TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 812
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...., 3 and 4 (hereinafter referred to as "the contesting respondents"). 2. The facts, as averred in the petition, are that the respondents No.2, 3 and 4 Shri Vimal Patel, Shri Samir Patel and Shri Mehul Patel respectively, are promoters in the Banco Group of Companies. One of the main companies of the group M/s. Banco Products (India) Limited is a public limited company involved in the business of manufacturing of gaskets, radiators, charged air coolers and oil coolers extensively used in the automobile industry. As per the details submitted by them before the Settlement Commission, the contesting respondents were born in Kenya and are persons of Indian origin and that at present, they are residents of UAE though they have residences in UK and Africa and all of them hold British passports. In April, 2016 in the Panama Papers expose, a company by the name of Overseas Pearl Limited, British Virgin Island, registered in the British Virgin Islands and domiciled in Jersey, belonging to the contesting respondents, was mentioned. It is the case of the petitioner that the main issue in this case was the existence of ownership by Indian Tax Residents (respondents No.2, 3 and 4) in the shareh....
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.... Zurich, Dubai and investment portfolio accounts in various foreign banks, details of which were found during the search proceedings. The disclosure of Rs. 100 crores was made by the contesting respondents as their undisclosed income over and above their regular income. 2.4 Thereafter, the matter was centralised with the Deputy Commissioner of Income-tax, Central Circle-3, Baroda and notices under section 153A of the IT Act were issued on 10.3.2017 in the group cases for assessment years 2011-12 to 2016-17. The limitation for passing the assessment order under section 153A of the IT Act was 31.12.2018. Notices under section 148 of the IT Act also came to be issued on 25.3.2017 to the contesting respondents for assessment years 2000-2001 to 2007-2008, on the basis of the information of undisclosed foreign assets and income, foreign bank accounts. 2.5 On 31.7.2017, the contesting respondents filed settlement applications under section 245C(1) of the IT Act before the Settlement Commission, Mumbai, for assessment years 2005-06 to 2013-14, assessment years 2004-05 to 2015- 16 and assessments years 2004-05 to 2015-16, respectively. Before the Settlement Commission, the contesting re....
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....come assessed under section 10 of the Black Money Act. The relevant part of the opinion was extracted in the said letter which reads as under: "Whether notice u/s 10 of the Act can be issued for those assessment years for which settlement proceedings are pending before the Settlement Commission? The proceedings before the Settlement Commission are under the provisions of the Income Tax Act. Thus, though notice under Section 10 can be issued for Assessment Years for which settlement proceedings are pending before the Settlement Commission, ultimately benefit will be required to be granted while computation under Section 5 of the Act." It was accordingly stated that it would be more appropriate to continue with the assessment of the income under the provisions of section 147 of the IT Act for which the assessees have already admitted the income and that if there is an income which is not assessed under the said section, then the difference would be brought to tax under the Black Money Act as per the relevant provisions thereof and the legal opinion of the Senior Standing Counsel of the Department. 2.9 Thereafter, the Settlement Commission proceeded further with the applicat....
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.... is clear that any undisclosed foreign income and asset which is assessable under the Black Money Act does not form part of income under the Income Tax Act and as such, the Income Tax Act is not applicable to those undisclosed foreign income and asset. It was submitted that the legislature clearly wanted to exclude foreign income from the purview of the Income Tax Act. It was contended that therefore, the Settlement Commission had no jurisdiction to entertain and decide the applications made by the contesting respondents under section 245C of the IT Act. 3.3 Reference was made to sections 10, 59 and 72 of the Black Money Act, to submit that these sections form a complete regime for assessment under the Black Money Act. It was contended that insofar as domestic income and assets are concerned, it is the income tax authorities who have the jurisdiction; however, in case of undisclosed foreign income or assets, it is the authorities appointed under the Black Money Act who have the jurisdiction. 3.4 The learned Additional Solicitor General next submitted that the contesting respondents neither disclosed their foreign income/assets in their income tax returns nor did they make any d....
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....ons in the case of the contesting respondents is further strengthened by the circular of the Department bearing Circular No.13 of 2015 dated 6.7.2015 in answer to FAQ No.23 and Circular No.15 of 2015 dated 3.9.2015 and in answer to FAQ No.26, which read as under: "Question No.23: A person is a non-resident. However, he was a resident of India earlier and had acquired foreign assets out of income chargeable to tax in India which was not declared in the return of income or no return was filed in respect of that income. Can that person file a declaration under Chapter VI of the Act? Answer: Section 59 provides that a declaration may be made by any person of an undisclosed foreign asset acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to assessment year 2016-17. Since the person was a resident in the year in which he had acquired foreign assets (which were undisclosed) out of income chargeable to tax in India, he is eligible to file a declaration under section 59 in respect of those assets under Chapter VI of the Act." "Question 26: As per answer to question no.23 of Circular No.13 dated 06.07.2015, a person being a non-resident can....
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.... that therefore, even in terms of subsection (2) of section 2 of the Black Money Act prior to its amendment vide Finance No.2 Act of 2019, the contesting respondents would fall within the ambit of the expression assessee as defined therein. Reference was made to the definition of "assessee" under sub-section (2) of section 2 of the Black Money Act which defines assessee to mean a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income Tax Act, by whom tax in respect of undisclosed foreign income and assets, or any other sum of money, is payable under that Act and includes every person who is deemed to be an assessee in default under the Black Money Act. It was submitted that a person who is deemed to be an assessee in default is covered by the expression "assessee" and, therefore, for the reason that they have not made any declaration of their foreign income and assets in terms of the Black Money Act, even in terms of the unamended section 2(2), the contesting respondents are assessees in default in terms of section 2(2) read with section 59 and section 72(c) of the Black Money Act and as such, the provisions ....
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.... Black Money Act, it was submitted that having regard to object behind the enactment, this court in judicial review may consider non providing of an overriding provision to be an omission on the part of the legislature and read such a provision therein. 3.9 It was further submitted that notices under sub-section (1) of section 10 of the Black Money Act were issued to the contesting respondents on 2.8.2018 for assessment years 2017-18 and 2018-19 during the pendency of proceedings before the Settlement Commission. It was submitted that the initial information relating to undisclosed foreign income/assets of the contesting respondents came to the notice of the Assessing Officer on 12.1.2017 (the date on which appraisal report was received by the Assessing Officer), relevant to assessment year 2017-18 and in case of disclosure before the Settlement Commission on 22.8.2017, which is the date when the applications and copies of statement of facts of the contesting respondents was received by the Assessing Officer. 3.10 It was further submitted that the proviso to subsection (1) of section 3 of the Black Money Act provides that an undisclosed asset located outside India shall be char....
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....sions of section 10, that is, the year when the information pertaining to undisclosed foreign income and assets came to the notice of the Assessing Officer. 3.13 Reference was made to sub-section (12) of section 2 of the Black Money Act which defines "Undisclosed foreign income and asset" to submit that the definition nowhere mentions the years to which the undisclosed foreign income and asset pertains. It was submitted that sub-section (12) of section 2 read with sub-section (1) of section 10 shows that unlike the Income Tax Act, the Black Money Act does not limit the years for which proceedings under that Act could be initiated and that what is assessable under Black Money Act is undisclosed foreign asset when it comes to the notice of the Assessing Officer, and the value of such assets would be charged to tax as per the proviso to section 3 of the Black Money Act. 3.14 Next, it was submitted that the definition of 'assessee' under sub-section (2) of section 2 of Black Money Act has been amended by the Finance Bill No.2 2019, to bring within its ambit non-residents. It was pointed out that subsection (2) of section 2 has been amended with retrospective effect from 1st July, 2....
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....-05 to 2015-16 in case of Samir Patel and Mehul Patel, and not assets. It was pointed out that under the Black Money Act, undisclosed foreign income can be taxed only for assessment year 2016-17 for which the relevant previous year is 2015-16. This is so because section 3 of the Black Money Act clearly mentions the same. However, due to the effect of proviso to section 3, the undisclosed foreign asset can be taxed for any previous year and shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer. It was submitted that in this regard, it is necessary to understand the subject matter of the income offered by the contesting respondents. It was pointed out that the contesting respondents have offered their global income, that is, income earned and accrued outside India along with income arising in India for assessment years when the contesting respondents were resident in India. Therefore, the income earned during those years was chargeable to tax In India. Referring to the items of income offered to tax as mentioned in the applications made by the contesting respondents under section 245C of the IT Act, it was pointed o....
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....ed only income before the Settlement Commission and not any asset does not hold good because what is taxable under Income-tax Act, 1961 is the income. 3.18 It was submitted that section 5 of the Income Tax Act defines 'Scope of total Income' and specifies that 'total income' of any person who is resident in any previous year includes all income from whatever source received/deemed to have been received in India, accrues or arises/deemed to accrues or arise in India or accrues or arises to him outside India during such year. It was submitted that the scheme of the Income Tax Act is required to be understood with reference to section 69A thereof, which by deeming fiction taxes assets as income. It was submitted that section 69B of the Income tax Act also provides such deeming fiction and treats the amount of investment not fully disclosed in books of accounts as income and, therefore, even the assets which were not part of the books of account and offered to tax can be charged only as income under the Income Tax Act. 3.19 Next, it was submitted that while it is true that before the Settlement Commission, the petitioner had stated that they desire to proceed further in the proceed....
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....milarly, if a court/tribunal inherently lacks jurisdiction, acquiescence of party equally should not be permitted to perpetrate and perpetuate defeating the legislative animation. The court cannot derive jurisdiction apart from the statute. In such eventuality the doctrine of waiver also does not apply. 3.22 It was, accordingly, urged that merely because before the Settlement Commission, the Department had consented to proceed further with the settlement proceedings, it would not vest in the Settlement Commission the jurisdiction to entertain and decide the application under section 245C of the Income tax Act in respect of the undisclosed foreign income and asset. 3.23 The learned Additional Solicitor General further submitted that apart from the fact that the impugned order passed by the Settlement Commission is unsustainable on the ground of lack of jurisdiction, another aspect which goes to the root of the matter is that the contesting respondents had not made full and true disclosure of their foreign income and assets in the applications made under section 245C of the Black Money Act. It was submitted that it is well settled that in the scheme of Chapter XIX-A of the Income....
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.... submitted bank statements prior to this period. Respondent No. 2 therefore offered the entire opening balance of Rs. 1,92,21,581 (in INR) as income for AYs 2005-06 (Rs. 11,92,688/-) and 2006-07 (Rs. 1,80,28,893/-). D. Interest income of Eur 26,550 as per applicant's letter dated 08.10.2018 determined on account of reconciliation of Code 39 and 40:- During the process of verification, it was observed that the Respondents No. 2, 3 and 4 had mentioned ledger code-39 and code-40 in bank statements to which various amounts were transferred. However, on reconciliation, it was found that amount of Euro 26,550 (Rs. 15,02,199/-) could not be reconciled. Therefore, Respondents No. 2, 3 and 4 offered Rs. 15,02,199/- as interest income in AY 2005-06. E. Income offered to cover up insufficient personal household expenses for the period covered by the Settlement application filed by the Respondents No. 2, 3 and 4:- Initially, Respondents No. 2, 3 and 4 offered income of Rs. 28,25,000/- on account of household and other domestic expenses. Later on, Respondents No. 2, 3 and 4 offered Rs. 1.49 crore as additional income. F. Income from Marias Trust:- Respondents No. 2, 3 and 4 in....
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....come was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the matter covered by the application." "35.... A "full and true" disclosure of income, which had not been previously disclosed by the assessee, being a pre-condition for a valid application under Section 245C (1) of the Act, the scheme of Chapter XIX-A does not contemplate revision of the income so disclosed in the application... Moreover, if an assessee is permitted to revise his disclosure, in essence, he would be making a fresh application in relation to the case by withdrawing the earlier application. In this regard, Section 245-C (3) of the Act which prohibits the withdrawal of an application once made under sub-section (1) is instructive inasmuch as it manifests that an assessee cannot be permitted to resile from his stand at any stage during the proceedings. Therefore, by revising the application, the applicant would be achieving something indirectly which he cannot otherwise achieve directly and in the process rendering the provision of sub-section (3) of Section 245-C of the Act otiose and meaningless. ... ....
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....rrect amount till the date of hearing) the question of "offering" another higher amount as a "full" disclosure is impermissible. Ajmera Housing (supra) clearly held that: "there is no stipulation for revision of an application filed under 245C(1) of the Act and thus the natural corollary is that determination of income by the Settlement Commission has necessarily to be with reference to the income disclosed in the application filed under the said Section in the prescribed form. 26. The amount offered in this case, clearly could not have been considered or accepted. The ITSC, in this regard, fell into error as there was no full and true disclosure by the assessees. Consequently, the impugned order is hereby set aside and quashed. The AO shall proceed hereafter, in accordance with law and complete the block assessments. The time taken during the pendency of proceedings before the commission and the time during which the commission's order was in force, shall be ignored for the purpose of limitation." 3.26 It was contended that sections 245C and 245D of the IT Act nowhere mention offer of additional income to buy peace. It was submitted that, therefore, the Settlement Comm....
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....ame to be paid and hence, the impugned order has been fully implemented. 4.1 Reference was made to the provisions of section 245-I of the IT Act which provides for 'Order of settlement to be conclusive', which postulates that no matter covered by the order of the Settlement Commission made under section 245D (4) of the Act will be reopened in any proceeding under the Act or any other law for the time being in force. It was submitted that section 245-I of the IT Act, not only clearly and unequivocally provides that the order of the Settlement Commission shall be final and conclusive but it also provides that no matter covered by such order shall be reopened in any proceeding under that Act or any other law for the time being in force. It was submitted that this is nothing but a nonobstante clause by virtue of which the conclusiveness and finality of the order of the Settlement Commission which would prevail even over the proceedings of the Black Money Act. It was submitted that in sharp contrast, there is no non-obstante clause whatsoever in the provisions of the Black Money Act. According to the learned counsel, the foreign income of the contesting respondents was assessed under ....
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....any asset (including financial interest in any entity) located outside India, chargeable to tax has escaped assessment. 4.4 It was submitted that the foreign income of the contesting respondents for the period under consideration has therefore, been rightly assessed under the IT Act and not under the Black Money Act and that the Settlement Commission had the exclusive jurisdiction to tax the contesting respondents. Therefore, the order made by the Settlement Commission has to be implemented and in fact the revenue authorities have implemented such order and recovered the amount due thereunder. 4.5 Reliance was placed upon the decision of the Orissa High Court in the case of Commissioner of Income-tax, Sambalpur v. Income-tax Settlement Commission (IT & WT), (2016) 289 CTR 569 (Orissa), wherein it has been laid down that when the revenue implements and enforces the final order of the Settlement Commission and demands and recovers the amounts payable thereunder, the finality of the Settlement Commission's order is attracted with full force and the revenue thereafter cannot in law challenge the order. The learned counsel submitted that in the facts of the present case also, before....
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....ey Act, which provides that in computing the total undisclosed foreign income and asset of any previous year of an assessee, any income which has been assessed to tax for any assessment year under the Income Tax Act prior to the assessment year to which the Act applies, or which is assessable or has been assessed to tax for any assessment year under the Act shall be reduced from the value of the undisclosed asset located outside India, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that the asset has been acquired from the income which has been assessed or is assessable, as the case may be, to tax. It was submitted that it is very significant that section 5(1) refers to any previous year and clause (ii) (a) refers to any assessment year under the Income-tax Act prior to the assessment year to which the Black Money Act applies. Section 5(1)(ii)(a), therefore, applies if there is an assessment order under the Income-tax Act for any assessment year prior to assessment year 2016-17 whereby the foreign assets or income have been assessed. The date on which such assessment order has been passed is immaterial. Only the assessment year to which the order re....
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....g on the provisions of the Black Money Act. 4.9 Reference was made to sub-section (2) of section 4 of the Black Money Act, which provides that notwithstanding anything contained in sub-section (1), any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income-tax Act in accordance with the provisions of section 29 to section 43C or section 57 to section 59 or section 92C of the said Act, shall not be included in the total undisclosed foreign income. It was submitted that, therefore, like section 5(1)(ii)(a), sub-section (2) of section 4 of the Black Money Act not only recognises an assessment made under the IT Act in respect of foreign income and asset, but also grants a set-off or adjustment of the same in the assessment under the Black Money Act. 4.10 Next it was submitted that section 59 of the Black Money Act includes in "undisclosed foreign asset" only those assets which have not been disclosed and assessed by the IT authorities. It was accordingly submitted that the above mentioned provisions of the Black Money Act completely falsify the argument of exclusivity canv....
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....ction (2) of section 2 of the Black Money Act, the expression "assessee in default" is a deeming fiction whereby a person is deemed to be an assessee in default. Reference was made to sub-sections (4) and (5) of section 30 as well as sub-section (14) of section 32 of the Black Money Act, to submit that these are the only provisions under the Black Money Act where an assessee is deemed to be in default. It was submitted that this being a legal fiction, one can only look at these provisions and the legal fiction cannot be read into section 59 and section 72(c) of the Black Money Act as is sought to be contended on behalf of the petitioner. It was submitted that a person cannot be an assessee in default unless proceedings under the Black Money Act are initiated and concluded and demand notice is issued and not paid under section 30(4), or in the circumstances set out in section 30(5) and section 32(14) of the Black Money Act. Therefore, the contesting respondents cannot be considered as assessees in default under the provisions of the Black Money Act. 4.15 The learned counsel also submitted that in any case section 59 of the Black Money Act has been introduced as an opportunity to t....
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....fficer and the provisions of the Act shall apply accordingly." 4.16 It was contended that if an assessee chooses not to file such declaration, the only consequences would be in terms of paragraph 15 of the above decision and such asset would be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of the Act shall apply accordingly as enshrined in section 72(c) of the Black Money Act. Therefore, under these circumstances, the failure to file declaration cannot render a person to be an assessee in default. 4.17 It was also argued that in any case, the section 59 of the Black Money Act pertains to undisclosed asset located outside India as defined in section 2(11) of the Black Money Act; whereas, in the present case, the respondents had earned undisclosed foreign income. It was further submitted that a foreign asset will become undisclosed foreign asset only if the source thereof cannot be explained, whereas, in case of the contesting respondents, the sources have been accepted and, therefore, there is no undisclosed foreign asset. Hence, even otherwise the provision is not applicable. 4.18 The ....
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....e of the settlement proceedings, it was submitted that no additional disclosure of undisclosed foreign income or asset was made during the course of settlement proceedings and that it was only in the spirit of settlement, to buy peace that the additional amount was offered by the contesting respondents. It was pointed out that the additional amounts offered come to only 7 or 8% of the amount of foreign income and asset disclosed in the applications under section 245C of the Act, and hence, reliance placed by the petitioner on the decision of the Supreme Court in Ajmera Housing Corporation (supra) is misconceived. It was, accordingly, urged that the petition being devoid of any merit deserves to be dismissed. 5. In rejoinder, the learned Additional Solicitor General submitted that this court has the jurisdiction to adjudicate the present matter as the impugned order passed by the Settlement Commission is without jurisdiction. In support of such submission the learned counsel placed reliance upon the decision of the Supreme Court in Whirlpool Corporation v. Registrar of Trade Marks, (1998) 8 SCC 1, wherein it has been held thus: "15. Under Article 226 of the Constitution, the Hi....
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....lf having regard to the nature of the function performed by the Commission and keeping in view the principles of judicial review. Maybe, there is also some force in what Dr Gauri Shankar says viz., that the order of the Commission is in the nature of a package deal and that it may not be possible, ordinarily speaking, to dissect its order and that the assessee should not be permitted to accept what is favourable to him and reject what is not. According to learned counsel, the Commission is not even required or obligated to pass a reasoned order. Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the Commission to make a particular order, unless of course the Commission itself chooses to give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated a....
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....Central Surat (the petitioner herein) filed a report under rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997 on 16.11.2017. The contesting respondents filed their replies thereto. Thereafter, further reports were filed from time to time, in response to which the contesting respondents filed their replies. During the course of the settlement proceedings, by letters dated 4.12.2017 and 21.3.2018, the PCIT Central Surat requested the Settlement Commission to make inquiry under section 245D (3) of the IT Act with respect to various foreign bank accounts and foreign assets by making a reference to Foreign Tax & Tax Research Division of the Central Board of Direct Taxes, New Delhi. According, the Settlement Commission by an order dated 25.5.2018 made under section 245D (3) of the IT Act, accorded permission to make reference to the FT & TR Division of the CBDT for submitting the requisite report. 6.2 It appears that during the course of the proceedings before the Settlement Commission, the PCIT had submitted a further verification report dated 23.10.2018 in terms of the directions issued by the Settlement Commission. By the said report the Settlement Commission was....
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....t and under Income-tax Act are not mutually exclusive to each other. Both can be legally carried out at the same time as per the provisions of both the Acts. However, the benefit of tax paid under provisions of the Income-tax Act will be provided to the assessee under Black Money Act. 2.4 It is also brought to the notice of the Hon'ble Settlement Commission that based on the SOF filed by the applicants, references have been forwarded to various foreign jurisdictions through FT&TR, CBDT for getting the details of the bank accounts and other investments, as disclosed. Now the details as sought are awaited from the foreign jurisdictions. It is important to note the provisions of section 11(1) of the Black Money Act which is reproduced as follows, "No order of assessment or reassessment shall be made under section 10 after the expiry of two years from the end of the financial year in which the notice under subsection (1) of section 10 was issued by the Assessing Officer." Further the explanation 1 to section 11 prescribes the manner of computing period of limitation for the purposes of this section in certain cases, which is as follows:- "Explanation 1.- In computing ....
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....gress was reported, the hearing was concluded on 14.1.2019. Thereafter, the Settlement Commission passed the impugned order dated 30.1.2019 under section 245D (4) of the IT Act. In paragraph 14 of the impugned order, the Settlement Commission ordered that the applicants shall pay the taxes including interest payable as per that order in four quarterly installments beginning March 2019 and ending in December 2019. 6.6 Subsequently, on 18.2.2019, the Assessing Officer passed orders giving effect to the order of the Settlement Commission and determined the additional tax payable, and notices of demand under section 156 of the IT Act came to be issued on the same day calling upon the contesting respondents to pay the amount within a period of thirty days of the service of notice failing which proceedings for recovery thereof would be taken. Thereafter, each of the contesting respondents has paid the additional tax payable. The present petition came to be filed subsequent thereto on 30.5.2019 and notice was issued on 31.5.2019. 6.7 During the pendency of this petition, section 2(2) of the Black Money Act which defines "assessee" came to be amended on 1st August, 2019 vide Finance (N....
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.... equally true that if the Settlement Commission lacked the jurisdiction to decide such applications, any consent given by the petitioner would be of no avail. 11. The question that, therefore, arises for consideration is whether the Settlement Commission lacked the jurisdiction to decide the applications under section 245C of the IT Act. 12. The contentions raised on behalf of the learned counsel for the respective parties have already been noted hereinabove. To begin, it may be apposite to refer to certain provisions of the Black Money Act to understand the scheme of that Act. Section 3 of the Black Money Act is the charging section and reads thus: 3. Charge of tax.- (1) There shall be charged on every assessee for every assessment year commencing on or after the 1st day of April, 2016, subject to the provisions of this Act, a tax in respect of his total undisclosed foreign income and asset of the previous year at the rate of thirty per cent of such undisclosed income and asset: Provided that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer. (2) For the....
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....been furnished within the time specified in Explanation 2 to subsection (1) or under sub-section (4) or sub-section (5) of Section 139 of the said Act; and (c) the value of an undisclosed asset located outside India. (2) Notwithstanding anything contained in sub-section (1), any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income Tax Act in accordance with the provisions of Section 29 to Section 43-C or Section 57 to Section 59 or Section 92-C of the said Act shall not be included in the total undisclosed foreign income. (3) The income included in the total undisclosed foreign income and asset under this Act shall not form part of the total income under the Income Tax Act." 16. The expression "previous year" has been defined under sub-section (9) of section 2 of the Black Money Act and reads thus: "previous year" means - (a) the period beginning with the date of setting up of a business and ending with the date of the closure of the business or the 31st day of March following the date of setting up of such business, whichever is earlier; (b) the peri....
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.... 5 of the Black Money Act provides that the amount of deduction referred to in clause (ii) of sub-section (1) in case of an immovable property shall be the amount which bears to the value of the asset as on the first day of the financial year in which it comes to the notice of the Assessing Officer, the same proportion as the assessable or assessed foreign income bears to the total cost of the asset. 18.2 Thus, sub-section (2) provides for the deduction in case of immoveable property. The illustration thereunder shows the formula for computing the deduction. 19. On behalf of the contesting respondents, it has been contended that when the Settlement Commission passed the order under sub-section (4) of section 245D of the IT Act, the contesting respondents did not fall within the ambit of the expression "assessee" as defined under sub-section (2) of section 2 of the Black Money Act and hence, they were not covered by the provisions of that Act; whereas on behalf of the petitioner it has been contended that the recent amendment in the Black Money Act, the definition of "assessee" under subsection (2) of section 2 has been widened to include non- residents under its anvil and the s....
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....ts amendment, inasmuch as such definition includes every such person who is "deemed to be an assessee in default" under that Act. It was further submitted that clause (c) of section 72 of the Black Money Act provides that where any asset has been acquired or made prior to the commencement of the Black Money Act and no declaration in respect of such asset is made under Chapter VI then such asset shall be deemed to have been acquired or made in the year in which notice under section 10 has been issued by the Assessing Officer and the provisions of the Black Money Act will apply accordingly. It was submitted that the contesting respondents having not made any declaration as regards their undisclosed assets are assessees in default under the provisions of section 72(c) of the Black Money Act and, therefore, fall within the ambit of the expression "assessee" as defined by section 2(2) of the Black Money Act prior to its amendment. It was submitted that non-declaration of asset under section 59 of the Black Money Act constitutes a default and the assessee would be deemed to be an assessee in default even though the words "assessee in default" are not used in sections 59 and 72(c) of the ....
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....defaults in paying any one of the installments within the time fixed under sub-section (3), he shall be deemed to be an assessee in default in respect of the whole of the then outstanding amount. Section 32 of the Black Money Act provides for "Modes of recovery of tax dues". Subsection (4) thereof provides that the Assessing Officer or the Tax Recovery Officer may, by notice in writing, require any debtor of the assessee to pay such amount, not exceeding the amount of debt, as is sufficient to meet the tax arrear of the assessee; and sub-section (14) thereof provides that the debtor to whom a notice under sub-section (4) is sent shall be deemed to be an assessee in default, if he fails to make such payment and further proceedings may be initiated against him for realisation of the amount in the manner provided in that section and the Second Schedule to the Income Tax Act. Section 44 of the Black Money Act provides for penalty for default in payment of tax arrear. Sub-section (1) of section 44 provides that every person who is an assessee in default or and assessee deemed to be in default, as the case may be, in making payment of tax, and in case of continuing default by such assess....
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...." relates only to an assessee who has not paid the tax arrear within the time allowed in subsection (1) of section 30 or the period reduced under subsection (2) or extended under sub-section (3) thereof fails; similarly the deeming fiction under sub-section (5) of section 30 relates only to an assessee who fails to pay any installment within the time fixed under sub-section (3) of section 30; and the deeming fiction contained in sub-section (14) of section 32 of the Black Money Act applies only to any debtor of an assessee who fails to make payment pursuant to a notice issued to him under sub-section (4) of section 32 of the Black Money Act. Thus, the deeming fiction contained in sub-sections (4) and (5) of section 30 of the Black Money Act is limited to an assessee who has not paid the tax arrear or not paid any installment as envisaged therein; and the deeming fiction under sub-section (14) of section 32 is limited to a debtor of an assessee who fails to make payment as envisaged therein, and cannot be expanded to cover persons who had not disclosed foreign income or assets within the window provided under the Black Money Act as is sought to be canvassed on behalf of the petition....
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....ated outside India. 14. It could thus be seen, that Section 59 of the Black Money Act gives an opportunity to the assessees who have acquired an asset located outside India, which is acquired from income chargeable to tax under the Income Tax Act. The assessee has been given an opportunity to declare such asset and pay the tax and penalty thereon. The consequences of the non-declaration have been provided under Section 72(c) of the Black Money Act, which reads thus: "72. Removal of doubts.- For the removal of doubts, it is hereby declared that- (a) ........ (b) ......... (c) where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under Section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly." 15. It could therefore be seen, that where no declaration in respect of the asset covered under the Black Money Act is made, such asset would be deemed to have been acquired or made in the year in which a notice under Section 10 is issued by the Assessing....
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.... of date in subsection (3) of Section 1 of the Black Money Act, the value of the asset was to be determined as per its valuation in the previous year. The date has been changed only for the purpose of enabling the assessee(s) to take benefit of Section 59 of the Black Money Act. The power has been exercised only in order to remove difficulties. The penal provisions under Sections 50 and 51 of the Black Money Act would come into play only when an assessee has failed to take benefit of Section 59 and neither disclosed assets covered by the Black Money Act nor paid the tax and penalty thereon. As such, we find that the High Court was not right in holding that, by the notification/order impugned before it, the penal provisions were made retrospectively applicable." Thus, section 59 of the Black Money Act enables a person to disclose assets covered by the said Act. If a person fails to take the benefit of the section 59, the penal provisions of the Black Money Act would come into play. However, by not disclosing his undisclosed foreign asset which are covered by the Black Money Act, the person does not commit any default under section 59 of that Act, but merely does not avail of the b....
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.... did not apply to them and, therefore, the undisclosed foreign income and assets of the contesting respondents could be assessed only under the IT Act. Under these circumstances, the question of lack of jurisdiction on the part of the Settlement Commission to entertain and decide the applications under section 245C of the Income Tax Act did not arise. It is by now well settled that while a statutory provision which has been made applicable retrospectively would be applicable from the date when it is made so applicable, however, the mere fact that it has been made retrospectively applicable would not mean that all acts which stood concluded prior to such amendment would stand invalidated, unless the legislature specifically provides so. Therefore, even if it is assumed for the sake of argument that undisclosed foreign income covered under the Black Money Act cannot be dealt with under the IT Act, at the relevant time when the impugned order under section 245D (4) came to be passed, the contesting respondents were not covered by the provisions of the Black Money Act and, therefore, the Settlement Commission clearly had the jurisdiction to entertain and decide the applications under s....
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....e intent of the legislature behind enacting the Black Money Act, non-providing of a non-obstante clause is clearly an omission on the part of the legislature and hence, the provisions should be interpreted accordingly. It was also suggested that considering the avowed object of the Black Money Act, the provisions thereof should be given an overriding effect over the provisions of the IT Act, though the Black Money Act does not contain any overriding provision. In the opinion of this court, such submission clearly cannot be accepted inasmuch as the Black Money Act is a taxing statute and provides for stringent penalties and prosecution provisions, and it is by now well settled that a taxing statute must be interpreted in the light of what is clearly expressed. The Supreme Court in A. V. Fernandez v. State of Kerala, AIR 1957 SC 657, held that it is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be....
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....essment year. The first proviso provides that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Thus, the second proviso does away with the limitation of four years as provided in the first proviso to section 147 in case of undisclosed foreign income. 37. Section 149(1)(c) of the Income Tax Act provides that no notice under section 148 shall be issued for the relevant assessment year if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Clause (c) of subsection ....
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....ee has already admitted income. If there is an income which is not assessed under the said section, then the difference will be brought to tax under the Black Money Act as per the relevant provisions thereof." In aforesaid premises, the contention that in view of the provisions of sections 4, 5 and 59 of the Black Money Act, the Black Money Act and the IT Act remain mutually exclusive and there is no overlapping, therefore, does not merit acceptance. 38. As noticed earlier, on the date when the Settlement Commission passed the order, the contesting respondents not being assessees as defined under section 2(2) of the Black Money Act were not covered by the provisions of that Act and hence, could not have been assessed thereunder. Significantly, the notices under section 153A and 148 of the IT Act were also issued in respect of undisclosed foreign income/assets found during the course of the search and seizure operation conducted under section 132 of the IT Act. Thus, the search proceedings were conducted after the Black Money Act came into force and consequently, the notices under section 148 and 153A of the IT Act were also issued after the Black Money Act came into force. The ....
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....assessment under that Act, of any person in respect of any assessment year or assessment years which may be pending before an Assessing Officer on the date on which an application under sub-section (1) of section 245C is made. The Explanation thereto inter alia provides for the purposes of that clause- "(i) a proceeding for assessment or reassessment or recomputation under section 147 shall be deemed to have commenced- (a) from the date on which a notice under section 148 is issued for any assessment year; (b) from the date of issuance of the notice referred to in sub-clause (a), for any other assessment year or assessment years for which a notice under section 148 has not been issued, but such notice could have been issued on such date, if the return of income for the other assessment year or assessment years has been furnished under section 139 or in response to a notice under section 142; xxxxxx (iii-a) a proceeding for assessment or reassessment for any of the assessment years, referred to in clause (b) of sub-section (1) of section 153-A in case of a person referred to in section 153-A or section 153-C, shall be deemed to have commenced on the date of issue of....
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....f rejection or allowing the application to be proceeded with under sub-section (1). (2-B) The Settlement Commission shall,- (i) in respect of an application which is allowed to be proceeded with under sub-section (1), within thirty days from the date on which the application was made; or (ii) in respect of an application referred to in subsection (2-A) which is deemed to have been allowed to be proceeded with under that subsection, on or before the 7th day of August, 2007, call for a report from the Principal Commissioner or Commissioner, and the Principal Commissioner or Commissioner shall furnish the report within a period of thirty days of the receipt of communication from the Settlement Commission. (2-C) Where a report of the Principal Commissioner or Commissioner called for under sub-section (2-B) has been furnished within the period specified therein, the Settlement Commission may, on the basis of the report and within a period of fifteen days of the receipt of the report, by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the Principal Commissioner or Commissioner: Provided that an....
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....r or Commissioner, if any, received under- (i) sub-section (2-B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the Principal Commissioner or Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Principal Commissioner or Commissioner. (4-A) The Settlement Commission shall pass an order under sub-section (4)- (i) in respect of an application referred to in subsection (2-A) or sub-section (2-D), on or before the 31st day of March, 2008; (ii) in respect of an application made on or after the 1st day of June, 2007 but before the 1st day of June, 2010, within twelve months from the end of the month in which the application was made. ....
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....en notice to the applicant and the Principal Commissioner or Commissioner of its intention to do so and has allowed the applicant and the Principal Commissioner or Commissioner an opportunity of being heard. (7) Where a settlement becomes void as provided under sub-section (6), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the income tax authority concerned, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void. (8) For the removal of doubts, it is hereby declared that nothing contained in section 153 shall apply to any order passed under sub-section (4) or to any order of assessment, reassessment or recomputation required to be made by the Assessing Officer in pursuance of any directions contained in such order passed by the Settlement Commission and nothing contained in the proviso to sub-section (1) of section 186 shall apply to the pursuance of any ....
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.... contesting respondents were covered by the provisions of the Black Money Act, the notices under section 148 and 153A of the IT Act, which mainly related to undisclosed foreign income, ought to have been withdrawn and proceedings ought to have been initiated under the relevant provisions of the Black Money Act. However, it seems that since the notices under section 148 and 153A of the IT Act related to undisclosed foreign income of periods not covered by the Black Money Act, such notices were not withdrawn and a conscious decision was taken to pursue the settlement proceedings. If that be so, it was always permissible for the assessees, namely the contesting respondents, to opt for settlement under Chapter XIX A of the IT Act and the Settlement Commission had the jurisdiction to decide the applications under section 245C of the IT Act in respect of the income disclosed therein. 45. Moreover, for the reasons set out hereinabove, even on a consideration of the provisions of the Black Money Act, this court finds that the Settlement Commission did not lack the jurisdiction to decide the applications under section 245C of the IT Act. In the light of the above discussion, the contentio....
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.... 10.10.2005. c. Barclays Bank accounts held in the name of the Applicant bearing account no.204490 and account no.204507 having aggregate balance of GBP 2,46,263 d. Interest income of Eur 26,550 as per Applicant's letter dated 08.10.2018 determined on account of reconciliation of Code 39 and Code 40 and e. Income offered to cover up insufficient personal and household expenses for the period covered by the settlement application filed by the Applicants as above. f. Income of Marias Trust being treated as AOP and separately assessable as such for the period covered by the present applications offered in the hands of the applicants equally to buy peace and to avoid multiplicity of the proceeding." 48. The Settlement Commission recorded that taking into account all the facts and discussions on record, it could be concluded that the further additional income offered during 245D(4) proceedings totaling Rs. 8,65,63,679/- along with the additional income offered in the SOFs amounting to Rs. 90,28,25,000/- can be accepted with reference to incomes disclosed in the settlement applications. 49. Thus, the Settlement Commission, after considering the material on record, has giv....
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.... which reliance has been placed by the learned counsel for the petitioner would, in the opinion of this court, have no applicability to the facts of the present case, inasmuch as, in the facts of the said case, the assessee had filed application under section 245C before the Settlement Commission disclosing an amount of Rs. 1,94,33,580/- for the relevant assessment year in addition to the income declared in the return of income submitted by them earlier. During the course of the proceedings before the Settlement Commission, the assessee filed a revised settlement application containing confidential annexures and related papers declaring therein an additional income of Rs. 11.41 crore. Thus, while in the application under section 245C(1) of the IT Act, the disclosure was of Rs. 1.94 crores, in the revision application the additional income of Rs. 11.41 crore, which was approximately five times the amount originally disclosed, came to be made. Besides, in that case, a revised settlement application had been made and it is in the backdrop of such facts and circumstances that the Supreme Court held that full and true disclosure of income which had not been previously disclosed by the a....
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....ntrary to any provisions of the IT Act. Insofar as the findings of fact recorded by the Settlement Commission to the effect that there has been no wilful attempt to conceal material facts in these cases are concerned, the same cannot be gone into by this court while exercising writ jurisdiction in absence of any challenge to such findings on the ground of perversity. Under the circumstances, there is no warrant for exercise of powers under articles 226 or 227 of the Constitution of India. 54. Another aspect of the matter is that it is an admitted position that prior to the presentation of this petition, the order of the Settlement Commission came to be fully implemented. Though the Settlement Commission had granted one year's time to pay the amount determined by it, after the order of the Settlement Commission was given effect to, the revenue authorities issued notices of demand and recovered the same from the contesting respondents. At the time when the petition came to be filed, the order of the Settlement Commission has been fully implemented. However, there is not even a whisper in this regard in the memorandum of petition. Not only that, despite having fully executed the imp....