2018 (4) TMI 1371 - HC - Income Tax

Validity of notice u/s 10(1) - Prosecution proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - information regarding certain investments in acquiring assets abroad - Held that - Time given for completion of assessment and reassessment is only in terms of Section 11 of the Act. Section 11 1) of the Act states that, no order of assessment or reassessment shall be made under Section 10, after the expiry of two years from the end of the financial year, in which, the notice under sub-section (1) of Section 10 was issued by the Assessing Officer. Sub-section (2) commences with a non obstante clause, stating that, notwithstanding anything contained in Section (1) of the Act, an order of fresh assessment in pursuance of an order passed under Section 18 setting aside or cancelling an assessment, may be made at any time before the expiry of the period of two years from the end of the financial year, in which, the order under Section 18 is received by the Principal Commissioner or the Commissioner. Thus, the prayer sought for by the petitioners in the second category of Writ Petitions, i.e. to direct the third respondent to forthwith pass orders under Section 10 (3) of the Act, if acceded to, it would be contrary to the statutory provisions under Section 11 (1) of the Act. Therefore, such a positive direction cannot be issued. Seeking direction upon the third respondent, Deputy Director of Income Tax (Investigation) Unit - 3 (3) to forthwith pass orders under Section 10 (3) of the Act is rejected, as the Writ Petitions are disposed of, directing both the Deputy Director of Income Tax (Investigation) Unit - 3 (3) and Deputy Director of Income Tax (Investigation) Unit - 3 (2) to pass orders in accordance with the provisions. Writ petition dismissed.

Summary

Issues Involved:
1. Issuance of Writ of Prohibition to prevent prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
2. Direction to the Deputy Director of Income Tax (Investigation) to pass an order under Section 10(3) of the Act.

Issue-wise Detailed Analysis:

1. Issuance of Writ of Prohibition:
The petitioners sought a Writ of Prohibition to prevent the first respondent from sanctioning any prosecution against them and the second and third respondents from instituting any prosecution under Chapter V of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. They argued that the Deputy Director of Income Tax (Investigation) Unit - 3 (2) was dealing with the same subject matter as the third respondent, leading to parallel proceedings, which they claimed was harassment. Additionally, they contended that the summons issued under Section 8(1) of the Act was improper as it was not preceded by a notice under Section 10(1).

The court found that the Deputy Director of Income Tax (Investigation) Unit - 3 (2) had indeed issued a notice under Section 10(1) before issuing the summons under Section 8(1). The court also noted that the question of whether the same matter was being dealt with by two authorities was a factual issue to be adjudicated before the appropriate authority, not under a Writ Petition. The court emphasized that Chapter V of the Act, dealing with offences and prosecution, is independent of other proceedings under the Act, and the court cannot issue a writ of prohibition based on mere apprehension of prosecution.

The court concluded that the petitioners had not provided any materials to show that an order of sanction had been passed under Section 55 or that steps had been taken to initiate prosecution. Therefore, the prayer for issuance of a writ of prohibition was dismissed.

2. Direction to Pass an Order under Section 10(3):
The petitioners sought a direction for the third respondent to pass an order under Section 10(3) of the Act. They argued that despite furnishing all relevant details, no orders had been passed under Section 10(3) even after nine months. The court noted that the statute prescribes an outer time limit for the authority to pass final orders and that compelling the authority to pass final orders before the stipulated time was not feasible. The court highlighted that Section 11(1) of the Act provides a two-year period from the end of the financial year in which the notice under Section 10(1) was issued for the completion of assessment or reassessment.

The court concluded that issuing a positive direction to pass orders under Section 10(3) would be contrary to the statutory provisions under Section 11(1) of the Act. Therefore, the prayer for such a direction was rejected.

Conclusion:
The court dismissed the Writ Petitions seeking a writ of prohibition and a direction to pass orders under Section 10(3) of the Act. The court directed both the Deputy Director of Income Tax (Investigation) Unit - 3 (3) and Deputy Director of Income Tax (Investigation) Unit - 3 (2) to proceed with the matter in accordance with the provisions of the Act. The petitioners were advised to present their factual and legal contentions before the appropriate authorities in the ongoing proceedings. All connected Writ Miscellaneous Petitions were closed.