Bombay High Court notice to Attorney General on Anil Ambani's plea

Bombay High Court notice to Attorney General on Anil Ambani's plea

The matter will be heard on 20 February

The Bombay High Court has admonished the Income Tax Department for their retrospective action against Anil Ambani, the chairman of the Reliance Group, for initiating tax proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

In August last, the IT department had sent a notice to Ambani for his alleged evasion of Rs.420 crore in taxes on undisclosed funds worth over Rs.814 crore held in Swiss Bank accounts. It stated that Ambani was an economic contributor and beneficiary of a Bahamas-based entity Diamond Trust and Northern Atlantic Trading Unlimited company.

The department had alleged that Ambani failed to disclose the foreign assets in his Income Tax Return, contravening the provisions of the Black Money Act.

In September, a co-ordinate bench of the high court had directed the IT department to not take any coercive action against Ambani.

However, Ambani had to challenge the proceedings, claiming that the authorities invoked the Black Money Act on the basis of transactions pertaining to 10 years before the Act came into force.

A division bench of Justice GS Patel and Justice SG Dige questioned how a person's conduct could be criminalized in a retrospective manner.

Justice Patel quipped, "A person conducts himself in a certain manner, you criminalize it and that too in a retrospective manner. How is that allowed? Suppose for years, I have claimed certain deductions, you come up with an Act saying it is illegal, and going back 20 years?"

Emphasizing his point and lambasting the IT department, Justice Patel said, "Suppose I am claiming a deduction in my expenditure on books...You come back and say that I claimed deduction on books outside the jurisdiction and hold it criminal. You are saying that I should have known what the government was going to do 10 years from now. This is the most simple and absurd example."

He remarked that the IT department could hold that 'henceforth,' certain actions could not be done, and they could even be criminalized. But it was pertinent to specify the time period.

Ambani had not only challenged the notice, but also the constitutional validity of the provisions of the Black Money Act under which it was stated that they could not have a retrospective application.

Since the vires of a Central Act were challenged, the court issued a notice to the Attorney General of India, R Venkataramani.