TMI Blog2020 (3) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... ied out in the premises of the petitioners under Section 132 of the Act leading to issuance of notice under Section 148 of the Act. Therefore, in terms of Clause (d) of Section 71, provisions of Chapter-VI would not be applicable in the case of the petitioners. This position has also been clarified by the departmental circulars . Therefore, unlike other persons in respect of whom the Black Money Act is sought to be made applicable, petitioners and similar category of assessees under the Act would be statutorily barred from making a declaration in terms of Section 59 of the Black Money Act. This has been contended by the petitioners to be highly arbitrary and discriminatory. This Court on 08.10.2018 had admitted the writ petition for hearing by issuing rule observing that arguable questions have been raised. Admittedly, when rule is issued, it presupposes existence of a prima facie case; in the absence of which rule is not ordinarily issued by the Court. Evidently, provisions of the Black Money Act are extremely severe having stringent penalty provisions and also leading to offences and prosecutions. Therefore, to enable a person to come clean and to shield himself from the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Case of the petitioners is that petitioner No.1 is the mother of petitioner No.3 whereas petitioner No.4 is the wife of petitioner No.3. Petitioner No.2 is the son of petitioner Nos.3 and 4. During the pendency of the writ petition, petitioner No.4 expired on 12.01.2019 and following order passed in Chamber Summons No.182 of 2019, petitioner No.4 has been substituted by her legal representatives. 4. In the year 2013, respondent Nos.2 to 4 claimed that they had information that petitioner Nos.2 and 3 along with another related person Mr. Manoj Mehta, who is stated to be cousin of petitioner No.3, were holding undisclosed foreign accounts in the name of Red House Finance Limited, a body corporate incorporated and registered in Singapore. Pursuant to such information, summons under Section 131 of the Income Tax Act, 1961 (briefly the Act hereinafter) came to be issued to petitioner Nos.2 and 3 as well as to Mr. Manoj Mehta. However, petitioners denied having any interest in Red House Finance Limited. According to the petitioners, the only foreign entity in which they had an interest was Sun Hill International Pte. Limited, Singapore which factum was disclosed in the return filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner Nos.2, 3 and 4 under Section 148 of the Act alleging that income chargeable to tax for the assessment years 2008-09 and 2009-10 had escaped assessment within the meaning of Section 147 of the Act. 11. It is stated that similar enquiries were made with respect to Mr. Manoj Mehta and his wife Mrs. Sangeeta Mehta. In June, 2016, they executed an affidavit which they submitted before the income tax authorities stating that they and not the petitioners were the beneficial owners of the said foreign accounts and assets in question. Income tax authorities continued with the re-opening proceedings against the petitioners which according to the petitioners demonstrates that even after coming into force of the Black Money Act, respondents continued to pursue income tax proceedings against the petitioners under the Act. 12. On December 20, 2017, respondent No.2 issued impugned notices to the petitioners under Section 10(1) of the Black Money Act calling upon them to produce the details sought for in connection with the assessment for the assessment year 2017-18 under the Black Money Act. In the annexures appended to the individual notices, details of the foreign bank accounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective servants, officers and agents from in any manner (directly or indirectly) proceeding against the petitioners, on the strength and / or basis of the impugned notices dated December 20, 2017 and / or otherwise under the provisions of the Black Money Act. (b) this Hon ble Court be pleased to issue a writ of certiorari, or a writ in the nature of certiorari and / or any appropriate order or direction, inter alia calling for the records of the petitioners case from the respondents, and upon considering the legality, validity and / or correctness thereof, this Hon ble Court be pleased to quash and / or set aside the impugned notices dated December 20, 2017 and restrain respondent Nos.2 to 4 by a writ of mandamus from applying and / or proceeding against the petitioners under and in furtherance of the Black Money Act. (c) pending the hearing and final disposal of the Petition, this Hon ble Court be pleased to: (i) stay the effect and / or operation and / or implementation of the impugned notices dated December 20, 2017 including a stay on the proceedings initiated pursuant to or under the impugned notice or under the provisions of the Black Money Act against the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into by respondent No.1 under Sections 90 or 90-A of the Act. Therefore, in the case of the petitioners Section 71(d)(iii) would apply and the benefit of Chapter VI of the Black Money Act comprising Sections 59 to 63 would be excluded. Thus, petitioners are statutorily dis-entitled from making declaration under Sections 59 and 62 of the Black Money Act. This, it is contended, is highly arbitrary and discriminatory besides being violative of Articles 14 and 20 of the Constitution of India. It is asserted that impugned notices having been issued on December 20, 2017 long after initiation of proceedings against the petitioners under the Act, the Black Money Act would not be applicable in respect of the petitioners in view of Sections 70, 71 and 72 of the Act. 18. In the course of hearing, Mr. Kadam specifically referred to the window of opportunity given to an assessee under Sections 59 to 63 of the Black Money Act to make a declaration of undisclosed foreign income and assets which is not available to an assessee who is already facing a proceeding under the Act. Exclusion of this category of assessee from making a declaration is highly arbitrary and discriminatory, he contends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed foreign assets. Prosecution complaint has been lodged against the two petitioners for making false statement on oath. Contesting the main contention of the petitioners that they were prevented from making disclosure of undisclosed foreign assets and subsequent payment of tax and penalty under the provisions of the Black Money Act, it is stated that petitioners never admitted having any undisclosed foreign assets and continued to deny the same. Therefore, this contention of the petitioners is only hypothetical. 21.1. Regarding contention of the petitioners that Black Money Act cannot be invoked against them as prior proceedings under the Act were commenced, it is stated that proceedings under the Act were closed after issue of notice under the Black Money Act since it was found that undisclosed foreign assets are liable to be taxed under the Black Money Act. 21.2. Petitioners main contention that they were statutorily prevented from making disclosure of undisclosed foreign assets under the Black Money Act is only academic because at no point of time, including in the income tax proceedings, they admitted that they had undisclosed foreign assets. 22. Regarding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... com 272 interfered with the restraint order passed by the Delhi High Court. Supreme Court held that interim order passed by the Delhi High Court was not sustainable and accordingly vacated the same. He, therefore, submits that no case for passing any interim order is made out. Notice of motion may be dismissed. 26. Petitioners have filed rejoinder affidavit to the affidavits-in-reply filed by the respondents. 27. Submissions made by learned counsel for the parties have been considered. 28. At the outset, we may advert to the Black Money Act. As per the statement of objects and reasons of the aforesaid Act, it is mentioned that stashing away of black money abroad by some people with intent to evade taxes has been a matter of deep concern to the nation. Black Money is a common expression used in reference to tax-evaded income. Evasion of tax robs the nation of critical resources necessary to undertake programs for social inclusion and economic development, besides putting disproportionate burden on the honest tax-payers as they have to bear the brunt of higher taxes to make up for the revenue leakage caused by evasion. Such black money could also be used in ways which coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax authorities specified in Section 116 of the Act shall be the authorities for the purposes of the Black Money Act. 30.4. Section 10 deals with assessment and under sub-section (1), the assessing officer is empowered to issue notice to any person for the purpose of making an assessment in terms of sub-section(3). 30.5. Section 11 provides the limitation period for completion of assessment and re-assessment. 30.6. Sections 15 to 22 deal with appellate provisions. However, Section 23 vests power of revision on the Principal Commissioner or Commissioner in respect of revision of order which is construed to be erroneous insofar it is prejudicial to the interests of the revenue. 30.7. Chapter IV of the Black Money Act deals with penalties and as per Section 41 forming part of Chapter IV, penalty imposed can be as high as a sum equal to three times the tax computed. Offences and prosecutions are provided in Chapter V. 31. Chapter VI of the Black Money Act deals with tax compliance for undisclosed foreign income and assets. Chapter VI comprises of Sections 59 to 72. Section 59 is quite relevant. It says that any person may make on or after the date of commencement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in relation to any undisclosed asset located outside India which has been acquired from income chargeable to tax under the Act for any previous year relevant to an assessment year prior to the assessment year beginning on the 1st day of April, 2016 where notice has been issued for assessment or re-assessment as per sub-clause (i) or where search under Section 132 of the Act has been conducted or a survey has been carried out under Section 133-A of the Act as per sub-clause (ii). Sub-clause (iii) says that Chapter VI shall also not apply in relation to any undisclosed asset located outside India, which has been acquired from income chargeable to tax under the Act for any previous year relevant to any assessment year prior to the assessment year beginning on the 1st day of April, 2016 where any information has been received by the competent authority under an agreement entered into by the Central Government under Section 90 or Section 90-A of the Act in respect of such undisclosed asset. As per the explanation, asset shall include a bank account whether having any balance or not. 34. Before winding up our summary survey of the Black Money Act, we may mention that Section 72 make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that arguable questions have been raised. Admittedly, when rule is issued, it presupposes existence of a prima facie case; in the absence of which rule is not ordinarily issued by the Court. 37. Evidently, provisions of the Black Money Act are extremely severe having stringent penalty provisions and also leading to offences and prosecutions. Therefore, to enable a person to come clean and to shield himself from the rigours of the said Black Money Act, a small window is provided in Section 59 to make a declaration of such undisclosed foreign income and asset. The window was for the period upto 30th day of September, 2015. According to the petitioners, they were statutorily debarred from making a declaration under Section 59 in view of Section 71 (d). 38. On the other hand, respondents have taken the stand that such contention of the petitioners is hypothetical inasmuch as petitioners never admitted having any undisclosed foreign asset and continue to deny the same till date. According to the respondents, this contention is of academic interest only as even in the income tax proceedings, petitioners never admitted that they had undisclosed foreign asset. 39. That apart, a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt held that the High Court was not right in holding that the penal provisions were made retrospectively applicable. Having said that, Supreme Court held that the penal provisions under Sections 50 and 51 of the Black Money Act would come into play only when an assessee has failed to take the benefit of Section 59 and neither disclosed assets covered by the Black Money Act nor paid the tax and penalty thereon. 43. On thorough consideration, we find that facts of the present case are distinguishable from the facts in the case of Gautam Khaitan (supra). That apart, the issue raised by the petitioners that they were statutorily barred from making declaration under Section 59 of the Black Money Act was not an issue in Gautam Khaitan (supra). It is another matter that in the income tax proceedings petitioners had not disclosed any black money or asset; rather have denied the same. 44. In such circumstances and taking an overall view of the matter, we feel that while respondents may proceed pursuant to the impugned notices dated December 20, 2017, no coercive measures may be taken against the petitioners if the occasion so arises. 45. Ordered accordingly. 46. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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