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TMI Blog2019 (11) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... oposed by the revenue, it certainly cannot be termed as a revision of the original disclosure made under section 245C inasmuch as, there is no further disclosure but an acceptance of additional liability based on the disclosure already made before the Settlement Commission. On a conjoint reading of section 3 and section 2(9) of the Black Money Act, one thing is clear namely that undisclosed foreign income or asset become chargeable to tax from assessment year 2016-17. However, insofar as undisclosed foreign asset is concerned, while it becomes chargeable to tax from assessment year 2016-17 onwards, the date of acquisition of such asset may relate to any assessment year prior to assessment year 2016-17. Therefore, even after the coming into force of the Black Money Act, insofar as assessment years prior to assessment year 2016-17 are concerned, the undisclosed foreign income would be chargeable to tax under the relevant provisions of the Income Tax Act. Adverting to the facts of the present case, as noticed earlier, the contesting respondents have not resiled from their stand in the application made under section 245C of the IT Act. The contesting respondents have also not made any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her forum. X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as "the Black Money Act") in terms whereof, 30.9.2015 was specified as the date on or before which a person may make a declaration in respect of an undisclosed asset located outside India. However, the contesting respondents did not make any declaration of their undisclosed foreign income/assets in accordance with the provisions of the Black Money Act and the notification issued thereunder. 2.3 During post search proceedings under section 131(1A) of the IT Act, the respondent No.2, by a letter dated 18.10.2016, disclosed ₹ 100 crores for all the three contesting respondents and other entities in which they are directly and indirectly interested which was confirmed by the respondents No.2 and 3. Such disclosure related to bank accounts in Citibank N.A., Singapore, bank accounts in Habib Bank AG Zurich, Dubai and investment portfolio accounts in various foreign banks, details of which were found during the search proceedings. The disclosure of ₹ 100 crores was made by the contesting respondents as their undisclosed income over and above their regular i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled their replies. During the pendency of the proceedings, vide letter dated 23.10.2018, the petitioner informed the Settlement Commission of the fact that the proceedings under the Black Money Act in these cases were pending. 2.8 By a letter dated 6.12.2018, the Settlement Commission called for a verification report from the Department inter alia calling for information as to whether the Department wanted to continue the proceedings under the Black Money Act or the proceedings which were pending with the Settlement Commission in respect of the same income and the same assessees. By a letter dated 10.12.2018, the petitioner informed the Settlement Commission that as per the legal opinion of the senior standing counsel of the Income Tax Department the proceedings under section 10 of the Black Money Act can be initiated against the assessee; however, the income which is determined by the Settlement Commission is to be reduced from the income assessed under section 10 of the Black Money Act. The relevant part of the opinion was extracted in the said letter which reads as under: "Whether notice u/s 10 of the Act can be issued for those assessment years for which settlement procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1 It was submitted that the Black Money Act is a special and later Act dealing with undisclosed foreign income and assets, while the Income Tax Act is a general law to consolidate and amend the law relating to income tax and as such the Black Money Act being a special legislation would prevail over the Income Tax Act for the purpose of assessment of undisclosed foreign income and assets after the coming into operation of the Black Money Act. 3.2 The attention of the court was invited to the provisions of section 4 of the Black Money Act which provide for the 'Scope of total undisclosed foreign income and asset' and more particularly to sub-section (3) thereof which provides that the income included in the total undisclosed foreign income and asset under that Act shall not form part of the total income under the Income Tax Act. It was submitted that in view of the provisions of sub-section (3) of section 4 of the Black Money Act, it is clear that any undisclosed foreign income and asset which is assessable under the Black Money Act does not form part of income under the Income Tax Act and as such, the Income Tax Act is not applicable to those undisclosed foreign income and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by the Central Government under section 59 of the Black Money Act, 30.9.2015 was notified as the date on or before which a person may make a declaration in respect of an undisclosed asset located outside India and 31.12.2015 was notified as the date on or before which a person shall pay the tax and penalty in respect of the undisclosed asset located outside India so declared under section 59 of the Black Money Act. 3.5 Reference was made to section 72(c) of the Black Money Act which provides that where any asset has been acquired or made prior to commencement of the Black Money Act, and no declaration in respect of such asset is made under that Chapter (that is, Chapter VI), such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of the Black Money Act shall apply accordingly. It was submitted that the applicability of these provisions in the case of the contesting respondents is further strengthened by the circular of the Department bearing Circular No.13 of 2015 dated 6.7.2015 in answer to FAQ No.23 and Circular No.15 of 2015 dated 3.9.2015 and in answer to FAQ No.26, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act provides that where an asset has been acquired or made prior to the commencement of that Act, and no declaration in respect of such asset has been made under that Chapter, such asset shall be deemed to have been acquired in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of the Black Money Act would apply accordingly. It was submitted that section 72(c) relates to assets which are acquired even prior to the assessment year commencing on or after the 1st day of April, 2016. It was submitted that by not making a declaration as required under section 59 of the Black Money Act within the window provided for making such declaration, the contesting respondents would be deemed to be assessees in default and the undisclosed asset will be deemed to have been acquired in the year in which the Assessing Officer issued notices to them under section 10 of the Black Money Act. 3.7 It was submitted that therefore, even in terms of subsection (2) of section 2 of the Black Money Act prior to its amendment vide Finance No.2 Act of 2019, the contesting respondents would fall within the ambit of the expression assessee as defined therein. Referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of section 4 of the Black Money Act, undisclosed foreign income will not form part of the total income under the Income Tax Act. It was contended that the legislature wanted to exclude undisclosed foreign income from the purview of the Income Tax Act. According to the learned counsel, section 4 of the Black Money Act is the governing section, whereas section 5 thereof only deals with computation and speaks of assessments concluded under the Income Tax Act. It was argued that therefore, in view of the provisions of sections 4, 5 and 59 of the Black Money Act, the Black Money Act and the IT Act remain mutually exclusive and there is no overlapping. It was also submitted that though sub-section (3) of section 4 of the Black Money Act does not contain a non obstante clause, having regard to the object of the Act, the court may read a non obstante clause in it. Referring to the statement of objects and reasons as well as the preamble of the Black Money Act, it was submitted that having regard to object behind the enactment, this court in judicial review may consider non providing of an overriding provision to be an omission on the part of the legislature and read such a provision the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous year when it comes to the notice of Assessing Officer. 3.12 Reference was made to the provisions of subsection (1) of section 10 of the Black Money Act, to submit that in view thereof, the Assessing Officer may, on receipt of an information from an income-tax authority under the Incometax Act or any other authority under any law for the time being in force or on coming of any information to his notice, serve on any person, a notice requiring him on a date to be specified, to produce or cause to be produced such accounts or documents or evidence as the Assessing Officer may require for the purposes of that Act and may, from time to time, serve further notices requiring the production of such other accounts or documents or evidence as he may require. It was submitted that, accordingly, notices for assessment year 2017-18 and for assessment year 2018-19 were issued under section 10 of Black Money Act in accordance with the provisions of section 10, that is, the year when the information pertaining to undisclosed foreign income and assets came to the notice of the Assessing Officer. 3.13 Reference was made to sub-section (12) of section 2 of the Black Money Act which def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on whereby the general law, to the extent dealt with by the special law, is impliedly repealed. This principle finds its origins in the Latin maxim of generalia specialibus non derogant i.e. general law yields to special law should they operate in the same field on same subject (Vepa P. Sarathi, Interpretation of Statutes, 5th Edn., Eastern Book Company; N.S. Bindra's Interpretation of Statutes, 8th Edn., The Law Book Company; Craies on Statute Law, S.G.G. Edkar, 7th Edn., Sweet & Maxwell; Justice G.P. Singh, Principles of Statutory Interpretation, 13th Edn., Lexis Nexis; Craies on Legislation, Daniel Greenberg, 9th Edn., Thomson Sweet & Maxwell, Maxwell on Interpretation of Statutes, 12th Edn., Lexis Nexis)." 3.16 It was submitted that the contesting respondents had claimed that what they have disclosed before the Settlement Commission is income for assessment years 2005- 06 to 2013-14 for Shri Vimal Patel and for assessment years 2004-05 to 2015-16 in case of Samir Patel and Mehul Patel, and not assets. It was pointed out that under the Black Money Act, undisclosed foreign income can be taxed only for assessment year 2016-17 for which the relevant previous year is 2015-16. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sident in India, they have acquired assets like shares, bonds, debentures, mutual funds, other investments, bank account balances are which all assets of the contesting respondents. According to the learned counsel for the petitioner, the income arising at a particular time and credited in the account of a person is income but the bank account as such and the balance in that account at any point of time, constitutes the asset of the person. It was submitted that section 59 of the Black Money Act also refers to undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to assessment year 2016-17. In this case, the contesting respondents had acquired shares/debentures/bonds/ mutual funds, etc. as admitted by them before the Settlement Commission in the years in which they were residents. Therefore, the claim made by the contesting respondents that they have offered only income before the Settlement Commission and not any asset does not hold good because what is taxable under Income-tax Act, 1961 is the income. 3.18 It was submitted that section 5 of the Income Tax Act defines 'Scope of total Income' and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which is prohibited by law or is devoid of the authority of law. 3.21 It was further submitted that it is well settled law that consent cannot confer jurisdiction upon an authority which does not have such jurisdiction. In support of such submission, reliance was placed upon the decision of the Supreme Court in the case of Jagmittar Sain Bhagat v. Health Services, Haryana, (2013) 10 SCC 136, wherein it has been held that it is a settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes a decree having no jurisdiction over the matter, it would amount to nullity as the matter goes to the root of the cause. Such an issue can be raised at any stage of the proceedings. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Similarly, if a court/tribunal inherently lacks jurisdiction, acquiescence of party equally should not be permitted to perpetrate and perpetuate defeating the legislative animation. The court cannot derive jurisdiction apart from the statute. In such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the investment reflected in FY 2007-08. The total additional income offered by the Respondent No. 2, 3 and 4 was ₹ 4,34,25,670/- in hands of the Respondent No.2, 3 and 4. B. Opening balance of HSBC account, Hong Kong of HKD 9,20,400 as on 10.10.2005 has been offered as additional income in the hands of Respondents No.2, 3 and 4 for AY 2006-07:- The Respondents No. 2, 3 and 4 made a total disclosure of ₹ 52,83,096/- in AY 2006-07 (₹ 17,61,032/- in each hand) since opening balance could not be explained by them. C. Barclays Bank account balance of GBP 2,46,263 in case of Shri Vimal Patel:- With regard to the Barclays Bank account, initially the Respondent No. 2 had offered bank interest of ₹ 6522/- only for AY 2005-06. The Petitioner in its report dated 23.10.2018, had stated that the Respondent No. 2 has neither submitted the basis of opening balance of the aforesaid account aggregating to GBP 2,46,263/- nor submitted bank statements prior to this period. Respondent No. 2 therefore offered the entire opening balance of ₹ 1,92,21,581 (in INR) as income for AYs 2005-06 (₹ 11,92,688/-) and 2006-07 (₹ 1,80,28,893/-). D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust on a financial year basis for the period for which petition was filed." It was submitted that the disclosure of income made by the contesting respondents was, therefore, not full and true which is pre-condition for a valid application under section 245C(1) of the IT Act. 3.24 Reliance was placed upon the decision of the Supreme Court in the case of Ajmera Housing Corporation and another v. Commissioner of Income Tax, (2010) 8 SCC 739, wherein the court has held thus:- "27. It is clear that disclosure of "full and true" particulars of undisclosed income and "the manner" in which such income had been derived are the pre-requisites for a valid application under Section 245C(1) of the Act. Additionally, the amount of income tax payable on such undisclosed income is to be computed and mentioned in the application. It needs little emphasis that Section 245C(1) of the Act mandates "full and true" disclosure of the particulars of undisclosed income and "the manner" in which such income was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed in the manner given (in the order) and "in the spirit of settlement agreed to offer additional income of ₹ 5.55 crores. A letter was filed on 10.11.2014 offering additional income of ₹ 5.55 crores, which is placed on record." The ITSC thereafter recorded: '9. As discussed in the foregoing paras, we have considered the submissions of the applicant and the Department. All the issues were discussed one by one during the course of hearing. After carefully considering the submissions of the department and the applicant and the facts of the case, we are of the view that the offer made by the applicant in the SOF and the additional offer of ₹ 5.55 crores made during the course of proceedings u/s 2450(4) before this commission adequately cover all the issues. Therefore, the offer of additional income of ₹ 5.55 crores is accepted.' 25. Clearly, the decision of the ITSC was untenable in law. Once the assessee approached it with a certain amount, representing that it constituted full and true disclosure (and had maintained that to be the correct amount till the date of hearing) the question of "offering" another higher amount as a "full" disclosure is im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel with Mr. Bandish Soparkar, learned advocate for the respondent No.2 and respondents No.3 and 4 respectively, raised a preliminary contention to the very maintainability of this petition under articles 226 and 227 of the Constitution of India. In this regard the attention of the court was drawn to the fact that the order of the Settlement Commission covers assessment years 2004- 05 to 2015-16 and that the impugned order has been passed on 30.1.2019. It was submitted that under the order of the Settlement Commission a sizeable amount of the differential tax and interest was payable and that the Settlement Commission granted one year's time to the contesting respondents to make such payment, however, in less than three weeks, the Department passed formal consequential orders on 18.2.2019 to recover the amount and demand notices were issued pursuant thereto and the contesting respondents were required to make payment under threat of coercion. It was submitted that, accordingly, by March 2019, the full amount in terms of the order passed by the Settlement Commission came to be paid and hence, the impugned order has been fully implemented. 4.1 Reference was made to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Settlement Commission has taxed is income and not any asset as per the Black Money Act. It was submitted that this contention gets further strength from the fact that the contesting respondents had earned "undisclosed foreign income and asset" in terms of 2(12) of the Black Money Act, albeit during the period the Black Money Act was not in force. 4.3 It was submitted that even presently, it is the IT Act that empowers the authorities under that Act to tax undisclosed foreign income by reopening any past assessment years up to as many as sixteen years. In this regard, reference was made to the second proviso to section 147 of the IT Act which provides that nothing provided in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year; as well as to section 149(1)(c) of the IT Act which provides for an outer limit of sixteen years for issuance of notice under section 148 of that Act where the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax has escaped ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was submitted that this argument is devoid of any merit whatsoever, because undisclosed foreign assets and foreign income can lawfully be dealt with either under the IT Act or the Black Money Act even after 1.7.2015. To substantiate such argument, the learned counsel submitted that it is very well settled legal position that the pre-existing jurisdiction of a statutory can be ousted or set at naught only by a specific and unequivocal statutory provision. There is no "exclusivity" or "ouster" or "non-obstante" provision whatsoever in the Black Money Act which provides that, after 1.7.2015, the authorities under the IT Act have no jurisdiction or authority of law to deal with or assess undisclosed foreign assets or foreign income. Instead, the Black Money Act contains several provisions which clearly recognize and permit the assessment of foreign undisclosed assets/income under the IT even after the coming into force of the Black Money Act on 1.7.2015. In this regard, the reference was made to sub-clause (a) of clause (ii) of subsection (1) of section 5 of the Black Money Act, which provides that in computing the total undisclosed foreign income and asset of any previous year of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the asset, that is, ₹ 60 lakhs can now be taxed under the Black Money Act. This Illustration shows that if the full cost of acquisition of ₹ 50 lakhs had been disclosed and taxed in assessment 2009- 10 then there would be no balance amount liable to be taxed under the Black Money Act. According to the learned counsel, this is exactly the situation in the present case, because the Settlement Commission has given a specific finding that all of the contesting respondents' foreign assets and income have been fully disclosed and nothing remains. This finding of the Settlement Commission has not even been attempted to be challenged by the revenue and that it has not even alleged that the contesting respondents have any foreign income or foreign asset which is not covered by the said order of the Settlement Commission. In these circumstances, there is no scope whatsoever for applying the provisions of the Black Money Act to the contesting respondents. It was contended that in any event, the order dated 30.1.2019 of the Settlement Commission cannot be challenged by the revenue by relying on the provisions of the Black Money Act. 4.9 Reference was made to sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Settlement Commission stands assessed under the Income Tax Act and, therefore, the provisions of the Black Money Act would not apply to the such income. 4.13 Referring to section 3 of the Black Money Act, it was submitted that this is the charging section and the charge under the Black Money Act applies from the 1st day of April, 2016 onwards whereas the order of the Settlement Commission deals with the period prior to 1.4.2016, that is, till assessment year 2015-16. It was submitted that, therefore, the provisions of the Black Money Act would not be applicable to the undisclosed foreign income and asset which the contesting respondents have disclosed before the Settlement Commission as the same relate to the period prior to 1.4.2016. 4.14 Insofar as the contention raised on behalf of the petitioner that the contesting respondents were covered by the definition of the expression "assessee" as defined under subsection (2) of section 2 of the Black Money Act even prior to its amendment as the contesting respondents were assessees in default, the learned counsel submitted that in sub-section (2) of section 2 of the Black Money Act, the expression "assessee in default" is a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gives an opportunity to the assessees who have acquired an asset located outside India, which is acquired from income chargeable to tax under the Income tax Act. The assessee has been given an opportunity to declare such asset and pay the tax and penalty thereon. The consequences of the non declaration have been provided under Section 72(c) of the Black Money Act, which reads thus: "Section 72 Removal of doubts. - For the removal of doubts, it is hereby declared that (a) … (b) … (c) where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly." 15. It could therefore be seen, that where no declaration in respect of the asset covered under the Black Money Act is made, such asset would be deemed to have been acquired or made in the year in which a notice under Section 10 is issued by the Assessing Officer and the provisions of the Act shall apply accordingly." 4.16 It was cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s action taken under the general Act and therefore, the position is different. 4.20 It was submitted that under section 3 of the Black Money Act, the said Act applies from assessment year 2016-17 onwards. Section 5(1)(ii)(a) of the Black Money Act refers to assessment under the IT Act in relation to assessment years previous to assessment year 2016-17. Therefore, the date of the assessment order is not material, if the assessment under the IT Act relates to assessment years prior to assessment year 2016-17. It was submitted that the Settlement Commission has passed the impugned order up to and including assessment year 2015-16, and hence, the order is squarely covered by section 5(1)(ii)(a) of the Black Money Act and the benefit of the full amount assessed under the IT Act is required to be given while computing the total undisclosed foreign income and asset under the Black Money Act. 4.21 As regards the contention that a full and true disclosure was not made in the applications under section 245C of the IT Act, because the contesting respondents had agreed to pay additional amount during the course of the settlement proceedings, it was submitted that no additional disclosure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force, it was submitted that section 245-I of the IT Act does not and cannot bar the jurisdiction of this court under article 226 of the Constitution of India. In support of such submission, reliance was placed upon the decision of the Supreme Court in Jyotendrasinhji v. S.I. Tripathy, 1993 Supp (3) SCC 389, wherein it has been held thus: 16. It is true that the finality clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this Court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this Court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this Court under Article 136. A party does not and cannot gain any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226. This is not a limitation inherent in Article 136; it is a limitation which this Court imposes on itself having regard to the nature of the function performed by the Commission and ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013-14 in case of the respondent No.2, for assessment years 2004-05 to 2015-16 in case of the respondent No.3 and for assessment years 2004-05 to 2015-16 in case of the respondent No.4. In response thereto, the respondents No.2, 3 and 4 filed income tax returns disclosing undisclosed foreign income and assets of ₹ 13,05,36,593/-, ₹ 12,05,39,478/- and ₹ 13,70,81,928/- respectively, in all, amounting to ₹ 38,81,57,999/-. The respondents No.2, 3 and 4 thereafter filed separate applications under section 245C of the IT Act before the Settlement Commission disclosing additional undisclosed foreign income and asset of ₹ 28,32,25,000/-, ₹ 24,71,00,000/- and ₹ 37,25,00,000/- respectively, in all, amounting to ₹ 90,28,25,000/-. Accordingly, the total additional income declared by the respondents No.2, 3 and 4 came to ₹ 41,37,61,593/-, ₹ 36,76,39,478/-, 50,95,82,999/- respectively, in all, ₹ 129,09,82,999/-. 6.1 By an order dated 14.8.2017 passed under section 245D (1) of the IT Act, the applications were admitted and allowed to be proceeded with. Thereafter, vide letter dated 14.11.2017, the PCIT Central Surat (the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 and 153A/C pending before Hon'ble ITSC:- 2.3 For the purpose of seeking clarity for applicability of the provisions of the Black Money Act to the concerned assessees, a view was sought from the senior standing counsel for the Department. As per her opinion, the proceedings u/s.10 of the Black Money Act can be initiated against the assessee, however, the income which is determined by the Hon'ble Settlement Commission is to be reduced from the income assessed u/s.10 of the Black Money Act. The concerned portion from the legal opinion as provided by Sr. Standing Counsel is reproduced below:- "Whether notice u/s. 10 of the Act can be issued for those assessment years for which settlement proceedings are pending before the Settlement Commission? The proceedings before the Settlement Commission are under the provisions of the Income tax Act. Thus, though notice under section 10 can be issued for the Assessment Years for which settlement proceedings are pending before the Settlement Commission, ultimately benefit will be required to be granted while computation under Section 5 of the Act." Thus, it is clear that the proceedings under Black Money Act and under Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Black Money Act and under Income-tax Act are not mutually exclusive to each other; both can be legally carried out at the same time as per the provisions of both the Acts; however, the benefit of tax paid under provisions of the Income-tax Act will be provided to the assessee under Black Money Act; and that it would be more appropriate to continue with the assessment of income under the Income-tax Act under the provisions of section 147 for which the assessee has already admitted income; that the Settlement Commission proceeded further. 6.5 During the course of the settlement proceedings, on 17.12.2018, the contesting respondents, with a view to settle the issues, in the spirit of settlement offered further additional income vide their submissions filed on 17.12.2018. It appears that the PCIT sought further time for conducting necessary inquiries and verification of certain intelligence inputs received by them. Accordingly, further time was granted to them till 7.1.2019; however, no further progress was reported and hence, as a last chance further time was granted till 14.1.2019 as the matters were getting time barred on 31.1.2019. Since no further progress was reported, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form a complete regime for assessment of undisclosed foreign income and assets under the Black Money Act and that sub-section (3) of section 4 of the said Act ousts the operation of the IT Act in respect thereof. According to the learned counsel, insofar as domestic income and assets are concerned, it is the income-tax authorities who have the jurisdiction to assess such income; however, insofar as undisclosed foreign income and assets are concerned, it is only the authorities under the Black Money Act who have the jurisdiction to assess such income. Such contention has been resisted by the contesting respondents on the ground that during the course of the settlement proceedings, the Department had requested the Settlement Commission to proceed further and decide the applications under section 245C of the IT Act despite the fact that notices under section 10 of the Black Money Act had been issued for assessment years 2017-18 and 2018-19. 10. In this regard, while it is true that the petitioner had specifically invited the Settlement Commission to decide the applications made by the contesting respondents under section 245C of the IT Act, nonetheless, it is equally true that if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red is not relevant. In other words an undisclosed foreign asset would be subject to tax under the Black Money Act notwithstanding the date of its acquisition, which may even be a previous year prior to the assessment year commencing on 1st April 2016; and shall be charged to tax under this provision on the value of such asset in the previous year in which such asset comes to the notice of the Assessing Officer. 15. Section 4 of the Black Money Act provides for the "Scope of total undisclosed foreign income and asset"and reads as under: "4. Scope of total undisclosed foreign income and asset.- (1) Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be,- (a) the income from a source located outside India, which has not been disclosed in the return of income furnished within the time specified in Explanation 2 to sub-section (1) or under sub- section (4) or sub-section (5) of Section 139 of the Income Tax Act; (b) the income, from a source located outside India, in respect of which a return is required to be furnished under Section 139 of the Income Tax Act but no return of income has been furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior to assessment year 2016-17 are concerned, the undisclosed foreign income would be chargeable to tax under the relevant provisions of the Income Tax Act. 18. Section 5 of the Black Money Act provides for computation of total undisclosed foreign income and asset. Sub-section (1) thereof lays down that in computing the total undisclosed foreign income and asset of any previous year of an assessee,- (i) no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee, whether or not it is allowable in accordance with the provisions of the Income-tax Act; (ii) any income, (a) which has been assessed to tax for any assessment year under the Income-tax Act prior to the assessment year to which that Act applies; or (b) which is assessable or has been assessed to tax for any assessment year under that Act, shall be reduced from the value of the undisclosed asset located outside India, if, the assessee furnishes evidence to the satisfaction of the Assessing Officer that the asset has been acquired from the income which has been assessed or is assessable, as the case may be, to tax. 18.1 Sub-section (2) of section 5 of the Bla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year beginning on the 1st day of April, 2016 for which he failed to furnish a return under section 139 of the Income Tax Act, 1961 before the date of commencement of the Act or which had escaped assessment by reason of failure on the part of such person to make a return under the Income Tax Act, or to disclose fully and truly all material facts necessary for assessment or otherwise. According to the learned counsel for the petitioner, a person who does not disclose his foreign assets within the window specified by the Central Government vide notification dated 1.7.2015 wherein 30.9.2015 was notified to be the appointed date on or before which a person may make a declaration in respect of an undisclosed asset outside India and 31.12.2015 was notified as the appointed date on or before which a person shall pay tax and penalty in respect of the undisclosed asset located outside India; such person is an "assessee in default" and is, accordingly covered by the definition of assessee as it stood even prior to its amendment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving regard to the definition of the term "assessee" as it stood at the relevant time when the impugned order came to be passed by the Settlement Commission, the provisions of the Black Money Act were not applicable to them. 22. To test the contention of the petitioner that the contesting respondents are deemed to be assessees in default as contemplated in the unamended section 2(2) of the Black Money Act, it would be necessary to refer to the provisions of the Black Money Act wherein the expression "deemed to be an assessee in default" has been employed. 23. Apart from sub-section (2) of section 2 of the Black Money Act, the expression "deemed to be an assessee in default" finds place in sections 30, 32 and section 44 thereof. Section 30 of the Black Money Act provides for recovery of tax dues by Assessing Officer. Sub-section (4) thereof provides that an assessee shall be deemed to be an assessee in default, if the tax arrear is not paid within the time allowed under subsection (1) or the period reduced under sub-section (2) or extended under sub-section (3), as the case may be. Subsection (5) of section 30 of the Black Money Act provides that where an assessee defaults in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 44 of the Black Money Act, provides for penalty for default of payment of tax arrear on the part of an assessee in default or an assessee deemed to be in default. 25. Therefore, while sub-sections (4) and (5) of section 30 and sub-section (14) of section 32 of the Black Money Act create a deeming fiction only for the purposes of section 30 and 32 thereof for recovery of tax dues by an Assessing Officer or by a tax recovery officer as the case may be, there is no such deeming fiction contained in section 59 or section 72(c) of the Black Money Act. Therefore, one cannot borrow and automatically apply the concept of "assessee deemed to be in default" to sections 59 and 72(c) of the Black Money Act, which is confined to an assessee who has not paid the tax arrear or an installment within the time fixed or a debtor of an assessee who does not make payment pursuant to a notice issued in this regard. The Black Money Act being a taxing statute is required to be interpreted in the light of what is clearly expressed. Subsection (4) of section 30 of the Black Money Act is clear and unambiguous and the deeming fiction contained in the expression "assessee in default" relates onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under the Income Tax Act for any assessment year prior to the assessment year beginning on the 1st day of April, 2016 as provided thereunder. The Supreme Court in Union of India v. Gautam Khaitan (supra) has held thus: "13. A perusal of Section 59 of the Black Money Act would further reveal, that an opportunity is given to the assessee to make a declaration in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income Tax Act, for any assessment year prior to the assessment year beginning on 01.04.2016. Section 59 further provides, that such a declaration has to be made on or after the date of commencement of the Black Money Act, however, before the date notified by the Central Government. The Central Government, in exercise of the powers under Section 59 of the Black Money Act, published a Notification on 01.07.2015, notifying 30.09.2015 as the date on or before which a person is required to make a declaration in respect of an undisclosed asset located outside India. It also notifies 31.12.2015 as the date on or before which the person shall pay the tax and penalty in respect of such undisclosed asset located outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by 31.12.2015. However, in view of the date originally prescribed by subsection (3) of Section 1 of the Black Money Act, such a declaration could have been made only after 01.04.2016. Therefore, in order to give the benefit to the assessee(s) and to remove the anomalies the date 01.07.2015 has been substituted in subsection (3) of Section 1 of the Black Money Act, in place of 01.04.2016. This is done, so as to enable the assessee desiring to take benefit of Section 59 of the Black Money Act. By doing so, the assessees, who desired to take the benefit of one time opportunity, could have made declaration prior to 30th September, 2015 and paid the tax and penalty prior to 31st December, 2015. 20. It would further be relevant to note that subsection (3) of Section 1 of the Black Money Act, itself provides that save as otherwise provided in this Act, it shall come into force on 1 st day of July, 2015. A conjoint reading of the various provisions would reveal, that the Assessing Officer can charge the taxes only from the assessment year commencing on or after 01.04.2016. However, the value of the said asset has to be as per its valuation in the previous year. As such, even if there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the previous year to which the income referred to in section 4 relates; or in the previous year in which the undisclosed asset located outside India was acquired" 30. Thus under the amended section 2(2), a non-resident or not ordinarily resident who was resident in India either in the previous year to which the income referred to in section 4 relates; or in the previous year in which the undisclosed asset located outside India was acquired has been brought within the ambit of the expression "assessee". In this regard, it may be noted that the expression "assessee" came to be amended on 1st August, 2019 albeit with retrospective effect from 1st July, 2015; however, as on the date when the Settlement Commission passed the impugned order viz. 30.1.2019, the contesting respondents were not assessees within the meaning of such expression as contemplated under section 2(2) of the Black Money Act and were, therefore, not covered by the provisions of that Act. Therefore, having regard to the fact that at the relevant time when the order under section 245D of the IT Act came to be passed, the contesting respondents were not assessees as contemplated under the Black Money Act, the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner submitted that the court may interpret the provisions of the Black Money Act keeping in mind the object of the enactment, as provided in the statement of objects and reasons, paragraph 1 whereof reads thus: "Stashing away of black money abroad by some people with intent to evade taxes has been a matter of deep concern to the nation. "Black Money" is a common expression used in reference to tax-evaded income. Evasion of tax robs the nation of critical resources necessary to undertake programs for social inclusion and economic development. It also puts a disproportionate burden on the honest taxpayers as they have to bear the brunt of higher taxes to make up for the revenue leakage caused by evasion. The money stashed away abroad by evading tax could also be used in ways which could threaten the national security." Reference was also made to the Explanatory Memorandum to the Finance Bill (2) of 2019, to submit that the same makes it clear that the legislative intent behind enacting the Black Money Act was to tax such foreign income and assets which were not charged to tax under the Income Tax Act. 32. The learned Additional Solicitor General further submitted that co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statutes so as to supply any assumed deficiency." 34. Thus, when sub-section (3) of section 4 of the Black Money Act does not contain a non-obstante clause, it is not possible for this court to read one into the sub-section on the ground that there is an omission on the part of the legislature to provide such a provision. When there is no ambiguity in the sub-section the question of reading an omission into the same would not arise. Similarly, without there being any provision giving overriding effect to the provisions of the Black Money Act, it is not possible to read such a provision in the statute and say that the provisions of the said Act would have overriding effect over the provisions of any other statute. 35. At this stage, it may be apposite to note that there are several provisions under the Income Tax Act, 1961 which cover assessment of undisclosed foreign income. 36. The second proviso to section 147 of the Income Tax Act, 1961 provides that nothing contained in the first proviso to section 147 shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated for A.Ys 2001-02 to A,Y, 2007-08 in all the three brothers. Therefore, the period under the purview of both the proceedings is different. Xxxxxx 2.3 xxxxxx "Whether notice u/s 10 of the Act can be issued for those assessment years for which settlement proceedings are pending before the Settlement Commission? The proceedings before the Settlement Commission are under the provisions of the Income Tax Act. Thus, though notice under Section 10 can be issued for Assessment Years for which settlement proceedings are pending before the Settlement Commission, ultimately benefit will be required to be granted whole computation under Section 5 of the Act." "Thus, it is clear that the proceedings under Black Money Act and under Income-tax Act are not mutually exclusive to each other. Both can be legally carried out at the same time as per the provisions of both the Acts. However, the benefit of tax paid under provisions of the Income-tax Act will be provided to the assessee under Black Money Act. Xxxx 2.5 Considering the same, it would be more appropriate to continue with the assessment of income under the Income-tax Act under the provisions of section 147 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applications made by the contesting respondents under section 245C of the Income Tax Act, 1961. It is evident that it is only for this reason that notices under the Black Money Act were issued only for assessment years 2017- 18 and 2018-19. 39. At this juncture reference may be made to certain provisions of Chapter XIX-A of the IT Act. Section 245C of the IT Act makes provision for application for settlement of cases and provides that an assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner provided therein. Thus, under section 245C of the IT Act, an assessee can make an application at any stage of a case relating to him. 40. The expression "case" has been defined under clause (b) of section 245A of the IT Act to mean an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date of the application, by an order in writing, reject the application or allow the application to be proceeded with: Provided that where no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with. (1-A) * * * (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Principal Commissioner or Commissioner. (2-A) Where an application was made under section 245-C before the 1st day of June, 2007, but an order under the provisions of sub-section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, has not been made before the 1st day of June, 2007, such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest thereon is paid on or before the 31st day of July, 2007. Explanation.-In respect of the application referred to in this sub-section, the 31st day of July, 2007 shall be deemed to be the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t day of July, 2007. (3) The Settlement Commission, in respect of- (i) an application which has not been declared invalid under sub-section (2-C); or (ii) an application referred to in sub-section (2-D) which has been allowed to be further proceeded with under that sub-section, may call for the records from the Principal Commissioner or Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Principal Commissioner or Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case, and the Principal Commissioner or Commissioner shall furnish the report within a period of ninety days of the receipt of communication from the Settlement Commission: Provided that where the Principal Commissioner or Commissioner does not furnish the report within the aforesaid period, the Settlement Commission may proceed to pass an order under sub-section (4) without such report. (4) After examination of the records and the report of the Prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such tax or has allowed payment thereof by instalments, the assessee shall be liable to pay simple interest at one and one-fourth per cent for every month or part of a month] on the amount remaining unpaid from the date of expiry of the period of thirty-five days aforesaid. (6-B) The Settlement Commission may, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (4)- (a) at any time within a period of six months from the end of the month in which the order was passed; or (b) at any time within the period of six months from the end of the month in which an application for rectification has been made by the Principal Commissioner or the Commissioner or the applicant, as the case may be: Provided that no application for rectification shall be made by the Principal Commissioner or the Commissioner or the applicant after the expiry of six months from the end of the month in which an order under sub-section (4) is passed by the Settlement Commission: Provided further that an amendment which has the effect of modifying the liability of the applicant shall not be made under this sub-section unless the Settlement C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 245C of the IT Act in accordance with law. As held by the Supreme Court in catena of decisions, an order of the Settlement Commission can be interfered with only if such order is found to be contrary to any provisions of the IT Act. 43. Besides, the petitioner cannot be permitted to approbate and reprobate at the same time, namely before the Settlement Commission to take a stand that the undisclosed foreign income and assets are governed by the provisions of the Income Tax Act, 1961 for the relevant years in respect of which the proceedings were pending before the Settlement Commission, and now to take a somersault and say that the Settlement Commission had no jurisdiction to decide the applications under section 245C of the IT Act. 44. Another aspect of the matter is that the proceedings before the Settlement Commission were taken in connection with notices issued under section 148 and 153A of the Income Tax Act, and it is therefore, that the Settlement Commission had the jurisdiction to decide the applications under section 245C of that Act, which related to the proceedings in respect of those notices. If it was the case of the revenue that the undisclosed foreign income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conceal material facts in these cases. The Settlement Commission further noted that in the course of hearings under sections 245D(4)/245D(3), the PCIT verified entries, as directed by the it, in the bank statements/ portfolio statements, ledger accounts, entries in the Tally database and all other evidences submitted by the applicants in different paper books and income statements of the applicants. The sources of individual credit entries were also verified by the PCIT. The verification reports of the PCIT are narrated in the earlier part of the order of the Settlement Commission. The Settlement Commission recorded that on some of the issues, which remained unreconciled due to the fact that they pertained to very old periods and for want of further evidence, the applicants in true spirit of settlement and for bringing quietus to the issues have offered additional income vide detailed submissions filed on 17.12.2018. The Settlement Commission recorded that the applicants had made the additional offer of ₹ 8,65,63,679/- in respect of the following issues:- "a. Irregularities in the opening stock of 7.5% HSBC Bank Plc Bond of US $ 10,86,457. b. HSBC Bank account balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the returns filed in response to the notices under sections 148 and 153A of the IT Act. As compared to the amount of income disclosed, the additional amount offered was only ₹ 8.64 crores which comes to approximately 6.7% of the total amount of income disclosed and is, therefore, only a fraction of the total income disclosed. Moreover, this offer to pay additional amount by the contesting respondents has to be considered keeping in mind the fact that the proceedings before the Settlement Commission are in the nature of settlement proceedings. If for the reason that in respect of issues which pertained to very old period and could not be reconciled due to lack of want of further evidence, the contesting respondents, with a view to bring about a settlement, agreed to pay a higher amount as proposed by the revenue, it certainly cannot be termed as a revision of the original disclosure made under section 245C of the IT Act, inasmuch as, there is no further disclosure but an acceptance of additional liability based on the disclosure already made before the Settlement Commission. 50. In the above backdrop, the decision of the Supreme Court in the case of Ajmera Housing Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by them. 52. The Supreme Court in Union of India v. Ind-Swift Laboratories Ltd. (supra) has held thus: "22. An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far as the findings of fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court. In the present case the order of the Settlement Commission clearly indicates that the said order, particularly, with regard to the imposition of simple interest @ 10% per annum was passed in accordance with the provisions of Rule 14 but the High Court wrongly interpreted the said Rule and thereby arrived at an erroneous finding. So far as the second issue with respect to interest on ₹ 50 lakhs is concerned, the same being a factual issue should not have been gone into by the High Court exercising the writ jurisdiction and the High Court should not have substituted its own opinion against the opinion of the Settlement Commission when the same was not challenged on merits." 53. In the present case, it is not possible to state that the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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