Delhi HC stays Proceedings under Black Money Act to Examine Validity of Retrospective Application [Read Order]

The Delhi High Court stayed the proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to examine the validity of the retrospective application.

Dhruv Lamba, the petitioner challenged the notice dated 08.04.2022 issued under Section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

The petitioner holding undisclosed assets in the British Virgin Islands came to light sometime in 2013 because of an investigation carried out by the International Consortium of Investigative Journalists [ICIJ]. 

The provisions of the Black Money Act were triggered on 01.07.2015. It appeared that between 2013 and until such time the 2015 Act was triggered, the petitioner was in denial mode. The petitioner made a declaration about his undisclosed assets which were embedded in a company going by the name Blackrose Holdings Inc., for the first time, on 30.09.2015.

The respondents/revenue rejected the declaration via the order dated 27.10.2015 and stated that they already had information about the undisclosed assets qua which declaration was sought to be made by the petitioner “on or before” 30.06.2015, under the agreement entered into by the Central Government as per Section 90/90A of the Income Tax Act, 1961.

It was submitted that the respondents/revenue had received an intimation about the undisclosed assets of the petitioner from the FT&TR Division via communication dated 29.10.2015. The respondents/revenue viewed that the petitioner was ineligible for seeking a declaration under Section 59 of the 2015 Act, given provisions of Section 71(d)(iii) of the 2015 Act.

The impugned notice under Section 10(1) of the 2015 Act was issued to the petitioner concerning the Assessment Year (AY). The petitioner replied that once the petitioner’s declaration under Section 59 of the 2015 Act was considered ineligible, then proceedings under the 2015 Act cannot be triggered.

The respondents/revenue passed an order rejecting the petitioner’s request via reply dated 06.09.2022 that proceedings under the Black Money Act should be dropped.

It was evident that the petitioner made the declaration under Section 59 of the Black Money Act, 2015 only when he was sure that the concerned authorities in India knew that the petitioner held undisclosed foreign assets, which could be brought under the purview of the 2015 Act.

The date on which the respondents/revenue acquired knowledge would then trigger the guidelines that the Central Board of Direct Taxes or CBDT framed on 23.01.2018, which required it to issue a notice under Section 10(1) of the Black Money Act within thirty days of the end of the FY when it acquired such knowledge.

Since there were several other issues/grounds that the petitioner would want to put forth for consideration to the court, the two-judge bench comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganju stayed the matter and directed to file all details before the next hearing for further examination.

To Read the full text of the Order CLICK HERE

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