“No Coercive Action Till Nov 17”: Bombay HC Stays IT Dept’s Prosecution Notice To Anil Ambani Over Alleged Secret Funds In Swiss Bank Accounts

Anil Ambani

IT department said, “He intentionally did not disclose his foreign bank account details and financial interests with Tax Authorities of India”

Mumbai: The Bombay High Court has directed the Income Tax department not to take any coercive action against Reliance Group Chairman Anil Ambani till November 17 on a showcause notice issued to him. The notice seeks to prosecute him under the Black Money Act.

In August the IT Department issued a notice to Anil Ambani for allegedly evading Rs 420 crore in taxes on undisclosed funds worth more than Rs 814 crore held in two Swiss bank accounts.

The department has charged Ambani with “wilful” evasion. The department said, “He intentionally did not disclose his foreign bank account details and financial interests with Tax Authorities of India.”

According to the department’s notice, Ambani was liable to be prosecuted under Sections 50 and 51 of the Black Money (undisclosed foreign income and assets) Imposition of Tax Act of 2015. This act stipulates a maximum punishment of 10 years imprisonment with a fine.

A division bench of Justices SV Gangapurwala and RN Laddha noted that petitions regarding the retrospective applicability of the Act were pending before various High Courts, including the Bombay High Court.

Senior Advocate Rafiq Dada for Ambani argued that the show cause and assessment notices that are currently before the appellate authority are verbatim. Furthermore, his client could not be prosecuted for alleged transactions in 2006 and 2012, when the Act was only enacted in 2015.

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“I have given a response to the show cause notice. I have asked for various documents. The show cause notice is premature,” he said.

Ambani claimed that case proceedings against him are on the basis of “unsubstantiated, patently false and frivolous allegations” which relate back to the year 2006-2007, and the year 2012-13.

After the counsel sought time to respond but still had no answer, Justice Gangapurwala granted interim relief after seeking the IT counsel’s response on retrospective applicability.

Ambani has also challenged the vires of section 3(1), sections 50,51,59, and 72C of the BM Act which allow for 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.

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