Black Money Act applies prospectively; disclosed foreign assets and pre-2016 interest income fell outside its charge.

The BMA was applied prospectively from A.Y. 2016-17, with its proviso permitting only limited retrospective valuation of undisclosed assets acquired from income chargeable under the Income-tax Act. The Tribunal treated the notice and assumption of jurisdiction under section 10 as invalid where the assets or income were not undisclosed within the BMA, particularly when foreign assets or income had been disclosed through revised returns or voluntary letters. It also held that inherited corpus was an explained capital receipt and that historic interest income for pre-2016 years could not be taxed under the BMA, but only under the Income-tax Act machinery. Relief was granted to the assessee.

---

---

Issues: (i) Whether the notice issued and assumption of jurisdiction under section 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA) was valid; (ii) Whether the BMA applies to the impugned foreign bank accounts and/or their income prior to its commencement and the correct year of chargeability under section 3(1) proviso and section 59; (iii) Whether historic interest income for pre-2016 years can be taxed under the BMA.

Issue (i): Validity of the notice and assumption of jurisdiction under section 10 of the BMA.

Analysis: The Tribunal examined the facts of assignment of AO authority, timing of summons, voluntary disclosures, revised returns filed under section 139(5) and the content of the notice dated 13.04.2018. It considered whether omission to specify relevant financial year and delay went to jurisdiction and whether such defects could be cured under section 81 of the BMA (analogue to section 292B of the IT Act). The Tribunal reviewed authorities on when notice defects are jurisdictional and the statutory requirement for a notice to identify the chargeable period.

Conclusion: The Tribunal held that the impugned notice dated 13.04.2018 and assumption of jurisdiction under section 10 were invalid to the extent they were invoked over assets/income that were not "undisclosed" within the meaning of the BMA; accordingly the cross-objection on jurisdictional grounds is allowed in favour of the assessee.

Issue (ii): Applicability of the BMA to pre-commencement assets/income and the correct year of chargeability under section 3(1) proviso and section 59.

Analysis: The Tribunal analysed section 3(1) (charging section commencing A.Y. 2016-17), its proviso fixing the previous year of chargeability for undisclosed assets, the definition of "undisclosed asset located outside India" in section 2(11), the components of section 4(1), and the transitional declaration mechanism in section 59. It considered the effect of valid voluntary disclosure by the assessee in revised returns under section 139(5) and voluntary letters prior to the issuance of the BMA notice, and relevant precedents distinguishing retrospective valuation of assets from prospective taxation of income.

Conclusion: The Tribunal concluded that the BMA's income charge operates prospectively from A.Y. 2016-17 and the proviso to section 3(1) grants limited retrospective valuation only for undisclosed assets acquired from income chargeable under the IT Act; where the corpus is explained (inherited capital) and income was disclosed in revised returns or via voluntary disclosure, the BMA does not apply. The Tribunal allowed the assessee on this issue.

Issue (iii): Taxability under BMA of historic interest income for pre-2016 years.

Analysis: The Tribunal reviewed the facts that the corpus was inherited and non-taxable as capital receipt, that historic interest for F.Y. 2009-10 to 2013-14 was voluntarily disclosed to the jurisdictional ITO with a request for re-opening under section 147, and that returns for later years were revised and processed. It examined statutory demarcation between BMA and ITA, and precedents treating pre-2016 income as assessable only under ITA machinery (including section 147/149).

Conclusion: The Tribunal held that historic interest income for pre-2016 years could not be taxed under the BMA and deleted the addition of Rs. 52,77,108 (Rs. 26,38,554 as assessee's share). The assessee succeeded on this issue.

Final Conclusion: The Tribunal allowed the assessee's cross-objection on legal grounds (jurisdiction, temporal scope, and taxability of historic interest) and consequently dismissed the revenue's appeal as infructuous; the net effect is final relief to the assessee with the revenue appeal dismissed.

Ratio Decidendi: The BMA's charging section 3(1) applies prospectively from A.Y. 2016-17; its proviso permits limited retrospective valuation only of undisclosed assets that were acquired from income chargeable under the Income-tax Act, 1961; where foreign assets or income are validly disclosed (including by revised return under section 139(5) or voluntary disclosure) or the corpus is an explained capital receipt (inheritance), such assets/income do not fall within the BMA and historic pre-2016 income is assessable only under the Income-tax Act, not the BMA.

---