UNION OF INDIA AND ORS.versusGAUTAM KHAITAN

                         [2019] 13 S.C.R. 721                          721


                  UNION OF INDIA AND ORS.                              A
                                 v.
                      GAUTAM KHAITAN
                 (Criminal Appeal No.1563 of 2019)
                                                                       B
                       OCTOBER 15, 2019
    [ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
      Black Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015 – ss.1(3), 2(9)(d), 3, 9, 10, 50, 51,
55, 59, 72, 85 & 86 – 2015 Act, if made retrospectively applicable     C
– Notification/Order notified on 01.07.2015 providing that the Act
shall come into force on 01.07.2015– Interim order passed by the
High Court restraining the appellants from taking and/or
continuing any action against the respondent pursuant to the Order
passed u/s.55 by the appellant no.2 – High Court inter alia observed
that while exercising the powers u/ss.85 & 86, the Central             D
Government made the said Act retrospectively applicable from
01.07.2015 and passed restraint order – On appeal, held: Black
Money Act provides stringent measures for curbing the menace of
black money – Sub-s.(3) of s.1 provides, that save as otherwise
provided in the said Act, it shall come into force on the 1st day of   E
April, 2016 – Various offences have been defined and stringent
punishments have also been provided– However, the scheme of the
Act also provided one time opportunity to make declaration in
respect of any undisclosed asset located outside India and acquired
from income chargeable to tax under the Income-tax Act –s.59
provided that such declaration was to be made on or after the date     F
of commencement of the Act, but on or before a date notified by
the Central Government in the Official Gazette – Date so notified
for making declaration is 30.09.2015 whereas, the date for
payment of tax and penalty was notified to be 31.12.2015 –As
such, an anomalous situation was arising if the date u/s.1(3) was
to be retained as 01.04.2016, then the period for making               G
declaration would have lapsed by 30.09.2015 and the date for
payment of tax and penalty would have also lapsed by
31.12.2015– However, in view of the date originally prescribed by
s.1(3), such declaration could have been made only after
01.04.2016 – Therefore, in order to give the benefit to the            H
                                721
722            SUPREME COURT REPORTS                     [2019] 13 S.C.R.


A     assessee(s) and to remove the anomalies, the date 01.07.2015 was
      substituted in s.1(3), in place of 01.04.2016 –By doing so, the
      assessees, who desired to take the benefit of one time opportunity,
      could have made declaration prior to 30.09.2015 and paid the tax
      and penalty prior to 31.12.2015 – Further, conjoint reading of the
      various provisions reveal that the Assessing Officer can charge the
B     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 was
      no change of date in s.1(3), the value of the asset was to be
      determined as per its valuation in the previous year – Date has
C     been changed only for the purpose of enabling the assessee(s) to
      take benefit of s.59 – Power was exercised only in order to remove
      difficulties – In any case, in the present case, the assessment year
      in consideration was 2019-2020 and the previous year relevant
      to the assessment year was the year ending on 31.03.2019 –
      Interim order passed by the High Court holding that by the
D     notification/order dated 01.07.2015, the penal provisions were
      made retrospectively applicable is set aside – High Court to decide
      the writ petition on its own merits, uninfluenced by the present
      observations made only for the purposes of examining the
      correctness of the interim order – Income Tax Act, 1961 – s.139.
E           Allowing the appeal, the Court
             HELD: 1.1 A perusal of Section 59 of the Black Money
      (Undisclosed Foreign Income and Assets) and Imposition of Tax
      Act, 2015 would further reveal, that an opportunity is given to
      the assessee to make a declaration in respect of any undisclosed
F     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 to be notified by the Central
G     Government. The consequences of the non-declaration have
      been provided under Section 72(c) of the Black Money Act.
      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
H     Section 10 is issued by the Assessing Officer and the provisions
     UNION OF INDIA AND ORS. v. GAUTAM KHAITAN                      723


of the Act shall apply accordingly. The offences in respect of      A
which sanction has been granted are under Sections 50 and 51
of the Black Money Act. [Paras 13, 16] [728-A-B-D-G-H; 729-
A]
       1.2 The scheme of the Black Money Act is to provide
stringent measures for curbing the menace of black money.           B
Various offences have been defined and stringent punishments
have also been provided. However, the scheme of the Black
Money Act also provided one time opportunity 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. Section 59 of the Black Money Act provided          C
that such a declaration was to be made on or after the date of
commencement of the Black Money Act, but on or before a date
notified by the Central Government in the Official Gazette. The
date so notified for making a declaration is 30.09.2015 whereas,
the date for payment of tax and penalty was notified to be          D
31.12.2015. As such, an anomalous situation was arising if the
date under sub-section (3) of Section 1 of the Black Money Act
was to be retained as 01.04.2016, then the period for making a
declaration would have been lapsed by 30.09.2015 and the date
for payment of tax and penalty would have also been lapsed by
31.12.2015. However, in view of the date originally prescribed      E
by sub-section (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 sub-section (3) of Section 1 of the Black Money      F
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. Sub-section (3) of Section 1 of the Black   G
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          H
724            SUPREME COURT REPORTS                     [2019] 13 S.C.R.


A     of the said asset has to be as per its valuation in the previous
      year. As such, even if there was no change of date in sub-section
      (3) of Section 1 of the Black Money Act, the value of the asset
      was to be determined as per its valuation in the previous year.
      The date has been changed only for the purpose of enabling the
      assessee(s) to take benefit of Section 59 of the Black Money
B
      Act. The power has been exercised only in order to remove
      difficulties. The penal provisions under Sections 50 and 51 of
      the Black Money Act would come into play only when an
      assessee has failed to take benefit of Section 59 and neither
      disclosed assets covered by the Black Money Act nor paid the
C     tax and penalty thereon. As such, the High Court was not right
      in holding that, by the notification/order impugned before it, the
      penal provisions were made retrospectively applicable. [Paras
      19-20] [731-A-H; 732-A-B]
            1.3 In any case, in the factual scenario of the present case,
D     the assessment year in consideration was 2019-2020 and the
      previous year relevant to the assessment year was the year
      ending on 31.03.2019. In that view of the matter, the interim
      order passed by the High Court is not sustainable in law, the
      same is quashed and set aside. The High Court is requested to
      decide the writ petition on its own merits. However, it is clarified
E
      that the observations made are only for the purposes of
      examining the correctness of the interim order passed by the
      High Court and the High Court would decide the writ petition
      uninfluenced by the same. [Paras 21-23] [732-B-D]
            CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
F
      No. 1563 of 2019.
            From the Judgment and Order dated 16.05.2019 of the High
      Court of Delhi at New Delhi in Crl. M.A.No. 4336/2019 in W.P. (Crl.)
      No. 618/2019.
G          Tushar Mehta, Solicitor General, Zoheb Hossain, Rajat Nair, Kanu
      Aggarwal, Piyush Goyal, Mrs. Anil Katiyar, Advs. for the Appellants.
            P. V. Kapur, Siddharth Luthra, Sr. Advs., A. T. Patra, Madhav
      Khurana, Mrs. Roopa Dayal, V. K. Naghrath, Aditya Ghadge, Sidhant
      Kapur, Ms. Sheena T., Ms. Kaveri Gupta, Mrs. Bina Gupta, Advs. for
H     the Respondent.
      UNION OF INDIA AND ORS. v. GAUTAM KHAITAN                               725


      The Judgment of the Court was delivered by                              A
      B. R. GAVAI, J.
      1. Leave granted.
       2. The present appeal challenges the interim order passed by the
Division Bench of the Delhi High Court in Writ Petition (Crl.) No. 618        B
of 2019 dated 16.05.2019 thereby, restraining the appellants herein from
taking and/or continuing any action against the writ petitioner (respondent
herein) pursuant to the Order dated 22.01.2019 under Section 55 of
the Black Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015 (hereinafter referred to as the “Black
Money Act”) passed by Appellant No. 2 herein.                                 C
      3. We have heard Mr. Tushar Mehta, learned Solicitor General
appearing on behalf of the appellants, and Mr. P.V. Kapur, learned senior
counsel appearing on behalf of the sole respondent.
      4. The short question that falls for consideration is, as to whether
                                                                              D
the High Court was right in observing that while exercise of the powers
under the provisions of Sections 85 and 86 of the Black Money Act,
the Central Government has made the said Act retrospectively
applicable from 01.07.2015 and passed a restraint order.
       5. From the Statement of Objects and Reasons, it could be
seen that the Black Money Act has been enacted for the following              E
purposes :
           (a) To unearth the black money stashed in foreign countries;
               and
           (b) To prevent unaccounted money going abroad.                     F
           (c) To punish the persons indulging in illegitimate means of
               generating money causing loss to the revenue
           (d) To prevent illegitimate income and assets kept outside
               the country from being utilised in ways which are
               detrimental to India’s social, economic and strategic          G
               interest and its national security.
      6. The Black Money Act has been passed by the Parliament on
11.05.2015 and it has received Presidential assent on 26.05.2015. Sub-
section (3) of Section 1 provides, that save as otherwise provided in
the said Act, it shall come into force on the 1st day of April, 2016.         H
726            SUPREME COURT REPORTS                         [2019] 13 S.C.R.


A     However, by the notification/ order notified on 01.07.2015, which have
      been impugned before the High Court, it has been provided, that the
      Black Money Act shall come into force on 01.07.2015, i.e., the date
      on which the order is issued under the provisions of sub-section (1) of
      Section 86 of the Black Money Act.
B           7. It will be relevant to refer to Section 3 of the Black Money
      Act, which is a charging section.
            “3. Charge of Tax - (1) There shall be charged on every
            assessee for every assessment year commencing on or after the
            1st day of April, 2016, subject to the provisions of this Act, a tax
C           in respect of his total undisclosed foreign income and asset of
            the previous year at the rate of thirty per cent of such undisclosed
            income and asset:
            Provided that an undisclosed asset located outside India shall be
            charged to tax on its value in the previous year in which such
D           asset comes to the notice of the Assessing Officer.
            (2) For the purposes of this section, “value of an undisclosed
            asset” means the fair market value of an asset (including
            financial interest in any entity) determined in such manner as may
            be prescribed.”
E            8. It could thus be seen, that Section 3 provides that tax shall be
      charged on every assessee for every assessment year commencing on
      or after the 1st day of April, 2016 in respect of his total undisclosed
      foreign income and assets of the previous year. The rate of the said
      tax has been quantified at thirty per cent. The proviso to sub-section
F     (1) of Section 3 of the Black Money Act provides, that undisclosed
      assets located outside India shall be charged to tax on its value in the
      previous year in which such asset comes to the notice of the Assessing
      Officer.
            9. It could thus clearly be seen, that the proviso to sub-section
      (1) of Section 3 of the Black Money Act, makes it clear that the
G
      undisclosed asset located outside India shall be charged to tax on its
      value in previous year in which, such an asset comes to the notice of
      Assessing Officer. Clause (9) of Section 2 of the Black Money Act
      defines “previous year”. Four different definitions have been given in
      sub-clauses (a), (b), (c) and (d). For the present matter, sub-clause (d)
H     of clause (9) of Section 2 would be relevant, which reads thus:
             UNION OF INDIA v. GAUTAM KHAITAN                                  727
                       [B. R. GAVAI, J.]

      “(9) “previous year” means—                                              A
       (a) …
       (b) …
       (c) …
       (d) the period of twelve months commencing on the 1st day of            B
           April of the relevant year in any other case, and which
           immediately precedes the assessment year.”
      10. It could thus be seen, that the previous year in the present
case would mean a period of twelve months commencing on the 1st
day of April of the relevant year and which immediately precedes the           C
assessment year.
       11. A bare reading of the provisions of Section 3 read with
Section 2(9)(d) of the Black Money Act would unambiguously show,
that the legislative intent insofar as the charging tax on undisclosed asset
located outside India is concerned, is to charge the tax on its value in       D
the previous year in which such asset comes to the notice of the
Assessing Officer. The previous year in the present case would be a
period of twelve months commencing on the 1st day of April of the
relevant year and which immediately precedes the assessment year.
       12. It could thus be seen, that Section 3 read with Section 2 (9)(d)    E
of the Black Money Act would permit the Assessing Officer, while
assessing the case of an assessee for assessment year commencing
after 01.04.2016, to bring the undisclosed asset located outside India
under the tax net on the value of the said property within a period of
twelve months, prior to the date on which such asset comes to the notice
                                                                               F
of the Assessing Officer. By virtue of these provisions, if such asset
comes to the notice of Assessing Officer on 01.04.2016, he could charge
such asset(s) on the basis of its value as would be ascertained in a
previous year ending on 31.03.2016. A perusal of Section 3 of the Black
Money Act would further reveal, that what is relevant is the date on
which the Assessing Officer notices the acquisition by an assessee of          G
undisclosed asset located outside India. However, for the purposes of
taxation, the value of such asset has to be ascertained as is in the
immediate previous year.
      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         H
728            SUPREME COURT REPORTS                         [2019] 13 S.C.R.


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 to be notified by the Central Government.
B
      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
C     shall pay the tax and penalty in respect of such undisclosed asset located
      outside India.
            14. It could thus be seen, that Section 59 of the Black Money
      Act gives an opportunity to the assessees who have acquired an asset
      located outside India, which is acquired from income chargeable to tax
D     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,
E           it is hereby declared that-
             (a) …
             (b) …
             (c) where any asset has been acquired or made prior to
F                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
G                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
H     the provisions of the Act shall apply accordingly.
            UNION OF INDIA v. GAUTAM KHAITAN                                  729
                      [B. R. GAVAI, J.]

       16. The offences in respect of which sanction has been granted         A
are under Sections 50 and 51 of the Black Money Act, which read
thus :
      “50. Punishment for failure to furnish in return of income,
      any information about an asset (including financial interest
      in any entity) located outside India.- If any person, being a           B
      resident other than not ordinarily resident in India within the
      meaning of clause (6) of section 6 of the Income-tax Act, who
      has furnished the return of income for any previous year under
      sub-section (1) or sub-section (4) or sub-section (5) of section
      139 of that Act, wilfully fails to furnish in such return any
                                                                              C
      information relating to an asset (including financial interest in any
      entity) located outside India, held by him, as a beneficial owner
      or otherwise or in which he was a beneficiary, at any time during
      such previous year, or disclose any income from a source outside
      India, he shall be punishable with rigorous imprisonment for a
      term which shall not be less than six months but which may extend       D
      to seven years and with fine.
      51. Punishment for wilful attempt to evade tax –
          (1) If a person, being a resident other than not ordinarily
              resident in India within the meaning of clause (6) of
                                                                              E
              section 6 of the Income-tax Act, wilfully attempts in any
              manner whatsoever to evade any tax, penalty or interest
              chargeable or imposable under this Act, he shall be
              punishable with rigorous imprisonment for a term which
              shall not be less than three years but which may extend
              to ten years and with fine.                                     F
          (2) If a person wilfully attempts in any manner whatsoever
              to evade the payment of any tax, penalty or interest
              under this Act, he shall, without prejudice to any penalty
              that may be imposable on him under any other provision
              of this Act, be punishable with rigorous imprisonment for       G
              a term which shall not be less than three months but
              which may extend to three years and shall, in the
              discretion of the court, also be liable to fine.
          (3) For the purposes of this section, a wilful attempt to evade
              any tax, penalty or interest chargeable or imposable under      H
730             SUPREME COURT REPORTS                          [2019] 13 S.C.R.


A                     this Act or the payment thereof shall include a case
                      where any person—
                       (i) has in his possession or control any books of
                           account or other documents (being books of
                           account or other documents relevant to any
B                          proceeding under this Act) containing a false entry
                           or statement;
                      (ii) makes or causes to be made any false entry or
                           statement in such books of account or other
                           documents; or
C                     (iii) wilfully omits or causes to be omitted any relevant
                            entry or statement in such books of account or other
                            documents; or
                     (iv) causes any other circumstance to exist which will
                          have the effect of enabling such person to evade
D                         any tax, penalty or interest chargeable or imposable
                          under this Act or the payment thereof.”
             17. Section 50 provides that if any person, being a resident other
      than not ordinarily resident in India, who has furnished the return of
      income for any previous year under sub-section (1) or sub-section (4)
E     or sub-section (5) of Section 139 of the Income-tax Act, wilfully fails
      to furnish in such return any information relating to an asset (including
      financial interest in any entity) located outside India, held by a beneficial
      owner or otherwise or in which he was a beneficiary, at any time during
      such previous year, or disclose any income from a source outside India,
      he shall be punishable with rigorous imprisonment for a term which shall
F     not be less than six months but which may extend to seven years and
      with fine.
             18. The penalty of the offences under Section 51 is for wilful
      attempt in any manner whatsoever to evade the payment of any tax,
      penalty or interest chargeable or imposable under the Income-tax Act.
G     The punishment provided under sub-section (1) is for rigorous
      imprisonment for a term which shall not be less than three years but
      which may extend to ten years and with fine. In respect to any other
      person not covered by sub-section (1) of Section 51, the punishment
      provided is rigorous imprisonment for a term which shall not be less
      than three months but which may extend to three years and shall, in
H     the discretion of the court, also be liable to fine.
            UNION OF INDIA v. GAUTAM KHAITAN                                 731
                      [B. R. GAVAI, J.]

       19. It could therefore be seen, that the scheme of the Black          A
Money Act is to provide stringent measures for curbing the menace of
black money. Various offences have been defined and stringent
punishments have also been provided. However, the scheme of the
Black Money Act also provided one time opportunity to make a
declaration in respect of any undisclosed asset located outside India
                                                                             B
and acquired from income chargeable to tax under the Income-tax Act.
Section 59 of the Black Money Act provided that such a declaration
was to be made on or after the date of commencement of the Black
Money Act, but on or before a date notified by the Central Government
in the Official Gazette. The date so notified for making a declaration is
30.09.2015 whereas, the date for payment of tax and penalty was              C
notified to be 31.12.2015. As such, an anomalous situation was arising
if the date under sub-section (3) of Section 1 of the Black Money Act
was to be retained as 01.04.2016, then the period for making a
declaration would have been lapsed by 30.09.2015 and the date for
payment of tax and penalty would have also been lapsed by 31.12.2015.
                                                                             D
However, in view of the date originally prescribed by sub-section (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 sub-section (3) of Section 1 of the Black Money
Act, in place of 01.04.2016. This is done, so as to enable the assessee      E
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 sub-section (3) of      F
Section 1 of the Black Money Act, itself provides that save as otherwise
provided in this Act, it shall come into force on 1st 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     G
if there was no change of date in sub-section (3) of Section 1 of the
Black Money Act, the value of the asset was to be determined as per
its valuation in the previous year. The date has been changed only for
the purpose of enabling the assessee(s) to take benefit of Section 59
of the Black Money Act. The power has been exercised only in order           H
732            SUPREME COURT REPORTS                        [2019] 13 S.C.R.


A     to remove difficulties. The penal provisions under Sections 50 and 51
      of the Black Money Act would come into play only when an assessee
      has failed to take benefit of Section 59 and neither disclosed assets
      covered by the Black Money Act nor paid the tax and penalty thereon.
      As such, we find that the High Court was not right in holding that, by
      the notification/order impugned before it, the penal provisions were made
B
      retrospectively applicable.
            21. In any case, in the factual scenario of the present case, it
      would reveal, that the assessment year in consideration was 2019-2020
      and the previous year relevant to the assessment year was the year
      ending on 31.03.2019.
C
            22. In that view of the matter, we find that the interim order
      passed by the High Court is not sustainable in law, the same is quashed
      and set aside.
            23. The High Court is requested to decide the writ petition on
D     its own merits. However, we clarify that the observations made by us
      are only for the purposes of examining the correctness of the interim
      order passed by the High Court and the High Court would decide the
      writ petition uninfluenced by the same.
            24. The appeal stands allowed as indicated above.
E
      Divya Pandey                                               Appeal allowed.




F




G




H