted that once a revised return is filed, under Section 139(5) of the Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red at length by the Gujarat High Court in Commissioner of Income-Tax v. Arun Textile C reported in 1991 (192) ITR 700 (Guj.) . It is held that once a revised return is filed under Section 139(5), the original return is substituted by the revised return. Consequently, the entries in the relevant column of the original return seeking depreciation cannot be used for any purpose. It is, therefore, not open to the Income-tax Officer to advert to the original returns or the statement filed along with it for the purpose of allowing deduction after such claim was expressly withdrawn under the revised return. (iv) In CIT v. Mahindra Mills reported in 2000 (3) SCC 615, the Hon'ble Supreme Court, at Paragraph 41, held as follows: Section 34 is not in the nature of merely an enabling provision. In the absence of particulars of depreciation as required by Section 34, there is no mandate on the Income-tax Officer under Section 29 to compute the income by allowing depreciation under Section 32. In the second Madras case (CIT v. Southern Petro Chemicals Industries Corporation Ltd., [233 ITR 400] the assessee did claim depreciation but he withdrew the same in the revised ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctness of the particulars of income even at the time when he filed the original return, there was no question of that person subsequently discovering the existence of the omission or creeping in of the wrong statement in the return already filed by him. Therefore, we are of the opinion that Section 139(5) will apply only to cases of omission or wrong statements and not to cases of concealment or false statements . This conclusion of ours derives support from the language used in Section 139(5). 3(m) However, we find that J.K.A. Subramania Chettiar's case was one where certain hundi transactions that the Assessee came forward to disclose in the revised return, were found to be of bogus nature and ultimately, the falsity of hundi transactions was admitted. More over, it was a clear case of filing revised returns after being 'found out'. Therefore, J.K.A. Subramania Chettiar's case is clearly distinguishable on facts and whatever the Division Bench has opined there is only in the context of that factual matrix. In our opinion, it does not help the Revenue in the instant case owing to the factual matrix. However, even if the opinion of the Division B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised return [(CIT v. Arun Textile 'C', (1991) 192 ITR 700, 708 (Guj); Chief CIT (Administration) v. Machine Tool Corporation of India Ltd., (1993) 201 ITR 101, 103-04 (Karn), K.E. Sunil Babu, Asst. CIT v.Steel Processors, (2006) 286 ITR 315 (Karn)]. 131. In Satyabhama Thakur (Dr)(Mrs) v CIT (1997) 223 ITR 791 (Pat); Mittal Alloys and Steels v CIT (2008) 299 ITR 291 (P H) it is held that where an assessee discovered any omission or wrong statement even in a revised return he can still be entitled to furnish another revised return and such a revised return may be furnished at any time before the assessment is made . 132. In, ITO v Radhakrishna Stores, Stationery and Book Merchants reported in (1999) 240 ITR 544 (Mad) it was held that a revised return filed even on the basis of errors found during enquiry should not justify prosecution. This court required proof of mens rea in such cases. This court considered that the mistakes attributed to a part time accountant resulting in errors and alternatives need not be treated as establishing such mens rea on the part of the proprietors. This court further observed that, if such a view is not taken, innoce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scovery by the Assessing Officer under the scheme of Income Tax Act, 1962, it cannot be said that the assessee has no right to file revised return which is also a statutory return. 139. Under the scheme of Income Tax Act, 1962, a revised return is permitted to be filed if there is any bona fide mistake and the assessing authority upon proof of the bona fide reasons can accept the revised return and pass necessary orders in accordance with law. Once the income-tax authorities have accepted the revised returns filed under section 139(5), it became explicit that the return filed earlier was a bona fide mistake and did not indicate any element of mens rea. 140. The respondents have relied on the following decisions to contend that submission of revised return under Section 139(5) of the Income Tax Act, was not voluntary and only on the discovery that the assessees have failed to furnish the details of the foreign asset and hence there is culpable state of mind, and the above facts can be gone into only at the time of trial and not in writ petitions. (i) In C.I.T. vs. J.K.A. Subramania Chettiar reported in (1977) 110 ITR 602 (Mad) , a Division Bench of the Madras High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed wrong statement had crept. in the return filed by him. If a person who furnished the return was aware of the falsity of the statement and the incorrectness of the particulars of income even at the time when he filed the original return, there was no question of that person subsequently discovering the existence of the omission or creeping in of the wrong statement in the return already filed by him. Therefore, we are of the opinion that Section 139(5) will apply only to cases of omission or wrong statements and not to cases of concealment or false statements . This conclusion of ours derives support from the language used in Section 139(5). 16. As far as the present case is concerned, the second return filed by the assessee on February 7, 1968, whether the same was filed before any investigation was started by the income-tax department or after the investigation was started by it, will not be a revised return as contemplated by Section 139(5) of the Act. All that can be stated is that if, after having filed the return on March 16, 1964, the assessee furnished further particulars to the Income-tax Officer with reference to his income, the Income-tax Officer was certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account had been seized at a raid was impelled by the compelling circumstance that the petitioner was likely to be dealt with under the penal provisions of the I.T. Act. The action of the petitioner in filing the returns under such a constraint cannot be said to be voluntary. In Mool Chand Mahesh Chand v. CIT [1978] 115 ITR 1 (All), the ITO started investigation by asking for details in respect of several matters while conducting the assessment proceedings for the year 1969-70. Thereafter, the assessee filed returns for the years 1964-65 to 1970-71. It was held that since the investigation had started and concealed income had come to light, it was a case covered by the word detection occurring in s. 273A. It was further observed that in these circumstances the returns were filed after the assessee felt that the game was up because the investigation initiated by the ITO exposed him to a situation that he had assessable income in respect of other years; it cannot be said that the filing of the return was voluntary. This decision shows that the term voluntary under Section 273Ahas been used to indicate an action free of any constraint. A return filed in order to save oneself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1977-78, he filed his return under the Act on January 20, 1978 disclosing an income of ₹ 13,380/- alongwith the profit and loss account, trial balance, income tax adjustment statement and a copy of the capital account. The return was accepted. On August 20 and 21, 1981, a search was conducted at the residence of the petitioner under section 132 of the Act which resulted in the seizure of several documents and account books which revealed the suppression of purchase of chicory seeds, the existence of several bank accounts, fixed deposits, investments in the names of his wife and daughters and several bank accounts not disclose in the statements filed alongwith the return. The trading and profit and loss account for the assessment year 1977-78 filed alongwith the return showed that he had purchased chicory seeds of the value of ₹ 65,797/- as against ₹ 2,15,729/- as per the seized accounts. There were several other wrong statements in the accounts. On the basis of the allegation that the petitioner had deliberately filed a false return and had kept false accounts with the intention of using them as genuine evidence in the assessment proceedings, a complaint was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reference under the Act cannot come in the way of the institution of the criminal proceedings under section 276C and section 277 of the Act. In the criminal case all the ingredients of the offence in question have to be established in order to secure the conviction of the accused. The criminal court no doubt has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act. It does not, however, mean that the result of a proceeding under the Act would be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it. Otherwise there is a danger of a contention being advanced that whenever the assessee or any other person liable under the Act has failed to convince the authorities in the proceedings under the Act that he has not deliberately made any false statement or that he has not fabricated any material evidence, the conviction of such person should invariably follow in the criminal court. The High Court of Punjab and Haryana has correctly applied the rule regarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A, section 279(1A) comes into operation and acts as a statutory bar for proceeding with the prosecution under section 276C or section 277. It does not, however, provide that merely because there is a possibility of the Commissioner passing an order undersection 273A, the prosecution shall not be instituted. The reason given by the High Court of Calcutta, therefore, does not appeal to us. (iv) In S.R.Arulprakasam v. Smt.Prema Malini Vasan, ITO reported in 163 ITR 487 (Mad) , a learned single Judge of this court, at paragraphs 9, 11 and 12 held as hereunder: 9. The thrust of the arguments of learned counsel for the petitioner is based upon the revised return submitted by him before the completion of the assessment for the year 1977-78 under section 139(5) of the Income-tax Act. Section 139(5) of the Income-tax Act lays Act lays down that Act lays down that if any person having furnished a return under sub http:// section (1) or sub-section (2) discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made. According to the learned counsel for the petitioner, section 139(5) of the Income-tax Act gives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted. The petitioner has wilfully attempted to evade tax by submitting such a false return and he, therefore, comes within the mischief of section 276C(1) of the Income-tax Act. Under Explanation to section 276C(1), the mere possession or control of any books of accounts or other documents containing a false entry or statement does itself amount to an attempt to evade tax within the meaning of section 276C(1) of the Act. The furnishing in a statement of profit and loss account showing a false amount of collection would amount to giving false evidence within the meaning of section 193 of the Indian Penal Code. By submitting a false return and a false statement of profit and loss account, the petitioner has attempted to deceive the Income-tax Officer and to fraudulently and dishonestly induce him to pass an order of assessment on the basis of the false return and thereby evade proper taxation. Prima facie the provisions of the aforesaid sections come into play. The question whether the petitioner was misled by his accountant or whether he deliberately and wilfully submitted the false return, the false statement of account and maintained a false account is a matter which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of statutes. 142. In the process of interpreting a statute or a provision, it should also be kept in mind that it is the duty of the Court to conceive and perceive the true intention of the Legislature and in the words of Hon'ble Justice G.P.Singh, in his Book, Interpretation of Statutes , how far and to what extent each component part of the statute influences the meaning of the other part, would be different in each given case. Let us consider some judgments on the interpretation of statutes, (i) In Justice G.P. Singh's Principles of Statutory Interpretation (11th Edn., 2008), the learned author states (at pages 135 and 136) that: Consideration of hardship, injustice or absurdity as avoiding a particular construction is a rule which must be applied with great care. The argument ab inconvenienti , said LORD MOULTON, is one which requires to be used with great caution . (ii) In the words of Tindal, C.J., in Sussex Peerage case [(1844) 11 Cl F 85], If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves so alone in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first and primary rule of construction is that the intention of the Legislature must be found in the words used by the Legislature itself. If the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act . The words used in the material provisions of the statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of giving effect to the policy or object of the Act can legitimately arise. When the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the courts would prefer to adopt the latter construction. It is only in such cases that it becomes relevant to consider the mischief and defect which the, Act purports to remedy and correct. (ix) In Attorney-General v. HRH Prince Ernest Augustus of Hanover reported in (1957) 1 All.ER 49, Lord Som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of a sentence may be, if it be properly clear from the contents of the same document that the apparent grammatical construction cannot be the true one, then that which, upon the whole, is the true meaning shall prevail, in spite of the grammatical construction of a particular part of it. And substantially the same opinion is expressed by Lord Selborne in Caledonian Ry, v. North British Ry. (1881) 6 AC 114 (222):-- The mere literal construction of a statute ought not to prevail if it is opposed to the intentions of the legislature as apparent by the statute, and if the words are sufficiently flexible to admit of some other construction by which, that intention can be better effectuated. Again Lord Fitzgerald in Bradlaugh v. Clarke, (1883) 8 AC 354 at p. 384 observed as follows:-- I apprehend it is a rule in the construction of statutes that in the first instance the grammatical sense of the words is to be adhered to. If that is contrary to, or inconsistent with, any expressed intention or declared purpose of the statutes, or if it would involve any absurdity, repugnance, or inconsistency, the grammatical sense must then be modified, extended, or abridged, so far as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislature must be given its due import and significance. (xvi) In Philips India Ltd., v. Labour Court reported in 1985 (3) SCC 103, the Hon'ble Apex Court, at Paragraph 15, held as follows: (15) No cannon of statutory construction is more firmly, established than that the statute must be read as a whole. This is a general rule of construction applicable to all statutes alike which is spoken of as construction ex visceribus actus. This rule of statutory construction is so firmly established that it is variously styled as 'elementary rule' (See Attorney General v. Bastow [(1957) 1 All.ER 497] ) and as a 'settled rule' (See Poppatlal Shall v. State of Madras [1953 SCR 667 : AIR 1953 SC 274] ). The only recognised exception to this well-laid principle is that it cannot be called in aid to alter the meaning of what is of itself clear and explicit. Lord Coke laid down that: 'it is the most natural and genuine exposition of a statute, to construe one part of a statute by another part of the same statute, for that best expresseth meaning of the makers' (Quoted with approval in Punjab Breverages Pvt. Ltd. v. Suresh Chand [(1978) 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed. (Craies On Statute Law, 7th Edn. Pages 260-262). 10. Where a statute does not consist merely of one enactment, but contains a number of different provisions regulating the manner in which something is to be done, it often happens that some of these provisions are to be treated as being directory only, while others are to be considered absolute and essential; that is to say, some of the provisions may be disregarded without rendering invalid the thing to be done, but others not. (Craies On Statute Law, 7th Edn. Pages 266-267). (xxii) In Nasiruddin v. Sita Ram Agarwal reported in (2003) 2 SCC 577, the Hon'ble Supreme Court held as follows: 35. In a case where the statutory provision is plain and unambiguous, the court shall not interpret the same in a different manner, only because of harsh consequences arising therefrom.... 37. The court s jurisdiction to interpret a statute can be invoked when the same is ambiguous. It is well known that in a given case the court can iron out the fabric but it cannot ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain and admits of but one meaning, the task of interpretation can hardly be said to arise. The decision in a case calls for a full and fair application of particular statutory language to particular facts as found. It is a corollary to the general rule of literal construction that nothing is to be added to or taken from a statute unless there are adequate grounds to justify the inference that the Legislature intended something which it omitted to express. A construction which would leave without effect any part of the language of a statute will normally be rejected. (xxv) In State of Jharkhand v. Govind Singh reported in (2005) 10 SCC 437, the Hon'ble Supreme Court held that, 12. It is said that a statute is an edict of the legislature. The elementary principle of interpreting or construing a statute is to gather the mens or sententia legis of the legislature. 13. Interpretation postulates the search for the true meaning of the words used in the statute as a medium of expression to communicate a particular thought. The task is not easy as the language is often misunderstood even in ordinary conversation or correspondence. The tragedy is that although in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision based on their own preconceived notions of ideological structure or scheme into which the provision to be interpreted is somewhat fitted. They are not entitled to usurp legislative function under the disguise of interpretation. (xxvi) In Vemareddy Kumaraswamy Reddy v. State of A.P., reported in (2006) 2 SCC 670, the Hon'ble Supreme Court held that, 12. It is said that a statute is an edict of the legislature. The elementary principle of interpreting or construing a statute is to gather the mens or sententia legis of the legislature. It is well-settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. (xxvii) In A.N.Roy Commissioner of Police v. Suresh Sham Singh reported in AIR 2006 SC 2677, the Hon'ble Apex Court held that, It is now well settled principle of law that, the Court cannot change the scope of legislation or intention, when the language of the statute is plain and unambiguous. Narrow and pedantic construction may not always be given effect to. Courts should avoid a construction, which would reduce the legislation to futility. It is also well settled that every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in Ansal Properties Industries Ltd. v. State of Haryana [2009 (3) SCC 553] 180. Further, it is a well-established principle of statutory interpretation that the legislature is specially precise and careful in its choice of language. Thus, if a statutory provision is enacted by the legislature, which prescribes a condition at one place but not at some other place in the same provision, the only reasonable interpretation which can be resorted to by the courts is that such was the intention of the legislature and that the provision was consciously enacted in that manner. In such cases, it will be wrong to presume that such omission was inadvertent or that by incorporating the condition at one place in the provision the legislature also intended the condition to be applied at some other place in that provision. (xxxi) In Satheedevi v. Prasanna reported in (2010) 5 SCC 622, the Hon'ble Supreme Court held as follows: 12. Before proceeding further, we may notice two well-recognised rules of interpretation of statutes. The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to make a provision what the Judge thinks it should be, but to make it what the legislature intended it to be. (xxxiii) In Delhi Airtech Services (P) Ltd. v. State of U.P., reported in (2011) 9 SCC 354, the Hon'ble Supreme Court, while dealing with a provision under Section 17(3-A) of the Act, held that, 55. It is well settled as a canon of construction that a statute has to be read as a whole and in its context. In Attorney General v. Prince Ernest Augustus of Hanover [1957 AC 436], Lord Viscount Simonds very elegantly stated the principle that it is the duty of court to examine every word of a statute in its context. The learned Law Lord further said that in understanding the meaning of the provision, the Court must take into consideration not only other enacting provisions of the same statute, but its preamble, the existing state of the law, other statutes in pari materia, and the mischief which I can, by those and other legitimate means, discern that the statute was intended to remedy. (All ER p. 531) 143. In P.Jayappan's case, the return was accepted. Subsequently, a search was conducted in the residence of the petitioner therein, under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the explanation offered was not satisfactory. 146. In J.K.A.Subramania Chettiar's case, the Hon'ble Division Bench of this Court has held that if, on the other hand, the defect in the original return was merely an inadvertent omission or unintended wrong statement, certainly the assessee had a right to have the same corrected and to file a revised return under Section 22(3) of the 1922 Act or under Section 139(5) of the Act and whether the assessee so files a revised return voluntarily or after the Income-tax Officer has noticed the omission or wrong statement will be totally immaterial. Thus, as per the judgment of J.K.A.Subramania Chettiar's case, revised return under Section 139(5) of the Act, is permissible, even after the notice given under Section 10(1). While dealing with Section 139(5) of the Act, the Hon'ble Division Bench, held as follows: 15. In our opinion, Section 139(5) will apply only to a limited category of cases, namely, where in the original return there was any omission or any wrong statement. The very word omission connotes an unintentional act. Equally, the words wrong statement will not take in a statement known to be fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the respondents therein contended that it was not open to the petitioners therein to contend that an explanation has been given to the respondents for not furnishing the details of the assets and in the case on hand, relied on Paragraph 12 of the said judgment, wherein, a learned single Judge, on the facts and circumstances of S.R.Arulprakasam's case, held that, The question whether the petitioner was misled by his accountant or whether he deliberately and wilfully submitted the false return, the false statement of account and maintained a false account is a matter, which has to be gone into in the trial Court and not in these proceedings for quashing , we are not inclined to accept the said preposition. 150. That apart, in S.R.Arulprakasam's case, the income shown by the assessee was ₹ 1,03,740/-, but it was adjudicated at ₹ 2,34,233/-. False declaration was apparent. Yet another factor that would be seen from S.R.Arulprakasam's case, is that prosecution has been launched only after adjudication. Whereas, in the case on hand, though a reply has been given to the notice, under Section 10(1) of the Black Money Act, 2015, no order has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtend to seven year and with fine; (ii) in any other case with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. 151. In the case on hand before us, there is no allegation of false statement or false accounts and for the reasons, stated supra, the judgment in S.R.Arulprakasam's case, is not applicable. 152. Ajay Medical Agency's case (cited supra), is also a case of concealment of income. In the reported case, ITO opined that there was a deliberate concealment of income by the assessee. The assessee has offered his explanation and filed his revised return. Before the Commissioner of Income Tax, the assessee filed an application and the Commissioner passed an order, holding that the assessee would not be entitled to the benefit of Clause (b) of Section 273A(1) of the Income Tax Act. 153. In Ajay Medical Agency's case, the assessing officer has formed an opinion that there is a deliberate concealment by the assessee. In the case on hand, there is no opinion of the assessing officer that the explanation offered by the assessee as unsatisfactory and thus, Section 2(11) is attracte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t source, does not exceed three thousand rupees . 155. On the above facts, taking note of Section 278-E of the Income Tax Act, 1961, dealing with presumption with culpable mental state, the Hon'ble Supreme Court, held that it is for the accused to take a defence, in respect of the offence, charged before the trial Court, as to, there was any wilful failure to submit a return. Case on hand, is not a wilful failure to submit a return. Failure to furnish return within time, attracts Section 276-CC of the Income Tax Act, 1961, and in such circumstances, the Hon'ble Supreme Court held as above. Whereas, in the case on hand, there should be a wilful failure to furnish in return, submitted under sub-Section (1) or (4) or (5) of Section 139 of the Income Tax Act, 1961, any information about an asset (including financial interest in any entity) located outside India. 156. In Assistant Collector of Customs, Bombay and Another Vs. Behramji Merwanji Damania , reported in AIR 1970 SC 962, held thus:- 4....accused persons and some other unknown persons had entered into a conspiracy at Bombay and other places in the beginning Of October, 1959 or India and in pursuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lish that he had been tried by a Court of competent jurisdiction for an offence and he is convicted or acquitted of that offence and the said conviction or acquittal is in force. If that much is established, it can be contended that he is not liable to be tried again for the same offence nor on the same facts for any other offence for which a different charge from the one made against him might have been made under Section 236 or for which he' might have been convicted under-Section 237. It has been repeatedly held by this Court that adjudication before a Collector of Customs is not a prosecution nor the Collector of Customs a Court . In Maqbool Hussain v. State of Bombay (1), this Court held that the wording of Article 20 of the Constitution and the words used therein show that the proceedings therein contemplated are proceedings of the nature of criminal proceedings before a court of law or a judicial tribunal and prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be launched, then, it is well open to the petitioner to raise all defenses. 159. On the facts and circumstances, L.R.Melwani's case is not applicable to the case on hand. Though the proposition of law is that there can be a simultaneous prosecution and assessment proceedings, but on the facts and circumstances of the case on hand, we are of the view that prosecution can be launched only if the case falls under 2(11) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and only if the assessee wilful fails to furnish the details of the asset in the return under Section 135(1) or (4) or (5) of the Income Tax Act, 1961. 160. Sasi Enterpreses's case (cited supra), is also a case of failure to furnish returns and prosecution was launched by presuming culpable state of mind and therefore, the said judgment is not applicable to the case on hand. 161. The word return is common in Section 139(1), 139(4) and 139(5) of the Income Tax Act. In Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, the word or is used and therefore it is contended that the legislature has envisaged only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in such a connection, it is, by force of a context, read as or . While dealing with the topic 'OR is read as AND, and vice versa' Stroud says in vol. 3, at p. 2009: You will find it said in some cases that 'or' means 'and'; but 'or' never does mean 'and'. Similarly, in Maxwell on Interpretation of Statutes, 11th Edn., p. 229- A 30, it has been accepted that 'to carry out the intention of the legislature, it is occasionally found necessary to read the conjunctions or and and one for the other'. The word 'or' is normally disjunctive and 'and' is normally conjunctive, but at times they are read as Vice versa. As Scrutton L.J. said in Green v. Premier Glynrhonwy Slate Co.('). 'you do sometimes read 'or' as 'and' in a statute. .. But you do not do it unless you are obliged, because 'or' does not generally mean 'and' and 'and' does not generally mean 'or'. As Lord Halsbury L.C. Observed in Marsey Docks Harbour Board v. Henderson(') the reading of 'or' as 'and' is not to be resorted to unless some other part of the same statute o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of Tax Act, 2015, refers only one return or more. (ii) In Oxford Dictionary, the word such is defined as, determiner, predeterminer, and pronoun 1 of the type previously mentioned: [as determiner] I have been involved in many such courses l [as predeterminer] I longed to find a kindred spirit, and in him I thought I had found such a person l [as pronoun] we were second-class citizens and they treated us as such. 2 (such - as/that) of the type about to be mentioned:[as determiner] there is no such thing as a free lunch l [as predeterminer] the farm is organized in such a way that it can be run by two adults l [as pronoun] the wound was such that I had to have stitches. 3. to so high a degree; so great (often used to emphazise a quality): [as determiner] this material is of such importance that it has a powerful bearing on the case l [as predeterminer] autumn's such a beautiful season l [as pronoun] such is the elegance of his typeface that it is still a favourite of designers. - PHRASES and such and similar things: he had activities like the scouts and Sunday school and such. as such [often with negative] in the exact sense of the word: it is poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court, pointed out that the word, 'such' refers to previously indicated, characterised or specified and that 'such' is an adjective, meaning the one previously indicated or refers to only to something which has been said before. (viii) Dictionary meaning of the word such has been considered in Central Bank of India v. Ravindra and others reported in (2002) 1 SCC 367 , by the Hon'ble Supreme Court, at paragraph No.43, as under: 43. Webster defines such as having the particular quality or character specified; certain; representing the object as already particularised in terms which are not mentioned. In New Webster's Dictionary And Thesaurus, mean-ing of such is given as of a kind previously or about to be mentioned or implied; of the same quality as something just mentioned (used to avoid the repetition of one word twice in a sentence); of a degree or quantity stated or implicit; the same as something just mentioned (used to avoid repetition of one word twice in a sentence); that part of something just stated or about to be stated. Thus, generally speaking, the use of the word such as an adjective prefixed to a noun is indicative of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as possible, adopt a construction which will carry out the obvious intention of the legislature. Undoubtedly if there is a defect or an omission in the words used by the legislature, the court would not go to its aid to correct or make up the deficiency. The court could not add words to a statute or read words into it which are not there, especially when the literal reading produces an intelligible result. The court cannot aid the legislature s defective phrasing of an Act, or add and mend, and, by construction, make up deficiencies which are there. (iii) In Nasiruddin v. Sita Ram Agarwal reported in (2003) 2 SCC 577, the Hon'ble Supreme Court held as follows: 35. In a case where the statutory provision is plain and unambiguous, the court shall not interpret the same in a different manner, only because of harsh consequences arising therefrom.... 37. The court s jurisdiction to interpret a statute can be invoked when the same is ambiguous. It is well known that in a given case the court can iron out the fabric but it cannot change the texture of the fabric. It cannot enlarge the scope of legislation or intention when the language of the provision is plain a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54. Thus, in Surjit Singh Kalra v. Union of India, this Court has observed that sometimes courts can supply words which have been accidentally omitted. 55. In G.P. Singh s Principles of Statutory Interpretation , 9th Edn., 2004 at pp. 71-74 several decisions of this Court and foreign courts have been referred to where the court has added words to a statute (though cautioning that normally this should not be done). 56. Hence we have to add the aforementioned words at the end of Section 175 otherwise there will be an irreconcilable conflict between Section 174 and Section 175. (viii) In Phool Patti v. Ram Singh reported in (2009) 13 SCC 22, the Hon'ble Supreme Court held that, 9. It is a well-settled principle of interpretation that the court cannot add words to the statute or change its language, particularly when on a plain reading the meaning seems to be clear. (ix) In Mohd. Shahabuddin v. State of Bihar, reported in (2010) 4 SCC 653, the Hon'ble Supreme Court held that, 179. Even otherwise, it is a well-settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is the only conclusion. Notwithstanding the conventional principle that the duty of judges is to expound and not to legislate. The Courts have taken the view that the judicial art of interpretation and appraisal is imbued with creativity and realism and since interpretation always implied a degree of discretion and choice, the Court would adopt particularly in areas such as, constitutional adjudication dealing with social and defuse rights. Courts are therefore, held as finishers, refiners, and polishers of legislatures which gives them in a state requiring varying degrees of further processing . (see Corrocraft Ltd., v. Pan American Airways (1968) 3 WLR 714 at page 732, AIR 1975 SC 1951 at page 1957. If a language used is capable of bearing more than one construction, in selecting the true meaning, regard must be had to the consequences, resulting from adopting the alternative constructions. A construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency or uncertainty and friction in the system which the statute purports to regulate has to be rejected and preference should be given to that construction which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return and therefore, writ court can go into the issue. On the said issue, let us consider few decisions, (i) In Anisminic Ltd. v. The Foreign Compensation Commissioner , (1969) 1 All ER 208 , Lord Reid at pages 213 and 214 of the Report stated as follows: It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the words jurisdiction has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the enquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry, it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in had faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive. In the same case, Lord Pearce said: Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any jurisdiction to embark on an enquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or, in the intervening stage while engaged on a proper enquiry, the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account.Thereby it would step outside its jurisdiction. It would turn it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h less a quasi-judicial authority, can confer jurisdiction on itself by deciding a jurisdictional fact wrongly The question whether the jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court in an application for a writ of certiorari. If the High Court comes to the conclusion, as the learned single Judge has done in this case, that the Income-tax Officer had clutched at the jurisdiction by deciding a jurisdictional fact erroneously, then the assesses was entitled for the writ of certiorari prayed for by him. It is incomprehensible to think that a quasi-judicial authority like the Income-tax Officer can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen. In our opinion the Appellate Bench is wholly wrong in opining that the Income-tax Officer can decide either way . (v) In Shrisht Dhawan (SMT) Vs. M/s.Shaw Brothers , reported in (1992) 1 SCC 534 , the Hon'ble Supreme Court at paragraph 19, held thus:- 19....What, then, is an error in respect of jurisdictional fact? A jurisdictional fact is one on existence or non-existence of which depends assumption or refusal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 81. Interfering with the finding of the Minister and setting aside the order, the Court of Appeal stated: The first and the most important matter to bear in mind is that the jurisdiction to make the order is dependent on a finding of fact; for, unless the land can be held not to be part of a park or not to be required for amenity or convenience, there is no jurisdiction in the borough council to make, or in the Minister to confirm, the order. In such a case it seems almost self-evident that the Court which has to consider whether there is jurisdiction to make or confirm the order must be entitled to review the vital finding on which the existence of the jurisdiction relied upon depends. If this were not so, the right to apply to the Court would be illusory. [See also Rex v. Shoredich Assessment Committee; (1910) 2 KB 859 : 80 LJ KB 185]. 82. A question under the Income Tax Act, 1922 arose in Raza Textiles Ltd., v. Income Tax Officer, Rampur, (1973) 1 SCC 633 : AIR 1973 SC 1362. In that case, the ITO directed X to pay certain amount of tax rejecting the contention of X that he was not a non-resident firm. The Tribunal confirmed the order. A single Judge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the jurisdiction of a Court, a Tribunal or an Authority depends can be said to be a 'jurisdictional fact'. If the jurisdictional fact exists, a Court, Tribunal or Authority has jurisdiction to decide other issues. If such fact does not exist, a Court, Tribunal or Authority cannot act. It is also well settled that a Court or a Tribunal cannot wrongly assume existence of jurisdictional fact and proceed to decide a matter. The underlying principle is that by erroneously assuming existence of a jurisdictional fact, a subordinate Court or an inferior Tribunal cannot confer upon itself jurisdiction which it otherwise does not posses. 22. In Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61; Reissue, Vol.1(1), para 68, pp.114- 15, it has been stated: Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or collateral to the merits of the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not posses . It was further observed: (SCC p.759, para 76) 76. The existence of jurisdictional fact is thus sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction . 70. Drawing the distinction between `jurisdictional fact' and `adjudicatory fact', the Court stated: (Arun Kumar case, SCC p.761, para 84) 84.... it is clear that existence of `jurisdictional fact' is sine qua non for the exercise of power. If the jurisdictional fact exists, the authority can proceed with the case and take an appropriate decision in accordance with law. Once the authority has jurisdiction in the matter on existence of `jurisdictional fact', it can decide the `fact in issue' or `adjudicatory fact'. A wrong decision on `fact in issue' or on `adjudicatory fact' would not make the decision of the authority without jurisdiction or vulnerable provided essential or fundamental fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessing officers as is apparent from Section 246 of the Act, has to be construed as a conscious statutory mandate. This is more so as noticed hereinabove, the Deputy Director of Income Tax, Deputy Commissioner of Income Tax and the Deputy Commissioner of Income Tax (Appeals) have been otherwise placed at par in the list of income tax authorities provided by Section 116 of the Act. The omission to either vest the Deputy Director of Income Tax with the appellate powers or to contemplate the said post to be an appellate forum from the orders/decisions of the assessing officers cannot thus be accidental or unintended. The relevant provisions of the Act pertaining to the powers, duties and jurisdiction of the various income tax authorities do not leave any room for doubt, in our estimate, to conclude otherwise. True it is, that the Deputy Commissioner of Appeals has been construed in terms of Section 246 of the Act to be an appellate forum from the orders as enumerated in sub-section (1) thereof, but in absence of any provision in the statute nominating the Deputy Director of Income Tax to be an appellate forum for any order/decision of the assessing officer/I.T.O., the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter considering the provisions of the Income Tax Act, 1961 and the Code of Criminal Procedure, the Hon'ble Supreme Court in Babita Lila's case (cited supra), held that the Deputy Director of Income Tax (Investigation), is incompetent to lodge a complaint. Above said decision is squarely applicable to the case of the petitioners. Hence Deputy Director of Income-Tax (Inv.), Unit-3(3), Chennai, is not competent to lodge the complaints. 171. In Bacha F. Guzdar v. Commissioner of Income Tax, Bombay reported in 1995 (1) SCR 876, the Hon'ble Supreme Court, at para No.7 held as follows: 7....It is true that the shareholders of the company have the sole determining voice in administering the affairs of the company and are entitled, as provided by the Articles of Association to declare that dividends should be distributed out of the profits of the company to the shareholders but the interest of the shareholder either individually or collectively does not amount to more than a right to participate in the profits of the company. The company is a juristic person and is distinct from the shareholders. It is the company which owns the property and not the shareholders. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Assessment Year 2016-17. As per Information on record, you had made remittance of R5.1,55,21,1011- to Lloyds Bank, 3, Sidney Street, Cambridge CB2 3HQ, in the name of the, beneficiary Hewitsons LLP Client Account, for the purpose of Investment in real estate as is evidenced by the declarations made by you to the bank. 2. The return of income filed for Assessment Year 2016-17 in the status or resident does not mention the details of the foreign asset in Schedule FA. However, after the receipt of notice under section 10(1) of the Black Money Act, a revised return of Income has been filed on 21.08.2017 with the foreign asset details mentioned in Schedule FA. Further, the tax audit report and the balance sheet uploaded while filing the first revised return of income on 17.10.2016 does not contain details of the foreign asset. Only the balance sheet filed on 07.08.2017 before filing the second revised return of Income on 21.08.2017 contain a mention of the foreign asset held. The difference in the details of the assets outside India as per the original and the second revised return is tabulated as under. Details of Assets held outside India as per Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich shall not be less than six months but which may extend to seven years and with fine'. 4. Under Section 50 of the Black Money Act, If any resident person who has furnished the return of income for any previous year under sub-section (1) or subsection (4) or subsection (5) of Section 139 of the IT Act 1961, willfully fails to furnish in such Return any information relating to an asset located outside India held by him as a beneficial owner or otherwise, at any time during such previous year, or disclose any income from a source outside India, he shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine. In the instant case, the assessee has filed its return of income for Assessment Year 2015-16 and Assessment Year 2016-17 in the status of a resident, but has not disclosed the investment of ₹ 77,60,470/- and ₹ 1,55,21,181/- In the immovable property at 5, Holben Close, Barton Cambridge CB237AQ for Assessment Year 2015-16 and Assessment Year 2016-17 respectively. Though a revised return has been filed for Assessment Year 2016-17, the same was not done voluntarily but only af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACCOUNTANTS New No.38/23, Venkatesa Agraharam, Mylapore, Chennai-600 004. INDIA ----------------------------------------------------------------------- To The Principal Director of Income Tax (Inv) New Income Tax Building No. 46(Old No. 108) Mahatma Gandhi Road, Chennai- 600 034 Madam, Sub: Issue of show-cause notice dated 13-04-2018 u/s 55(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Prosecution proceedings u/s 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - in the case of Smt. Nalini Chidambaram (PAN: AAAPC5521E) - Assessment Year 2016-17 1. I am a Chartered Accountant and the authorized representative of the assessee /noticee Smt. Nalini Chidambaram and I am authorized to submit this reply to your show-cause notice. 2. The show-cause notice is in respect of assessment year 2016-17 and pertains to an Immovable property at No.5, Holben Close, Barton, Cambridge CB23 7AQ, United Kingdom (hereinafter referred to as the Cambridge Property.) the showcause notice alleges that as per the information received by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Chartered Accountant, the assessee filed a revised return of income on 21-08-2017 under section 139(5) of the IT Act, within the due date. In the said revised return of income, Schedule FA was duly filled in and in Part-C thereof the investment in the Cambridge Property, the investment of ₹ 1,55,21,181/- was fully disclosed. Section 139(5) of the IT Act reads as under: If any person, having furnished a return under subsection (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. The said section enables an assessee to file a revised return of income if the assessee discovers any omission. Hence, the revised return correcting the omission is well within the rights of the assessee. 7. It is necessary to recall that before your show cause notice, proceedings were instituted against the assessee under section 10(1) by the Deputy Director of Income Tax (Inv.), Unit - 3(3) by notice dated 02-08-2017, in respect of the same Cambridge Property. Replies were fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Besides, section 50 does not include an ingredient distinguishing between so called voluntary or involuntary revised return of income. 12. As regards the reference to section 54 of the Black Money Act, it is submitted that there is no question of section 54 being attracted to the facts of the present case. In the first place, there was no failure, much less willful failure, to furnish any information relating to the foreign asset. The assessee filed the original return as well as the revised return on the advice of her Chartered Accountant and there is no question of presuming a culpable mental state on the part of the accused. 13. Hence, the assessee submits that the present show cause notice dated 13-04-2018 is without jurisdiction, unfair and discriminatory, on the following among other grounds: GROUNDS A. The Black Money (Undisclosed Foreign Income and Assets) and imposition of Tax Act, 2015, as its name indicates, is targeted only at undisclosed foreign Income and undisclosed foreign asset. The Statement of Objects and Reasons as well as the Long Title to the Act further make it clear that the Act has been made to deal with Black Money that is undisclosed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed; on the other hand there will be a sanction for prosecution, trial or even a conviction on the allegation that the assessee did not furnish any information relating to the foreign asset (or income). Obviously, the Act does not intend such contradictory results and hence the need to read the provisions of Chapter III and Chapter V of the Act harmoniously. E. The authority to sanction prosecution under Chapter V is the Principal Chief Commissioner or Principal Director Generator Chief Commissioner or Director General or Principal Commissioner or Commissioner, whereas the Assessing Officer will usually be of the rank of ITO or Assistant Commissioner. If sanction is accorded first under Section 55 of Chapter V by a superior officer, it would be unrealistic and futile to expect that the Assessing Officer will reach a conclusion that there is no undisclosed foreign asset (or income) because such a conclusion will contradict and destroy the sanction given by a superior officer. Hence a harmonious construction of the provisions of Chapter III and Chapter V of the Act is absolutely necessary, and the process of sanctioning prosecution under Chapter V can be commenced only if and af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Accountant. There was no failure to disclose any information about the foreign asset, and certainly no wilful failure to disclose any information. On the facts of the present case, it would be totally unreasonable and perverse to conclude there has been wilful failure to disclose any information about the foreign asset. Hence, the present show cause notice deserves to be dropped. I. The assessee submits that there are valid legal grounds to challenge the constitutional validity of the provisions of Chapter V of the Act or, in the alternative, to read down the said provisions to render them constitutional and not violative of Articles 14, 19 and 21 of the Constitution of India. The assessee reserves the right to raise these grounds in the appropriate Court of law. 14. In the above circumstances it is requested you may kindly withdraw the show cause notice dated 13-04-2018 and drop the proceedings against the assessee/noticee. 15. The show cause notice originally posted the case for hearing on 20-04-2018. On that day, a request was made for a further 3 weeks' time. However, time was granted only upto 27-04-2018. The time granted was insufficient. Nevertheless, this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding any beneficial Interest) at any time during the previous year. In the said original return of Income, it contains details of only one Immovable property held outside India i.e. at 5, Holben Close, Barton, Cambridge CB237AQ, UK with total investment shown at ₹ 1,55,07,510/-. However, in the revised return of income filed by you on 22.08.2017, Schedule FA has Sub-head B also filled up apart from Sub-head C. Sub-head B to Schedule FA mentions the details of financial Interest in any entity held (including any beneficial Interest) at any time during the previous year. In the said revised return of income filed on 22.08.2017, in Sub-Head B to Schedule FA, you have disclosed financial / beneficial Interest of ₹ 31,68,095/- (held since 20.07.2015), financial / beneficial interest of ₹ 33,14,536/- (held since 16.09.2015) and of ₹ 16,75,724 (held since 11.03.2016) In Hewitsons LLP, Cambridge, United Kingdom. Thus, in the revised return of Income, there is total investment In financial interest disclosed of ₹ 81,58,355/- which is subsequent to the issue of notice u/s 10(1) of Black Money (Undisclosed Foreign Income and Assets)And Imposition of Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Karti P. Chidambaram 26/03/2015 Investment in real estate abroad Hewitsons LLP Client Account 77,55,613 2 Karti P. Chidambaram 08/04/2015 Investment in real estate abroad Hewitsons LLP Client Account 77,85,120 3 Aditi Nalini Chidambaram (daughter of Karti P.Chidambaram 13/04/2015 Purchase of Immovable Property Hewitsons LLP Client Account 76,86,000 4 Aditi Nalini Chidambaram (daughter of Karti P.Chidambaram 11/12/2015 Investment in real estate abroad refurbishment expenses L.Mooney 33,64,360 5 Aditi Nalini Chidambaram (daughter of Karti P.Chidambaram 28/01/2016 Investment in real estate abroad refurbishment expenses L.Mooney 34,32,823 TOTAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) had flied the original return of income for the Assessment Year 2016-17 on 15.10.2016 disclosing Income of ₹ 66,450/- in the status of resident. As per Schedule FA in the said return of Income, It is seen that the assessee has disclosed financial interest of ₹ 1,00,295/- in Totus Tennis Ltd, United Kingdom. 2. As per information received by the Assessing Officer, M/s.Chess Global Advisory Services Pvt. Ltd. had made an investment of USD 499965 in Nanoholdings LLC, USA on 20.08.2015. The same was not reflected in the original return of Income on 15.10.2016 flied for Assessment Year 2016-17. Under the circumstances, a notice u/s 10(1) of the Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015 was issued and served subsequent to which a revised return of Income was filed on 04.09.2017 revising the contents of Schedule FA of the return of Income originally Filed. 3. As per the original return of Income filed on 15.10.2016, disclosure was made in Schedule FA only in one row mentioning the financial interest held in Totus Tennis Limited amounting to ₹ 1,00,295/-. However, in the revised return of Income flied by the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in case of Smt. Srinidhi Karti Chidambaram, are as follows: WHEREAS I have carefully perused the report of the Deputy Director of Income-Tax (Inv.), Unit-3(3), Chennai dated 02.04.2018 and the connected records placed before me by the Deputy Director of Income-Tax(Inv.), Unit-3(3), Chennai for according sanction under s.55 for initiating prosecution u/s.50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in the case of M/s. Chess Global Advisory Services Private Limited for the Assessment Year 2016-17. The following important documents were considered in the instant proceedings among others. S.No. Description of the document 1. The original return of income for Assessment Year 2016-17 filed by the assessee in the status of Resident on 31.07.2016 2. Notice u/s 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 dated 04.08.2017. 3. The revised return of income for Assessment Year 2016-17 filed by the assessee in the status of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ₹ 81,58,355/- in Hewitsons LLP, UK. 5. Whereas, it Is seen that the assessee had failed to disclose information regarding the Investment in Hewitsons LLP UK of ₹ 81,58,355/-. The assessee has disclosed the information relating to the asset located outside India only in the revised return of income filed by her on 22.08.2017 and it has been done only after issue of notice under s.10(1) of the BMA 2015 on 04.08.2017. In the circumstances, prima facie, there Is willful failure to disclose the particulars relating to the asset held outside India in the return of income filed voluntarily under s. 139(1) of the IT Act, 1961. 6. Whereas a notice dated 13.04.2018 was issued to show cause why sanction under s.55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 should not be issued for launching prosecution under s. 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for failure to furnish in the return of income filed under s.139(1) of IT Act information relating to the asset located outside India. Opportunity of being heard was accorded to the assessee and the case was posted for he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) The Black Money (Undisclosed Foreign Income Assets) And Imposition of Tax Act, 2015 is targeted at undisclosed foreign Income and undisclosed foreign asset. The various provisions of the Act will apply only if there is undisclosed foreign asset or income within the meaning of Section 2(10) and 2(11) of the Act. Hence, it is necessary that proceedings should be initiated and completed u/s 10 before invoking the provisions of Chapter V, particularly, Section 50 read with Section 55. The process of sanctioning prosecution can commence only if and after the AO has reached a conclusion adverse to the assessee under section 10 of the Act. d) Proceedings under 10(1) have been instituted by the DDIT (Inv), Unit-3(3) in respect of the same Cambridge property and replies have been filed. Despite passage of over 5 months, no order under 5.10(3) of the BMA 2015 have been passed. Satisfactory reply has been given to establish that there was no undisclosed foreign asset and hence, provisions of BMA 2015 are not attracted The proceedings are unfair and the assessee and the members of the family are singled out for discriminatory and unfair treatment. e) The allegation that the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vable property located outside India that the assessee furnished for the first time in Schedule FA, the details of the foreign remittance made to the extent of ₹ 81,58,355/-. However, even the said remittance has been reported in Schedule FA as financial interest in Hewitsons LLP and not as advances made to Mrs.L.Mooney. According to the assessee, once a revised return of income has been filed under 139(5), it completely obliterates the return of income filed under s.139(1) and in support of which the assessee has relied upon certain judicial pronouncements. Though it is settled law that the effective return for the purpose of assessment, and is the return filed by the assessee on the basis of which he wants his income to be assessed, the said ratio of the judicial pronouncements relied on by the assessee is not applicable since the facts are distinguishable. There is no dispute that it was subsequent to the notice under s.10(1) of BMA 2015 dated 04.08.2017 that the assessee chose to file a revised return of income on 22.08.2017 in which the information with regard to the foreign assets held were disclosed in Schedule FA. It therefore follows that the revised return filed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has contended that the sum of ₹ 81,58,355/- remitted to Mrs.L.Mooney was part of the amount of ₹ 5,64,42,613/- shown against item 2(a)(iv) in Schedule-AL relating to Assets and Liability at the end of the year , which is part of the original return of income filed for the assessment year 2016-17. The said contention of the assessee is completely devoid of merits. From the original return of income filed on 31.07.2016 and from the accompanying documents, it could never by inferred whether the investments made included the investments made outside the country in a foreign asset. Thus, assessee has failed to provide or to make available information relating to the foreign asset in the return of income filed originally on 31.07.2016. The Hon'ble Supreme Court in Kalyanji Mavji Company Vs. CIT (1976) 102 ITR 287 has observed that to inform means to make available and the details available to the ITO in the papers filed before him does not by its mere available become an item of information. It is transmuted into an item of information in his possession only when its existence is realized and its implications are recognized. Further, as per section 139(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows that the process of sanctioning prosecution can commence even before completion of assessment U/s 10(3) of the BMA, 2015. The scheme of the Act makes It clear that assessment and prosecution are not only distinct and separate but the two proceedings are independent and irrespective of the outcome of the assessment under s.10(3) of the BMA, 2015. Besides, it has been held by the Hon'ble Supreme Court in P.Jeyappan Vs S.K. PERUMAL, 1984 AIR 1693 that the pendency of assessment proceedings cannot act as a bar to institution of criminal prosecution for offences punishable under the provisions of law. d) The contention that it is over five months since proceedings under s. 10(1) of BMA 2015 have been initiated and that no order under s.10(3) of the BMA 2015 has been passed and thereby the assessee and: the members of her family have been singled out for unfair and discriminated treatment are devoid of merits. The provisions of section 11 of BMA 2015 enables the Assessing Officer to pass the order of assessment before expiry of two years from the end of the financial year in which the notice under s.10(1) has been issued. In the Instant case, the notice under 10 (1) of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y would not have been disclosed. f) As regards presence of culpable merital state, the provisions of 5.54 of BMA 2015 are very clear. The court shall presume the existence of such culpable mental state and It Is for the assessee to prove that he had no such mental state in the prosecution. As per s. 54(2) of BMA, 2015 this fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability. The mere assertion made by the assessee that the return of income was filed on the advice of the Chartered Accountant and there is no willful failure on her part to disclose information relating to the asset is not borne out by the facts on record. In the return of income filed on 31.07.2016 for the Impugned Assessment Year, the return has been verified and digitally signed by the assessee solemnly declaring that the information given in the return is correct and complete. g) The submission made by the assessee that if sanction is first accorded u/s 55 by a superior authority it would be unrealistic to expect a junior officer i.e Assessing Officer to reach a conclusion that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid facts and circumstances of the case and the provisions of law, I am satisfied that there exists a prima facie case to initiate prosecution against the assessee for the offence in terms of section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for the Assessment Year 2616-17. 11. Now, therefore, in exercise of the powers conferred upon me under section 55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, I Susie B. Varghese, Principal Director of Income-tax(Inv.), Chennai, do hereby accord sanction for filing a complaint against Smt. Srinidhi Karti Chidambaram for offence under s.50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for the Assessment Year 2016-17 and also do hereby authorize Shri.Kannan Narayanan, DDIT (Inv.), Unit-3(3), Chennai to file the complaint in the Court of the Chief Metropolitan Magistrate, Egmore, Chennal - 600 003 or such other competent court having jurisdiction. 177. Proceedings of the Principal Director of Income Tax (INV.), Chennai, dated 10.05.2018, have been issued, sanctioning prosecution against Smt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Letter in F.No.Pr.DIT (Inv)/Prosecution/2018-19 dated 20.04.2018 issued by the Principal Director of Incometax (Inv.), TN P reposting the case for hearing on 27th April, 2018. 10. The written submissions made by the Assessee's Representative during the hearing on 27.04.2018. 2. As per information received by the Assessing Officer(DDIT (Inv), Unit-3(3), Chennai), the assessee had made investment in an immovable property at No.5, Holben Close, Barton, Cambridge CB237AQ, United Kingdom during the Financial Year 2015-16 relevant to the Assessment Year 2016-17. As per information on record, the assessee had made remittance of ₹ 1,55,21,181/- to Lloyds Bank, 3, Sidney Street, Cambridge CB2 3HQ, in the name of the beneficiary Hewitsons LLP Client Account, for the purpose of investment in real estate as is evidenced by the declarations made by the assessee to the bank. The property was registered on 01.05.2015. The assessee has not disclosed information relating to the said investment in immovable property located, outside the country in the return of income filed under s.139(1) of the IT Act; 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclose information regarding the investment of ₹ 1,55,21,181/- in the Immovable property at No.5, Holben Close, Barton Cambridge CB237AQ in its original as well as the first revised return of income for Assessment Year 2016-17 that were filed voluntarily. The assessee has disclosed the information relating to the asset located outside India only in the second revised return Of income filed by her on 21.08.2017 and it has been done only after issue of notice under s.10(1) of the BMA 2015 on 02,08.2017. In the circumstances, prima facie, there is willful failure to disclose the particulars relating to the asset held outside India in the return of income filed voluntarily under s. 139(1) of the IT Act, 1961. ................ 10. Whereas on a careful consideration of the aforesaid facts and circumstances of the case and the provisions of law, I am satisfied that there exists a prima facie case to initiate prosecution against the assessee for the offence in terms of section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for the Assessment Year 2016-17. 11. Now, therefore, in exercise of the powers conferred upon me under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccused 2 to 4 are the directors of the 1st accused company. The accused 2 to 4 have keenly participated in the day to day, affairs of the first accused company who were in charge of the day, to day attain, of the company during the periods when the offence was committed. Therefore as per, Section 55 of the Black Money (Undisclosed Foreign Income and Assets) and imposition of Tax Act, 2015 all the accused are equally liable for the commission of the offence and are liable to be prosecuted. 7. The complainant submits that the 1st accused is a Company and an assessee and having the PAN -AACCC5763B and the 2nd to 4th accused are the directors of the 1st accused company. The accused have committed an offence within the meaning of Section 50 of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act, 2015 as explained below. 8. The complainant states that as per information received, the accused had made investments of ₹ 3,27,62,500/- in Nanoholdings LLC, USA and Rs,80,01,110/- in Totus Tennis Limited, UK. However, in Schedule FA of the original return of income filed by the 1st accused for the impugned year on 15.10.2016, the investment in Totus Tenni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing on 20th April 2018. 11. The complainant states that vide letter dated April 18, 2018 the accused sought adjournment and the case was reposted for hearing on 27th April, 2018. On 27.04.2018, the authorized representative of the accused appeared and made detailed oral submissions and filed written submissions as follows. a) The accused has filed revised return of income u/s.139(5) of the Income Tax Act, 1961 which completely obliterates the original return of Income filed u/s.139(1) and the information about the investment in the Cambridge property was reflected in the revised return of income filed u/s.139(5) of the Income Tax Act, 1961 b) M/s.Chess Global Advisory Services Pvt. Ltd. invested a sum of ₹ 1,00,295/- in equity shares of Totus Tennis Limited on 01.07.2015. This was duly reflected in Part B of Schedule FA. The other foreign remittances of ₹ 79,00,815/- made to Totus Tennis Limited towards advance for allotment of shares were reflected in the Balance Sheet as on 31.03.2016 under heading II Assets, sub-heading D (iii) Loans and Advances to Related Parties which is part of the original return of income filed and thus are fully disclosed. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and the members of the family are singled out for discriminatory and unfair treatment. f) The allegation that the revised return was not done voluntarily but only after the Issue of notice under s. 10(1) of the BMA 2015 is untenable. There is no connection between the notice under s.10(1) of the BMA 2015 and the filing of the revised return. Any attempt to connect the two dates is untenable and irrelevant. g) There is no question of section 54 being attracted to the facts of the present case; the accused filed original as well as return of income and there is no question of presuming a culpable, mental state. h) The authority to sanction prosecution under chapter V is a Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General or Principal Commissioner or Commissioner and if sanction is accorded first by Superior Officers, it is unrealistic and futile to expect that the A.O, a junior Officer, will reach a conclusion that there was no undisclosed foreign asset or income. i) The time granted is insufficient. The show cause was originally posted for hearing on 20.04.2018 and though a request was made for further three week' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not so. Further, as per the provisions of section 139(5) an opportunity is afforded to revise the return if there is an omission or wrong statement on account of a bonafide mistake and such return has to be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of assessment whichever is earlier. It thus follows that in such a case once a revised return is filed, the original return must be taken to have been withdrawn for the purpose of assessment. Hence, it means that filing of revised return is for the purpose of returning the correct income that is liable to tax and the benefit of the section cannot be taken recourse to escape from the rigor of prosecution. Hence the subsequent the revised return of income filed by the accused will not exonerate the accused from the offence under s.50 of Black Money Act, 2015. b) The accused has contended that the foreign remittances of ₹ 79,00,815/- made to Totus Tennis Limited towards advance for allotment of shares were reflected in the balance sheet as on 31.03.2016 under heading li - Assets, subheadtng D (m) - Loans and Advances to Related Parties which is part of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a single page attachment to Form 3CD the investment in Nanoholdings LLC, USA does not feature. The said contention of the accused is completely devoid of merits. From the original return of income filed on 15.10.2016 and from the accompanying documents, it could never be inferred whether the investments made included the investments made outside the country in a foreign asset. The balance sheet filed online does not feature any item as Investment in Preferred Share . Thus, accused has failed to provide or to make available information relating to the foreign asset in the return of income filed originally on 14.10.2016. The accused has entirely failed to provide any information in Schedule FA of the return of income filed voluntarily on 15.10.2016 of the investment of ₹ 3,27,62,500/- in Nanoholdings LLC,USA. e) The object of the Black Money Act, 2015 is not only assessment of total undisclosed foreign asset and income of an accused but also mandates true and full disclosure of such foreign asset or income to be disclosed voluntarily by a resident accused in the return of income filed by him under the income Tax Act, 1961 Failure of such accused to furnish return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (in the original return of income filed, the accused had only disclosed Rs,1,00,295/- as investment in Totus Tennis Ltd, UK). Even if the contention that ₹ 79,00,815/- only represent advance for allotment of shares is accepted, even then the accused was under mandate to disclose information with regard to the foreign remittance of the sum of ₹ 79,00,815/- in Column B of Schedule FA which is regarding details of financial interest in any entity, including beneficial interest. Certainly there is no dispute that the entire investment of ₹ 3,27,62,500/- in preferred units of Nanoholdings LLC, USA was never disclosed in the original return of income filed on 14.10.2016. After issue of notice under s.10(1) of BMA 2015, the accused chose to disclose the entire investment made both in Totus Tennis Ltd, UK and Nanoholdings LLC, USA. Thus, the filing of the second revised return is clearly triggered by the notice issued Under section 10 of the Black Money Act, 2015. Had it been otherwise in the first return voluntarily filed by the accused on 14.10.2016 the relevant information / complete information with regard to the foreign assets located outside India would have been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 COMPLAINANT KANNAN NARAYANAN Deputy Director of Income Tax(Inv.) Unit - 3(3), Chennai-34. 179. Details of the assets furnished in the Returns submitted by the petitioners, under Section 139(1) and 139(5) of the Income Tax Act, are given hereunder: Original Return of Income filed on 28.08.2015 by Mrs. Srinidhi Karthi Chidambaram for the Assessment Year 2015-16:- Schedule FA: Details of Foreign Assets and Income from any source outside India:- Original Return of Income filed on 31.07.2016 by Mrs. Srinidhi Karthi Chidambaram for the Assessment Year 2016-17:- Schedule FA:- Details of Foreign Assets and Income from any source outside India:- Return of Income filed on 30.07.2017 by Mrs. Srinidhi Karthi Chidambaram for the Assessment Year 2017-18:- Return of Income filed by Mrs.Nalini Chidambaram, dated 14.10.2016 for the Assessment Year 2016-17 (Original), under Section 139(1) of the Income Tax Act:- C. Details of Immovable Property held (including any beneficial interest) at any time during the previous year:- SI.No (1) Country Name and Code (2) Address of the Property ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trued only as a notice, under Section 142 of the Income Tax Act, for further information. Return of Income filed by Mrs.Nalini Chidambaram, dated 30.10.2017 for the Assessment Year 2017-18:- Schedule FA:- Details of Foreign Assets and Income from any source outside India:- Return of Income filed by Mr.Karthi P Chidambaram, dated 25.08.2015 for the Assessment Year 2015-16:- Schedule FA: Details of Foreign Assets and Income from any source outside India:- Return of Income filed, dated 30.07.2016 by Mr.Karthi P Chidambaram for the Assessment Year 2016-17:- Schedule FA: Details of Foreign Assets and Income from any source outside India:- Return of Income filed by M/s.Chess Global Advisory Services Private Limited, Chennai, dated 15.10.2016 for the Assessment Year 2016-17:- Schedule FA:- Details of Foreign Assets and Income from any source outside India. Revised Return of Income, dated 04.09.2017, filed by M/s.Chess Global Advisory Services Private Limited, Chennai for the Assessment Year 2016-17:- Schedule FA:- Details of Foreign Assets and Income from any source outside India. 183. In the notices issued under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department is accepted, then the term or sub-Section (4) or sub-Section (5) of Section 139 would be rendered meaningless. The purpose of Section 139(5) of the IT Act, as discussed above, is to enable the assessee, to file a revised return, if having furnished a return, under sub-Section (1) or sub-Section (4), the assessee discovers any omission or any wrong statement therein. Even assuming that schedule AL would take into its ambit, discovery of an asset, outside the country, even if there is no source of income, outside the country, even then, an offence under Section 50 cannot be attracted, till the time period for filing a return, under Section 139(5) of the Income Tax Act, is not over. 186. This is not a case, where there is complete failure to disclose of the existence of asset, outside the country. As stated earlier, all the parties, including Nalini Chidambaram, had disclosed the existence of the foreign asset (Nalini Chidambaram having disclosed the same in the schedules annex to the balance sheet). Srinidi Chidambaram and Karthi P Chidambaram had disclosed the existence of asset in their original return, under Section 139(1) itself. 187. It is pertinent to mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have offered an explanation that the said property has been purchased from a source of income in India. It is not the case of the respondents that the assessees have not offered any explanation about the source of income. Section 2(11) is attracted, when the assessee has no explanation to offer about the source of income and if any explanation is offered, such explanation in the opinion of the Assessing Officer, should be unsatisfactory. When the assessee has offered explanation, about the source of investment and paid tax, then it is the duty of the assessing officer to come to the conclusion that in his opinion, the explanation offered is not satisfactory. The words, in the opinion of the assessing officer , with reference to the expression, he has no explanation about the source of investment in such assessment or the explanation given by him, is not satisfactory, makes it clear that the assessing officer should arrive at the subjective satisfaction on the source of investment, in such assessment. Formation of opinion, as to the source of investment is an important element, engrained in the definition. Section 2(11) is attracted, if only the assessee has no explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Kumari Shrilekha Vidyarthi and Others vs. State of U.P. and Others , reported in (1991) 1 SCC 212 , the Hon'ble Supreme Court considered appointment to the office of Public Prosecutor/Law Officers, a State action, reference can be made to few paragraphs on the aspect of arbitrariness: 35. It is now too well-settled that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 of the Constitution and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of the rule of law. Satisfaction of this basic test in every State action is sine qua lion to its validity and in this respect, the State cannot claim comparison with a private individual even in the field of contract. This distinction between the State and a private individual in the field of contract has to be borne in the mind. 36. The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case (supra), long strides have been taken in several well-known decisions of this Court expanding the scope of judicial review in such matters. It has been emphasized time and again that arbitrariness is anathema to State action in every sphere and wherever the vice percolates, this Court would not be impeded by technicalities to trace it and strike it down. This is the surest way to ensure the majesty of rule of law guaranteed by the Constitution of India. It is, therefore, obvious that irrespective of the nature of appointment of the Government Counsel in the districts in the State of U.P. and the security of tenure being even minimal as claimed by the State, the impugned circular, in order to survive, must withstand the attack of arbitrariness and be supported as an informed decision which is reasonable. 39. No doubt, it is for the person alleging arbitrariness who has to prove it. This can be done by showing in the first instance that the impugned State action is uninformed by reason inasmuch as there is no discernible principle on which it is based or it is Contrary to the prescribed mode of exercise of the power or is unreasonable. If this is shown, then the burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer to arrive at a conclusion, as to whether, there is an undisclosed income under Section 2(11) and a duty is cast on the assessing officer to form an opinion, under Section 2(11). Expression, undisclosed source of investment depends on the existence of the above and the opinion is dependent on each one of the facts. Show cause notice issued is totally extraneous to Section 2(11) of the Act. 199. At this juncture, it is pertinent to consider, what satisfaction means. Satisfaction means to be satisfied with a state of things, meaning thereby, to be satisfied in one's own mind. Satisfaction is essentially a conclusion of mind. The word satisfied means, makes up its mind . Reference can be made to the decision, Blyth vs Blyth reported in (1966) 1 All England Reporter 541, Smith,J., in Angland vs Payne reported in (1944) NLLR 610, 626 stated that satisfied means, a mind which has reached a clear conclusion. 200. Referring to the clarifications on tax compliance, on undisclosed foreign income and assets, Circular No.13 of 2015, dated 06.07.2015, issued by the Central Board of Direct Taxes (TPL Division), Department of Revenue, Ministry of Finance, Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts, having an aggregate balance not exceeding an amount equivalent to ₹ 5 Lakhs, at any time during the previous year. 202. In the case on hand, the assessees have furnished the details of the assets in Schedule FA of the Income-Tax returns, under Section 139(5). Thus, even taking it for granted that the assessees have omitted to furnish the details in the returns under Section 139(1) of the Act, in the light of the decision of Central Board of Direct Taxes, prosecution cannot be launched, but at best, there could only be penal proceedings. 203. Income Tax Department and Government of India have introduced a scheme, called as, Income Declaration Scheme, 2016 , which has come into force, on the first day of June, 2016. Chapter IX of the Finance Act, 2016 and Section 183 deals with declaration of undisclosed income and it reads thus, 183. (1) Subject to the provisions of this Scheme, any person may make, on or after the date of commencement of this Scheme but before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any income chargeable to tax under the Income-tax Act for any assessment year prior to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disjunctive that marks an alternative which generally corresponds to the word either . Where general words follow the designation of particular things, or classes of persons or subjects, the general words will usually be construed to include only those persons or things of the same class or general nature as those specifically enumerated. This is the rule known as ejusdem generis , and it is founded upon the idea that if the legislature intended the general words to be used in an unrestricted sense, the particular classes would not have 'been mentioned. It is specially applicable to penal statutes. But under no circumstances, and regardless of the type of statute involved, must the rule be used where the language of the statute under consideration is plain and there is no uncertainty. Its use is permissible only as an aid to the Court in its attempt to ascertain the intent of the law makers. Nor will it to be proper for the Court to follow the rule where to do so will defeat or impair the plain purpose of the legislature. It cannot be employed to restrict the operation of an Act within narrower limits than was intended by the lawmakers. Nor is the rule to be applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strued so as to carry out the object sought to be accomplished by them so far as it can be collected from the language employed. 24. The question when the rule of ejusdem generis is to be applied with reference to the words Or otherwise came up for determination recently before the Supreme Court in Lila Vati Bai v. State of Bombay, (S) AIR 1957 SC 521 (C). Their Lordships were considering the constitutionality of the Bombay Land Requisition Act (Act XXXIII), 1948. Explanation (a) to Section 6 of the Act contained the words (omitting other words not necessary) premises which are in the occupation of the landlord, the tenant or the sub-tenant, as the case may be, shall be deemed to become vacant when such landlord ceases to be in occupation......upon termination of his tenancy, eviction, or assignment or- transfer in any other manner of his interest in the promises 'or otherwise' (underlined (here in ' ') by me) . The argument presented there was that in that case admittedly there was no termination, eviction, assignment or transfer, and that the words or otherwise must be construed as ejusdem generis with the words immediately preceding them. This arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning. In our opinion, in the context of the object and the mischief of the enactment there is no room for the application of the rule of ejusdem generis. Hence it follows that the vacancy as declared by the order impugned in this case, even though it may not be covered by the specific words used, is certainly covered by the legal import of the words or otherwise . In my judgment, therefore, the rule of ejusdem generis pressed in aid of his argument by Mr. Chatterji cannot be applied here. 25. In the present case, there is no doubt that if the ejusdem generis doctrine is applied, it would impily a departure from the natural meaning of words in order to give them a meaning which may or may not have been the intention of the Legislature. If the intention of the Legislature would have been to include in the words or otherwise the same kind of transfer which is contemplated by the earlier words by way o transfer , there was no necessity of using the general words or otherwise , in that, the earlier specific words by way of transfer were wide enough to include all kinds of transfers. An interpretation of the general words or otherwise , limiting them to the matters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any benefit by contract or otherwise. It was argued for the appellant that the expression by contract or otherwise should be construed ejusdem generis and reference was made to the decision of Hamilton, J. in 1911-2 KB 688. On this aspect of the case we think that the argument of the appellant is justified. In the context of the section the word otherwise should, in our opinion, be construed ejusdem generis and it must be interpreted to mean some kind of legal obligation or some transaction enforceable at law or in equity which, though not in the form of a contract, may confer a benefit on the donor. 209. In R B Falcon (A) PTY Limited vs. Commissioner of Income Tax reported in (2008) 12 SCC 466 , the Hon'ble Supreme Court at paragraph Nos.24 to 26, considered the word, 'otherwise', as follows: 24. The Advanced Law Lexicon defines otherwise as: By other like means; contrarily; different from that to which it relates; in a different manner; in another way; in any other way; differently in other respects in different respects; in some other like capacity. 25. Otherwise is defined by the Standard Dictionary as meaning 'in a different manner, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose (in this Code called a purposive and literal construction), or (b) applying a strained meaning where the literal meaning is not in accordance with the legislative purpose (in the Code called a purposive and strained construction). 213. In the light of the above decisions and discussion, we are of the considered view that Section 55 Block Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is not attracted. There was no failure to furnish any information relating to any foreign asset or investment. The Company has filed the original return of income, as well as the revised return of income within the time stipulated under the Income Tax Act, 1961. An assessee can file a revised return of income or even more than one revised return of income under Section 139(5) of the Income Tax Act, 1961 as long as it is filed within time. Revised return of income is the only relevant return of income that can be relied upon or referred to. Revised return of income obliterates or effaces any earlier return of income. A return of income has many schedules and all the schedules are part of the 'return of income' referred to in Section 139 of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the light of the above discussion and decisions, we are of the view that the offence under Section 50 is not made out. Consequently, complaints filed in C.C.Nos.4482 to 4485 of 2018 dated 11.05.2018 are quashed. 219. In W.P.Nos.8834 and 8835, the petitioners therein have sought for Writs of Prohibition, prohibiting the Principal Chief Commissioner of Income Tax (Tamil Nadu and Puducherry), Chennai, 1st respondent therein, from sanctioning any prosecution against them and the Director General of Income Tax (Investigation) and Deputy Director of Income Tax (Investigation), Chennai, respondents 2 and 3 therein, from instituting any prosecution against them, under Chapter V of the Act (Act 22 of 2015) before the Special Court for Economic Offences. 220. W.P.Nos.8832, 8833, 8840 and 8841 of 2018, have been filed, for a direction, to the Deputy Director of Income Tax (Investigation), Chennai, 3rd respondent herein, to pass orders forthwith under Section 10(3) of the Act (Act 22 of 2015), dated 04.08.2017, 08.08.2017, 01.11.2017 and 31.08.2017 issued by the 3rd respondent therein, to them, under Section 10(1) of the Act 22 of 2015 and replies furnished by them to the said noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per section 2(16) of the Income-tax Act, 1961, the word Commissioner has been defined, inter-alia, to include a person appointed as Principal Director of Income-tax and since the Commissioner is also one of the competent authority for according sanction under section 55 of the Black Money Act, the same covers the Principal Director of Income-tax also. Except Mr.ARL.Sundaresan, learned Senior Counsel for the petitioners, no serious contentions, on the above aspect, were made. Respondents have explained the competence of the Principal Director of Income Tax, and other authorities under the Income Tax Act, 1961, to accord sanction for prosecution and going through the provisions of the Income Tax Act, 1961, we do not accept the contention of the petitioners that the Principal Director of Income Tax is not an authority, jurisdiction/competence under Section 55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, to sanction prosecution or file a prosecution complaint for offences, under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. 224. In the light of the above, W.P.Nos.13005 and 130 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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