Bombay High Court Issues Notice To Attorney General On Anil Ambani's Plea Challenging Retrospective Applicability Of Black Money Act

A division bench of Justices Gautam Patel and SG Dige issued notice to the Attorney General of India as Ambani has challenged the vires of the Act regarding retrospective criminalisation under the Act.

Ambani claims the IT department is taking action against him for transactions which relate back to the year 2006-2007 (i.e. 10 years before the promulgation of the BM Act with effect from 01.07.2015), and the year 2012-13.

"A person conducts himself in a certain way and you criminalise that action with retrospective effect. How does a person know how he is supposed to conduct himself? How can it have a retrospective effect?" Justice Patel said, wondering how a person was expected to know what would be criminalised in the future.

"I(some person) have dealt with funds and money...But what you are saying I should have known ten years ago," he added.

Ambani's plea seeks quashing of two Income Tax prosecution notices issued to him for alleged non-disclosure of money in two Swiss Bank Accounts amounting to approximately Rs. 814 crore and a tax evasion of Rs. 420 crore. The notices were earlier stayed by the court.

The show cause notices were issued on August 8, 2022, under sections 50 and 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BM Act) alleging Tax Evasion of nearly Rs. 420 crore.

Apart from seeking quashing of the notice, Ambani has also challenged the vires of section 3(1), sections 50,51,59 and 72C of the BM Act allowing retrospective application as being ultra vires and violative of Articles 14, 20 and 21 of the Constitution.

"That provisions of the BM Act, which came into force with effect from 1st July 2015, cannot be invoked retrospectively to tax the value of any alleged undisclosed foreign asset, which may have existed prior to its coming into force on 1st July 2015," the plea states.

During the hearing, counsel for the Income Tax department tried to submit their affidavit in reply on record. However, the court said it should have been filed in the registry.

Noticing that a notice was not issued to the Attorney General despite vires of the Act being challenged, the court ordered the needful.

The notice is returnable on February 13 and the matter will next be heard on February 20, 2022.

The court directed ad-interim relief to Ambani to continue till then.

Time Line

In March this year, the Assessing Officer passed an order under Section 10(3) of the BM Act, holding that Ambani had undisclosed foreign assets. Ambani filed an appeal before the Commissioner of Income Tax (Appeals) against Assessment Order dated 31/03/22.

In the meantime on August 8, the IT department issued the notices to prosecute Ambani under the Act.