Union of India and Ors. vs Gautam Khaitan

HELD: 1.1 A perusal of Section 59 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 would further reveal, that an opportunity is given to the assessee to make a declaration in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act, for any assessment year prior to the assessment year beginning on 01.04.2016. Section 59 further provides, that such a declaration has to be made on or after the date of commencement of the Black Money Act, however, before the date to be notified by the Central Government. The consequences of the non-declaration have been provided under Section 72(c) of the Black Money Act. 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 Officer and the provisions of the Act shall apply accordingly. The offences in respect of which sanction has been granted are under Sections 50 and 51 of the Black Money Act. [Paras 13, 16] [728-A-B-D-G-H; 729A]

1.2 The scheme of the Black Money Act is to provide stringent measures for curbing the menace of black money. Various offences have been defined and stringent punishments have also been provided. However, the scheme of the Black Money Act also provided one time opportunity to make a declaration in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act. Section 59 of the Black Money Act provided that such a declaration was to be made on or after the date of commencement of the Black Money Act, but on or before a date notified by the Central Government in the Official Gazette. The date so notified for making a declaration is 30.09.2015 whereas, the date for payment of tax and penalty was notified to be 31.12.2015. As such, an anomalous situation was arising if the date under sub-section (3) of Section 1 of the Black Money Act was to be retained as 01.04.2016, then the period for making a declaration would have been lapsed by 30.09.2015 and the date for payment of tax and penalty would have also been lapsed by 31.12.2015. However, in view of the date originally prescribed by sub-section (3) of Section 1 of the Black Money Act, such a declaration could have been made only after 01.04.2016. Therefore, in order to give the benefit to the assessee(s) and to remove the anomalies the date 01.07.2015 has been substituted in sub-section (3) of Section 1 of the Black Money Act, in place of 01.04.2016. This is done, so as to enable the assessee desiring to take benefit of Section 59 of the Black Money Act. By doing so, the assessees, who desired to take the benefit of one time opportunity, could have made declaration prior to 30th September, 2015 and paid the tax and penalty prior to 31st December, 2015. Sub-section (3) of Section 1 of the Black Money Act, itself provides that save as otherwise provided in this Act, it shall come into force on 1 st day of July, 2015. A conjoint reading of the various provisions would reveal, that the Assessing Officer can charge the taxes only from the assessment year commencing on or after 01.04.2016. However, the value of the said asset has to be as per its valuation in the previous year. As such, even if there was no change of date in sub-section

(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, the High Court was not right in holding that, by the notification/order impugned before it, the penal provisions were made retrospectively applicable. [Paras 19-20] [731-A-H; 732-A-B]

1.3 In any case, in the factual scenario of the present case, the assessment year in consideration was 2019-2020 and the previous year relevant to the assessment year was the year ending on 31.03.2019. In that view of the matter, the interim order passed by the High Court is not sustainable in law, the same is quashed and set aside. The High Court is requested to decide the writ petition on its own merits. However, it is clarified that the observations made are only for the purposes of examining the correctness of the interim order passed by the High Court and the High Court would decide the writ petition uninfluenced by the same. [Paras 21-23] [732-B-D]