2023 (1) TMI 1126 - HC - Income Tax

Proceedings u/s 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - penalty proceedings initiated by the concerned officer against the petitioner for alleged failure to disclose foreign income/assets - petitioner was in employment of Vodafone Idea Ltd. and claims that he received stock options from the parent company i.e., Vodafone Group PLC - as contented no undisclosed foreign income or assets and therefore, the provisions of the 2015 Act have been wrongly triggered. HELD THAT - This inquiry vis- -vis the petitioner, as per the record which is made available to us, has been going on since 27.02.2019, when summons under Section 131(1A) of the Income Tax Act, 1961 in short, 1961 Act were issued. Petitioner claims that he has filed not one, but three responses, setting out the details sought by the respondent/revenue. In this regard, reference is made to the replies dated 06.03.2019, 12.03.2019 and 05.04.2019, appended on pages 69, 77 and 79 of the case file. The record also shows that a summon was issued, once again, to the petitioner after nearly three years on 31.01.2022, under Section 131(A) of the 1961 Act; which was also replied to by the petitioner on 11.02.2022. Insofar as the 2015 Act is concerned, notice, in the first instance, under Section 8 of 2015 Act was issued on 11.07.2022, which was replied to by the petitioner on 16.08.2022. The impugned show cause notice, as indicated above, was issued on 12.09.2022. A reply to the same has been filed, which is dated 07.10.2022. Given the fact that the matter is at the stage of show cause notice, we are of the view that the best way forward would be to direct the concerned statutory authority to adjudicate the impugned show cause notice. Writ petition is disposed of directing concerned statutory authority to adjudicate the impugned show cause notice dated 12.09.2022, having regard to the response dated 07.10.2022 and the earlier replies which have been placed on record and referred to hereinabove. The adjudication will be undertaken as expeditiously as possible, though not later than eight (8) weeks from the date of receipt of a copy of this judgement. The concerned authority, however, before proceeding further, will issue notice to the petitioner and grant him and/or his authorized representatives, personal hearing in the matter.

Summary

Issues involved:
Challenge to show cause notice under Black Money Act - Jurisdiction of statutory authority - Disclosure of foreign income/assets - ESOP details in income tax return - Responses to summons and notices - Adjudication of show cause notice.

Analysis:
The case involves a challenge to a show cause notice dated 12.09.2022 under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 [2015 Act]. The petitioner, an employee of Vodafone Idea Ltd., received stock options from the parent company, Vodafone Group PLC. The petitioner disclosed the Employee Share Option Plan [ESOP] details in the income tax return for Assessment Year (AY) 2016-17. The petitioner argues that there was no undisclosed foreign income or assets triggering the 2015 Act provisions. The petitioner has responded to summons and notices issued since 2019, highlighting no undisclosed income or assets. The court directed the statutory authority to adjudicate the show cause notice, considering the responses provided by the petitioner. The authority must grant a personal hearing before passing a speaking order. The authority should specifically address the jurisdictional issue raised by the petitioner. If the order is adverse, its enforcement is stayed for eight weeks from the receipt of the speaking order.

The court noted the ongoing inquiry since 2019 and the petitioner's multiple responses to the revenue's queries. The statutory authority must consider all responses and earlier replies before adjudicating the show cause notice. The court emphasized the need for expeditious adjudication, not exceeding eight weeks from the judgment's receipt. The authority must issue a notice for a personal hearing to the petitioner or their representatives before passing a speaking order. The authority's decision must address the jurisdictional challenge raised by the petitioner regarding undisclosed income/assets. If the order is unfavorable, its implementation is postponed for eight weeks from the petitioner's receipt of the speaking order.

The court found that the matter was at the show cause notice stage, directing the statutory authority to proceed with adjudication based on the responses and replies provided by the petitioner. The authority is required to grant a personal hearing before issuing a speaking order. The authority must specifically address the jurisdictional challenge raised by the petitioner. If the decision is adverse, its enforcement is stayed for eight weeks from the petitioner's receipt of the speaking order. The parties are instructed to act based on the digitally signed copy of the judgment for further proceedings.