2021 (9) TMI 1444 - HC - Income Tax

Court quashes Black Money Act complaint due to timely revised ITR filing disclosing foreign assets.

The court quashed the complaint filed under Section 50 of the Black Money Act against the petitioner as the revised Income Tax Return (ITR) was filed ... Black Money - offence punishable under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Scope of total undisclosed foreign income and asset - revised ITR by disclosing the assets has been filed only after issuance of notice by the I.T. Department - HELD THAT:- In order to attract offence u/s 50 of the Black Money Act even in spite of filing the revised ITR under sub-section 5 of Section 139 of I.T. Act, if the assets were not disclosed, then only the prosecution can be launched under Section 50 of the Black Money Act. Therefore, the complainant alleging in the complaint that the assessee willfully has not disclosed the foreign assets in the ITR as well as revised ITR is not sustainable under the law. Therefore, filing of the complaint by the complainant under Sections 4 & 50 of the Black Money Act does not attract against the petitioner. Once he has filed the revised ITR under subsection 5 of Section 139 of the I.T. Act by declaring the assets, when there is no offence is made out, then conducting the trial is abuse of process of law. The initial burden of proving the case is always with the complainant-prosecution and after discharging the initial burden, then the burden shifts on the accused to rebut the presumption available under the law. When the assets were already disclosed in the revised ITR u/s 139(5) of the I.T. Act, it cannot be said that there is any willful non-disclosure by the accused. When there is mens rea on the part of the accused, then the question of rebutting the presumption under Section 54 of the Black Money Act does not arise. Even otherwise, if the assessee failed to disclose the foreign assets under sub-section (1) or sub-section (4) or sub-section (5) of Section 139 fails to furnish any information relating to any asset at any time during such previous year, the AO may direct that such person shall pay, by way of penalty as per Section 43 of the Black Money Act. Apart from that, it is not a case of the I.T. Department that there were any income yield by the petitioner from those assets. Therefore, complaint itself is not sustainable once the assessee has already filed the revised ITR by disclosing the foreign assets and the question of saying that he has willfully failed to disclose the assets cannot be acceptable. When there is no offence is made out, then conducting the proceedings against the petitioner-assessee is abuse of process of law and hence, liable to be quashed. Issues Involved:1. Quashing of the complaint filed under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.2. Validity of the revised Income Tax Return (ITR) filed by the petitioner.3. Interpretation of Sections 4 and 50 of the Black Money Act.4. Applicability of the presumption under Section 54 of the Black Money Act.Detailed Analysis:1. Quashing of the Complaint Filed Under Section 50 of the Black Money Act:The petitioner filed a petition under Section 482 of Cr.P.C. to quash the complaint filed by the Income Tax Department. The complaint alleged that the petitioner failed to disclose foreign assets in his ITR for the assessment year 2017-18, thus committing an offense under Section 50 of the Black Money Act. The trial court had taken cognizance and registered a criminal case against the petitioner based on this complaint.2. Validity of the Revised Income Tax Return (ITR) Filed by the Petitioner:The petitioner argued that the Black Money Act came into force in July 2015, and he filed his ITR on 31.03.2018. He subsequently filed a revised ITR on 23.02.2019 under Section 139(5) of the Income Tax Act. The petitioner contended that the revised ITR was filed within the permissible time frame, and therefore, the question of prosecuting him under Section 50 of the Black Money Act does not arise. The court noted that the revised ITR was filed within one year from the original ITR, fulfilling the requirements of Section 139(5) of the Income Tax Act.3. Interpretation of Sections 4 and 50 of the Black Money Act:Section 4 of the Black Money Act defines the scope of undisclosed foreign income and assets, while Section 50 prescribes the punishment for failure to furnish information about such assets in the ITR. The court analyzed these sections and concluded that the offense under Section 50 would only be attracted if the foreign assets were not disclosed even in the revised ITR filed under Section 139(5) of the Income Tax Act. In this case, the petitioner had disclosed the assets in the revised ITR, and therefore, no offense under Sections 4 and 50 of the Black Money Act was made out.4. Applicability of the Presumption Under Section 54 of the Black Money Act:The respondent argued that the presumption under Section 54 of the Black Money Act was applicable, placing the burden on the petitioner to rebut the presumption. However, the court held that the initial burden of proving the case lies with the prosecution. Since the petitioner had disclosed the foreign assets in the revised ITR, there was no willful non-disclosure, and thus, the presumption under Section 54 did not apply. The court further noted that the Income Tax Department had not alleged any income generated from the undisclosed assets, reinforcing the conclusion that no offense was committed.Conclusion:The court concluded that the complaint filed by the Income Tax Department was not sustainable, as the petitioner had filed the revised ITR within the permissible time frame and disclosed the foreign assets. Consequently, the criminal proceedings against the petitioner were deemed an abuse of the process of law and were quashed.Order:The criminal petition was allowed, and the criminal proceedings in C.C.No.4179/2019 registered upon P.C.No.73/2019 against the petitioner were quashed. The pending I.A.No.2/2020 was also disposed of.