The petitioner challenged the procedure initiated against him by the respondent authority concerning the provisions laid down by the Black Money (Undisclosed Foreign Income and Assets) and Imposition Act, 2015.
The petitioner’s son Mujeeb Mir was a trustee of the financial assets of a company that was located outside India. The trustee died on 31.01.2005 after that the petitioner was appointed as the manager of the Estate. The discretionary trust was dissolved on 11.09.2009. The shareholding of the trust was equally transferred to beneficiaries including the petitioner’s daughter. The daughter of the petitioner Saheba Mir brought the fact of the creation of Trust by her deceased brother to the notice of the Reserve Bank of India (RBI). It was also to inform her about the inheritance on account of her brother’s death and seek permission under Section 6(5) of the Foreign Exchange Management Act to hold securities in a foreign company and beneficial interest in a foreign bank account owned by the said foreign company. The Black Money and Imposition Act (BMIA) is claimed to address the mischief undisclosed assets and foreign income and assets located outside India that were acquired using income that was chargeable to tax under the Income Tax Act, was not so offered to tax in India, but was illegally routed out of India and was used in the creation of said undisclosed assets. On 06.07.2015 the Ministry of Finance, through the Department of Revenue and the Central Board of Direct Taxes (CBDT), issued a circular which stated the inapplicability of the BMIA to the assets that were created by the Non-Resident Indians (NRIs) out of income generated abroad which was not chargeable to tax in India. Despite this position, the respondents initiated the process of assessing the tax from the petitioner as being the legal beneficiary of the foreign assets. The present petition challenged the action of the respondents.
The Counsel for the petitioner argued that the action initiated by the respondent authority was without jurisdiction and did not apply to the assets as they were created by a Non-Resident Indian (NRI) out of income generated abroad which was not chargeable to tax in India. It was also submitted that there is no scope for the respondent authority to issue the impugned order of assessment without taking into consideration the objections submitted before it by the petitioner qua the issue of jurisdiction. It was further contended that the respondents had proceeded in the matter notwithstanding the order dated passed by Court in the earlier Writ petition filed by the petitioner. The Court had directed the respondents not to prosecute and impose any penalty upon the petitioner based on the impugned show cause notice. The counsel based on the peculiar facts and circumstances involved contended that the constitutional rights of the petitioner have been violated.
The counsel for the respondent authority, on the other hand, submitted that the petition filed by the petitioner before this Court is not maintainable in the law given the availability of an alternate and efficacious remedy of appeal to the petitioner in terms of the Act. The counsel contended that the scope of this Court to interfere with the proceedings subject matter of the Writ petition was very limited and that various High Courts of the country have declined to show indulgence.
Based on the facts and contentions it was observed that the court had already shown indulgence in the petition filed by the petitioner, feeling aggrieved of the proceedings initiated against him by the respondent-assessing authority in terms of the Black Money (Undisclosed Foreign Income and Assets) and Imposition Act, 2015. The Court had protected the interests of the petitioner by restraining the respondent from imposing any penalty upon the petitioner. Notwithstanding this order, the respondent has issued the penalty notice. The question before the court was whether the respondent was justified to pass the impugned assessment order and the penalty notice. The court while answering the question stated that it has become necessary to call for the records of the case as well as to give an opportunity to the respondents for filing a reply.
Based on all the facts and contentions the court was inclined to issue notice to the respondents to file objections on or before the next date of hearing. The court also directed that no further proceeding shall be initiated against the petitioner by the respondent authority till the next date of hearing before the Bench.
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