Facts of the Case

The petitioner challenged:

  • Notice dated 08.04.2022 issued under Section 10(1) of the Black Money Act
  • Order dated 10.11.2022 rejecting application for dropping proceedings
  • Show cause notice dated 27.02.2023 under Section 10(3)

Information regarding undisclosed foreign assets allegedly held by the petitioner surfaced in 2013 through investigations by the International Consortium of Investigative Journalists (ICIJ).

The petitioner declared such assets on 30.09.2015 under Section 59 of the Act, but the declaration was rejected on the ground that the authorities already had prior information before the cut-off date.

The assets were linked to a company (Blackrose Holdings Inc.) with bank accounts in Singapore (UBS AG and Barclays Bank).

 Issues Involved

  1. Whether proceedings under the Black Money Act can continue after rejection of declaration under Section 59
  2. Whether notice under Section 10(1) was time-barred as per CBDT guidelines
  3. Whether the Black Money Act applies retrospectively to assets acquired before 01.07.2015
  4. When did the Revenue acquire “knowledge” triggering limitation

Petitioner’s Arguments

  • Once declaration under Section 59 was rejected, proceedings under the 2015 Act cannot be initiated (CBDT Circular dated 06.07.2015)
  • Notice under Section 10(1) must be issued within 30 days from the end of the financial year in which knowledge was acquired (CBDT Guidelines dated 23.01.2018)
  • The Act cannot be applied retrospectively to assets acquired prior to 01.07.2015

Respondent’s Arguments

  • Declaration under Section 59 was not bona fide
  • The petitioner had prior knowledge of investigation and failed to disclose assets earlier
  • Information regarding undisclosed assets was received as early as 2014 and 2015
  • Petitioner declared assets only after becoming aware that authorities had information

Court’s Findings / Observations

The Court observed:

  • Petitioner declared assets only after becoming aware of investigation
  • However, crucial legal and factual issues require deeper examination
  • Key determination required:
    • When did Revenue acquire “tangible information”?
    • Whether limitation guidelines under CBDT were triggered
    • Whether Act applies to pre-2015 assets

Court Order

  • Notice issued in the writ petition
  • Time granted for counter-affidavit and rejoinder
  • No coercive action to be taken against the petitioner till next hearing

Important Clarifications

  • The concept of “knowledge of undisclosed assets” is central to limitation under Section 10
  • CBDT Guidelines (2018) play a crucial role in determining validity of notice
  • Applicability of Black Money Act to pre-2015 assets remains a live constitutional/legal issue
  • Bona fide declaration under Section 59 is key for protection

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59029032023CW37322023_150554.pdf

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