Bombay High Court grants interim relief (for now) to Anil Ambani in income tax case under Black Money Act

The Bombay High Court on Friday directed the Income Tax Department not to take any action till March 17 on the penalty notices issued against the chairperson of Reliance (ADA) Group, Anil Ambani in connection with the income tax proceedings initiated against him..A bench of Justices GS Patel and Neela Gokhale passed the order in a petition filed by Ambani challenging a show cause notice issued to him under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.A co-ordinate bench of the High Court had earlier protected Ambani from any coercive action on the show cause notice by way of ad-interim relief on September 26, 2022. During the hearing today, Senior Advocates Rafique Dada and Prateek Sekseria, appearing for Ambani, said that the income tax department has issued penalty notices in furtherance of the show cause notice. Dada sought to challenge levy of such penalty notices and also asked permission to amend the petition. The same was allowed by the division bench which also protected Ambani from any action till the next hearing date.“The petitioner (Ambani) will be pressing for ad-interim reliefs as subsequent demands have been made in form of subsequent penalty notice. Leave is granted to amend petition. Authorities to take no further steps pursuant to penalty demand notice till April 17, 2023” the Court ordered. .Ambani moved the Court seeking a stay on the proceedings initiated against him after a show cause notice came to be issued by the income tax department. The IT Department had issued the notice to Ambani on August 9, 2022, for allegedly evading ₹420 crores in taxes on undisclosed funds worth more than ₹814 crores held in Swiss Bank accounts.The notice stated that Ambani was an economic contributor as well as beneficial owner of a Bahamas-based entity called ‘Diamond Trust’ and Northern Atlantic Trading Unlimited (NATU) company.The department alleged that Ambani "failed to disclose" these foreign assets in his income tax return (ITR) filings and, hence, contravened the provisions of the Black Money Act..Ambani’s plea pointed out that the notice under challenge affected his vested rights under law.The action by the authorities seeking to exercise powers under the Black Money Act was on the basis of transactions which relate to a period 10 years prior to the Black Money Act coming into force.This action was clearly violative of Ambani’s fundamental rights under Article 14 and 20 of Constitution of India, it was submitted.Ambani stated that the provisions of the Black Money Act could not have a retrospective effect.He also contended that the show cause notice was issued despite an assessment order of March 31 under the Black Money Act.