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REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No.1563 OF 2019
(Arising out of S.L.P.(Crl.) No. 4911 of 2019)
UNION OF INDIA AND ORS. .... APPELLANT(S)
VERSUS
GAUTAM KHAITAN .... RESPONDENT(S)
J U D G M E N T
B.R. GAVAI, J.
Leave granted.
2. The present appeal challenges the interim order passed
by the Division Bench of the Delhi High Court in Writ Petition
(Crl.) No. 618 of 2019 dated 16.05.2019 thereby, restraining the
appellants herein from taking and/or continuing any action
against the writ petitioner (respondent herein) pursuant to the
Order dated 22.01.2019 under Section 55 of the Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax
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Act, 2015 (hereinafter referred to as the “Black Money Act”)
passed by Appellant No. 2 herein.
3. We have heard Mr. Tushar Mehta, learned Solicitor
General appearing on behalf of the appellants, and Mr. P.V.
Kapur, learned senior counsel appearing on behalf of the sole
respondent.
4. The short question that falls for consideration is, as to
whether the High Court was right in observing that while
exercise of the powers under the provisions of Sections 85 and
86 of the Black Money Act, the Central Government has made
the said Act retrospectively applicable from 01.07.2015 and
passed a restraint order.
5. From the Statement of Objects and Reasons, it could be
seen that the Black Money Act has been enacted for the
following purposes :
(a) To unearth the black money stashed in foreign
countries; and
(b) To prevent unaccounted money going abroad.
(c) To punish the persons indulging in illegitimate
means of generating money causing loss to the
revenue
(d) To prevent illegitimate income and assets kept
outside the country from being utilised in ways
which are detrimental to India’s social, economic
and strategic interest and its national security.
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6. The Black Money Act has been passed by the Parliament
on 11.05.2015 and it has received Presidential assent on
26.05.2015. Subsection (3) of Section 1 provides, that save as
otherwise provided in the said Act, it shall come into force on
the 1st day of April, 2016. However, by the notification/ order
notified on 01.07.2015, which have been impugned before the
High Court, it has been provided, that the Black Money Act
shall come into force on 01.07.2015, i.e., the date on which the
order is issued under the provisions of subsection (1) of Section
86 of the Black Money Act.
7. It will be relevant to refer to Section 3 of the Black Money
Act, which is a charging section.
“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 purposes of this section, “value of an
undisclosed asset” means the fair market value of an
asset (including financial interest in any entity)
determined in such manner as may be prescribed.”
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8. It could thus be seen, that Section 3 provides that tax
shall be charged on every assessee for every assessment year
commencing on or after the 1st day of April, 2016 in respect of
his total undisclosed foreign income and assets of the previous
year. The rate of the said tax has been quantified at thirty per
cent. The proviso to subsection (1) of Section 3 of the Black
Money Act provides, that undisclosed assets 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.
9. It could thus clearly be seen, that the proviso to
subsection (1) of Section 3 of the Black Money Act, makes it
clear that the undisclosed asset located outside India shall be
charged to tax on its value in previous year in which, such an
asset comes to the notice of Assessing Officer. Clause (9) of
Section 2 of the Black Money Act defines “previous year”. Four
different definitions have been given in subclauses (a), (b), (c)
and (d). For the present matter, subclause (d) of clause (9) of
Section 2 would be relevant, which reads thus:
“(9) “previous year” means—
(a) …
(b) …
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(c) …
(d) the period of twelve months commencing on the 1st
day of April of the relevant year in any other case,
and which immediately precedes the assessment year.”
10. It could thus be seen, that the previous year in the
present case would mean a period of twelve months
commencing on the 1st day of April of the relevant year and
which immediately precedes the assessment year.
11. A bare reading of the provisions of Section 3 read with
Section 2(9)(d) of the Black Money Act would unambiguously
show, that the legislative intent insofar as the charging tax on
undisclosed asset located outside India is concerned, is to
charge the tax on its value in the previous year in which such
asset comes to the notice of the Assessing Officer. The previous
year in the present case would be a period of twelve months
commencing on the 1st day of April of the relevant year and
which immediately precedes the assessment year.
12. It could thus be seen, that Section 3 read with Section 2
(9)(d) of the Black Money Act would permit the Assessing
Officer, while assessing the case of an assessee for assessment
year commencing after 01.04.2016, to bring the undisclosed
asset located outside India under the tax net on the value of the
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said property within a period of twelve months, prior to the date
on which such asset comes to the notice of the Assessing
Officer. By virtue of these provisions, if such asset comes to the
notice of Assessing Officer on 01.04.2016, he could charge such
asset(s) on the basis of its value as would be ascertained in a
previous year ending on 31.03.2016. A perusal of Section 3 of
the Black Money Act would further reveal, that what is relevant
is the date on which the Assessing Officer notices the
acquisition by an assessee of undisclosed asset located outside
India. However, for the purposes of taxation, the value of such
asset has to be ascertained as is in the immediate previous year.
13. A perusal of Section 59 of the Black Money Act 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 Incometax 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 Central
Government, in exercise of the powers under Section 59 of the
Black Money Act, published a Notification on 01.07.2015,
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notifying 30.09.2015 as the date on or before which a person is
required to make a declaration in respect of an undisclosed
asset located outside India. It also notifies 31.12.2015 as the
date on or before which the person shall pay the tax and penalty
in respect of such undisclosed asset located 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 Incometax Act. The assessee has
been given an opportunity to declare such asset and pay the tax
and penalty thereon. The consequences of the nondeclaration
have been provided under Section 72(c) of the Black Money Act,
which reads thus:
“Section 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,
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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.
16. The offences in respect of which sanction has been
granted are under Sections 50 and 51 of the Black Money Act,
which read thus :
“50. Punishment for failure to furnish in return of
income, any information about an asset (including
financial interest in any entity) located outside
India. If any person, being a resident other than not
ordinarily resident in India within the meaning of clause
(6) of section 6 of the Incometax Act, who has furnished
the return of income for any previous year under subsection (1) or subsection (4) or subsection (5) of section 139 of that Act, wilfully fails to furnish in such return
any information relating to an asset (including financial
interest in any entity) located outside India, held by him,
as a beneficial owner or otherwise or in which he was a
beneficiary, at any time during such previous year, or
disclose any income from a source outside India, he shall
be punishable with rigorous imprisonment for a term
which shall not be less than six months but which may
extend to seven years and with fine.
51. Punishment for wilful attempt to evade tax –
(1) If a person, being a resident other than not
ordinarily resident in India within the meaning of
clause (6) of section 6 of the Incometax Act, wilfully
attempts in any manner whatsoever to evade any
tax, penalty or interest chargeable or imposable
under this Act, he shall be punishable with rigorous
imprisonment for a term which shall not be less
than three years but which may extend to ten years
and with fine.
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(2) If a person wilfully attempts in any manner
whatsoever to evade the payment of any tax, penalty
or interest under this Act, he shall, without
prejudice to any penalty that may be imposable on
him under any other provision of this Act, be
punishable with rigorous imprisonment for a term
which shall not be less than three months but which
may extend to three years and shall, in the
discretion of the court, also be liable to fine.
(3) For the purposes of this section, a wilful attempt to
evade any tax, penalty or interest chargeable or
imposable under this Act or the payment thereof
shall include a case where any person—
(i) has in his possession or control any books of
account or other documents (being books of
account or other documents relevant to any
proceeding under this Act) containing a false
entry or statement;
(ii) makes or causes to be made any false entry or
statement in such books of account or other
documents; or
(iii) wilfully omits or causes to be omitted any
relevant entry or statement in such books of
account or other documents; or
(iv) causes any other circumstance to exist which
will have the effect of enabling such person to
evade any tax, penalty or interest chargeable or
imposable under this Act or the payment
thereof.”
17. Section 50 provides that if any person, being a resident
other than not ordinarily resident in India, who has furnished
the return of income for any previous year under subsection (1)
or subsection (4) or subsection (5) of Section 139 of the
Incometax Act, wilfully fails to furnish in such return any
information relating to an asset (including financial interest in
any entity) located outside India, held by a beneficial owner or
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otherwise or in which he was a beneficiary, at any time during
such previous year, or disclose any income from a source
outside India, he shall be punishable with rigorous
imprisonment for a term which shall not be less than six
months but which may extend to seven years and with fine.
18. The penalty of the offences under Section 51 is for wilful
attempt in any manner whatsoever to evade the payment of any
tax, penalty or interest chargeable or imposable under the
Incometax Act. The punishment provided under subsection
(1) is for rigorous imprisonment for a term which shall not be
less than three years but which may extend to ten years and
with fine. In respect to any other person not covered by subsection (1) of Section 51, the punishment provided is rigorous
imprisonment for a term which shall not be less than three
months but which may extend to three years and shall, in the
discretion of the court, also be liable to fine.
19. It could therefore be seen, that 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
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asset located outside India and acquired from income
chargeable to tax under the Incometax 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 subsection
(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 subsection
(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 subsection (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
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have made declaration prior to 30th September, 2015 and paid
the tax and penalty prior to 31st December, 2015.
20. It would further be relevant to note that subsection (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 1st 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 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
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notification/order impugned before it, the penal provisions were
made retrospectively applicable.
21. In any case, in the factual scenario of the present case, it
would reveal, that the assessment year in consideration was
20192020 and the previous year relevant to the assessment
year was the year ending on 31.03.2019.
22. In that view of the matter, we find that the interim order
passed by the High Court is not sustainable in law, the same is
quashed and set aside.
23. The High Court is requested to decide the writ petition on
its own merits. However, we clarify that the observations made
by us 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.
24. The appeal stands allowed as indicated above.
…....................J.
[ARUN MISHRA]
......................J.
[M. R. SHAH]
......................J.
[B.R. GAVAI]
NEW DELHI;
OCTOBER 15, 2019.
