No Coercive Action Against Reliance Group Chairman Anil Ambani: Bombay HC To IT Department

The Bombay High Court has asked the Income Tax (IT) department to not undertake any coercive action against businessman and Reliance group Chairman Anil Ambani under the Black Money & Imposition of Tax Act.

The IT 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.

A division bench consisting of Justices B P Colabawalla and Firdosh Pooniwalla stated that similar petitions challenging provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 are pending before the court and admitted Ambani's plea for final hearing at a later date.

In his petition, Ambani noted that certain provisions of the Act are "ultra vires" (beyond the powers/violative) to the Constitution of India. The court has directed the centre to file its affidavit in response to the plea.

Also Read: Equity Mutual Fund Inflows Hit One-Year Low in May Amid Iran War Jitters

Further, the High Court noted that an assessment order has already been passed against Ambani and that he has challenged it before the Commissioner of Income Tax (Appeals).

"The said appeal can proceed and orders can be passed thereon. However, we clarify that no coercive action shall be taken against the petitioner, including that of prosecution and penalty, till the hearing and final disposal of this writ petition," Bombay HC said.
.
According to the Income Tax department's notice, Ambani could face prosecution under Sections 50 and 51 of the Black Money Act, which provide for a maximum punishment of 10 years' imprisonment along with a fine.

The department had accused Ambani of "wilful" tax evasion, alleging that he "intentionally" failed to disclose details of foreign bank accounts and financial interests to Indian tax authorities.

In his petition, Ambani contended that the Black Money Act came into force in 2015, whereas the transactions under scrutiny pertain to assessment years 2006-07 and 2010-11. He argued that the provisions of the Act cannot be applied retrospectively.

As per the Income Tax Department's notice, Ambani was an "economic contributor" and a "beneficial owner" of a Bahamas-based entity named 'Diamond Trust' and another company, Northern Atlantic Trading Unlimited (NATU), incorporated in the British Virgin Islands.