Bombay High Court protects Anil Ambani from coercive action in income tax proceedings

The Bombay High Court on Monday directed the Income Tax Department not to take any coercive action against Chairman of Reliance (ADA) Group, Anil Ambani in connection with the income tax proceedings initiated against him under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015..A bench of Justices SV Gangapurwala and RN Ladhha passed the order today after Ambani moved the Court seeking urgent stay on the proceedings initiated against him after a show cause notice came to be issued by the Income Tax Department (IT Department)."The Income Tax Department shall till the next date not take any coercive action against the petitioner (Ambani) in pursuance to the show cause notice," the Court directed.Advocate Akhileshwar Sharma, appearing for the Commissioner of Income Tax Mumbai and Principal Director of Income Tax, sought time to respond to the petition.Accordingly, the petition was adjourned to November 17, 2022..The IT Department had issued the notice to Ambani on August 9, 2022, for allegedly evading ₹420 crores in taxes on undisclosed funds worth more than ₹814 crores held in Swiss Bank accounts.The notice stated that Ambani was an economic contributor as well as beneficial owner of a Bahamas-based entity called ‘Diamond Trust’ and Northern Atlantic Trading Unlimited (NATU) company.The department alleged that Ambani "failed to disclose" these foreign assets in his income tax return (ITR) filings and, hence, contravened the provisions of the Black Money Act..Ambani’s plea pointed out that the notice under challenge affected his vested rights under law.The action by the authorities seeking to exercise powers under the Black Money Act was on the basis of transactions which relate to a period 10 years prior to the Black Money Act coming into force.This, Ambani contended, amounts to attempting to initiate prosecution and conviction for an alleged offence on the basis of a law which was not in force at the time of the alleged transactions.This action was clearly violative of Ambani’s fundamental rights under Article 14 and 20 of Constitution of India, it was submitted..Senior Advocate Rafique Dada appearing for Ambani stated that the provisions of the Black Money Act could not have a retrospective effect.Dada also pointed out that the show cause notice was issued despite an assessment order of March 31 under Black Money Act.He argued that the notice was issued prematurely as the assessment order was already passed and was subject to appeal.That order was under challenge before the Commissioner of Income Tax (Appeal) and, hence, had not yet attained finality, it was argued.“If civil proceedings are pending, criminal proceedings cannot go on. Let the civil proceedings carry on and reach its logical end. The whole idea is to twist my arm and take out money,” Dada said.