Black Money Act: Bombay HC Grants Ambanis Interim Relief In Income Tax Case

The Bombay High Court on Friday ordered the Income Tax (IT) Department not to take any action on penalty notices issued against Anil Ambani, chairman of Reliance (ADA) Group, in connection with income tax proceedings initiated against him until March 17.

The order was passed by a bench of Justices GS Patel and Neela Gokhale in response to Ambani’s petition challenging a show cause notice issued to him under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

A High Court co-ordinate bench had previously protected Ambani from any coercive action on the show cause notice by way of ad-interim relief on September 26, 2022. 

During yesterday’s hearing, advocates appearing for Ambani, Senior Advocates Rafique Dada and Prateek Sekseria, stated that the income tax department had issued penalty notices in response to the show cause notice.

Advocate Dada sought to challenge the imposition of such penalty notices and also asked permission to amend the petition.

The division bench agreed, protecting Ambani from further action until the next hearing date, i.e., March 17, 2023.

“The petitioner (Ambani) will be pressing for ad-interim reliefs as subsequent demands have been made in form of subsequent penalty notice. Leave to granted to amend petition. Authorities are not to take any further action in response to the penalty demand notice until March 17, 2023,” the Court ruled.

Ambani moved the Court seeking for a stay of proceedings against him after the income tax department issued a show cause notice.

On August 9, 2022, the IT Department issued a notice to Ambani for allegedly evading 420 crores in taxes on undisclosed funds worth more than 814 crores held in Swiss Bank accounts.

According to the notice, Ambani was an economic contributor as well as a beneficial owner of the Bahamas-based ‘Diamond Trust’ and the Northern Atlantic Trading Unlimited (NATU) company.

The department claimed that Ambani “failed to disclose” these foreign assets in his income tax return (ITR) filings, thus violating the provisions of the Black Money Act. Ambani’s petition argued that the challenged notice violated his legal rights.

The authorities’ action to exercise powers under the Black Money Act was based on transactions that occurred ten years before the Black Money Act went into effect. This action clearly violated Ambani’s fundamental rights under Articles 14 and 20 of the Indian Constitution, it was submitted.

Ambani stated that the provisions of the Black Money Act could not have a retrospective effect. He also argued that the assessment order issued on March 31 pursuant to the Black Money Act was disregarded when the show cause notice was issued.