Case Note & Summary
The Supreme Court heard an appeal by the Union of India against an interim order of the Delhi High Court that restrained the authorities from taking action against Gautam Khaitan under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The High Court had observed that the Central Government, by issuing a notification on 01.07.2015 under Sections 85 and 86 of the Act, made the Act retrospectively applicable from that date, and thus stayed proceedings. The Supreme Court examined the scheme of the Act, noting that it was enacted to unearth black money stashed abroad and prevent unaccounted money from going overseas. The Act received Presidential assent on 26.05.2015 and, under Section 1(3), was to come into force on 01.04.2016 unless otherwise provided. However, Section 86(1) empowered the Central Government to appoint a different date by notification, and the government issued a notification on 01.07.2015 bringing the Act into force from that date. The Court analyzed Section 3, the charging section, which imposes tax on undisclosed foreign income and assets for assessment years commencing on or after 01.04.2016, at 30% of the value. The proviso to Section 3(1) states that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which it comes to the notice of the Assessing Officer. The Court interpreted 'previous year' under Section 2(9)(d) as the twelve months preceding the assessment year. Thus, if an asset comes to notice on 01.04.2016, its value is determined for the previous year ending 31.03.2016. The Court also considered Section 59, which provided a compliance window for declaring undisclosed foreign assets before 30.09.2015, with tax and penalty payable by 31.12.2015. Section 72(c) deems that if no declaration is made, the asset is treated as acquired in the year the notice under Section 10 is issued. The Court held that the Act is not retrospective; it applies to assessment years from 01.04.2016 onwards, and the notification under Section 86(1) merely brought the Act into force earlier than the default date. The High Court's interim order was set aside, and the appeal was allowed, permitting the authorities to proceed with prosecution under Sections 50 and 51 of the Act.
Headnote
A) Black Money Act - Retrospective Application - Sections 85, 86 - The High Court erred in holding that the Central Government made the Act retrospectively applicable from 01.07.2015; the Act itself provides for its commencement on a date to be notified, and the notification was validly issued under Section 86(1). (Paras 4-6) B) Black Money Act - Charging Section - Section 3 read with Section 2(9)(d) - The charging section applies to assessment years commencing on or after 01.04.2016, and the proviso to Section 3(1) allows taxation of undisclosed foreign assets based on value in the previous year when the asset comes to the Assessing Officer's notice, not retrospectively. (Paras 7-12) C) Black Money Act - Deeming Provision - Section 72(c) - Where no declaration is made under Section 59, the undisclosed asset is deemed to have been acquired in the year the notice under Section 10 is issued, ensuring prospective application. (Paras 14-15) D) Black Money Act - Prosecution - Sections 50, 51 - Sanction for prosecution under these sections is valid as the offences relate to wilful failure to disclose foreign assets or wilful attempt to evade tax, which are substantive offences under the Act. (Paras 16-18)
Issue of Consideration
Whether the High Court was right in observing that the Central Government, while exercising powers under Sections 85 and 86 of the Black Money Act, made the Act retrospectively applicable from 01.07.2015 and passed a restraint order.
Final Decision
The Supreme Court allowed the appeal, set aside the interim order of the Delhi High Court dated 16.05.2019, and permitted the authorities to proceed with prosecution under Sections 50 and 51 of the Black Money Act.
Law Points
- Retrospective application of statute
- Charging section interpretation
- Deeming provision
- Opportunity of declaration
- Sanction for prosecution
