No retrospective criminalisation under Black Money Act: Bombay High Court issues notice to Attorney General on Anil Ambani plea

The Bombay High Court on Monday admonished the Income Tax Department for their retrospective action taken against Chairman of Reliance (ADA) Group, Anil Ambani in connection with initiation of income tax proceedings against him under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015..Ambani had challenged the proceedings, claiming that the authorities invoked 2015 Act on the basis of transactions which pertained to a period 10 years before the Act came into force.A Division Bench of Justices GS Patel and SG Dige questioned how a person’s conduct could be criminalised in a retrospective manner. “A person conducts himself in certain manner, you criminalise it and that too in 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?" Justice Patel quipped. .Justice Patel cited an example to emphasize his point, “Suppose I am claiming a deduction in my expenditure on books...You come back and say that I claimed deduction on books outside jurisdiction and plus held 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,” the judge lambasted..He remarked that the IT department could always hold that ‘henceforth,’ certain actions cannot be done, and they could even be criminalised. But it was pertinent to specify the time period..Ambani, meanwhile, challenged not only the notice issued to him, but also challenged the constitutional validity of the provisions Black Money Act under which it was issued on the grounds that they could not have a retrospective application. Since the vires of a Central Act had been challenged, the Court issued notice to Attorney General for India R Venkataramani. .The matter was posted for hearing on February 20..The notice under challenge had been issued to Ambani by the IT Department on August 9, 2022, for his alleged evasion of ₹420 crore in taxes on undisclosed funds worth more than ₹814 crore 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..A co-ordinate bench of the High Court had in September last year directed the IT department to not take any coercive action against Ambani.This order was extended on Monday till February 20.