The Bombay high court has asked the Income Tax (I-T) department not to take any coercive action against businessman and Reliance group Chairman Anil Ambani under the Black money Act.
The I-T department had sought to prosecute Ambani under the Black Money (BM) Act for allegedly evading Rs 420 crore in taxes on undisclosed funds worth more than Rs 814 crore held in two Swiss bank accounts. On March 31, 2022, the Assessing officer had passed an Assessment Order u/s 10(3) of the BM Act, holding that Ambani had undisclosed foreign assets.
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The bench of Justices SV Gangapurwala and RN Laddha heard the arguments by both sides. As the I-T department sought time to respond to the plea filed by Ambani, the court decided to grant the relief.
Ambani had received notice on August 8, 2022, from the I-T department seeking to invoke sections 50 and 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of the Tax Act, 2015 and initiate prosecution proceedings against him.
Ambani’s lawyer, Rafique Dada, said the show cause notice issued by the department was based on unsubstantiated, patently false, and frivolous allegations against Ambani which relate back to the year 2006-2007. Since at that time the BM act was not even promulgated, this, it cannot be invoked.
Ambani is challenging the provisions of the BM Act, as well as the notification issued by the Central Government on July 1, 2015 which allows for the act to be applied retrospectively.
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During the court proceeding, Dada pointed out that there was already a civil proceeding pending in the case as Ambani had challenged the order passed by the assessing officer before the appellate authority. He stated that pending the civil proceedings, the department could not have initiated the criminal proceedings.
The bench at this time asked if Ambani had ‘replied to the show cause notice. To this, Dada replied, “Yes. I did and I asked for various documents and said that I would respond after getting the documents. Reasons have to be given for taking action. There has to be a speaking order, they can’t just take action.”
Dada further submitted “this action is only for twisting my arm and getting the money out.”
Advocate Akhileshwar Sharma representing the Tax department said that the judgements being sought by Dada is under the Benami act while the action undertaken by the department is under the BM act. He further added, “Give me some time to respond to the petition and give them protection for some time.” He further asked for a long date as the affidavit has to come from Delhi.”
The court thus adjourned Ambani’s petition for further hearing on Nov 17 for the department to file an affidavit in reply.
