Offences and prosecution – Black Money (Undisclosed Foreign Income and Assets) Act, 2015 on Non-disclosure of Foreign Investments in return
Sec 2, 50 & 55 of BMA, 2015 & 139 of ITA, 1961 : Offences and prosecution – Black Money (Undisclosed Foreign Income and Assets) Act, 2015 – Prosecution under the Act – Effect of Sections 50 & 55
– Non-disclosure of Foreign Investments in return – Return refers to the term as used in the Income Tax Act – Revised Return is valid – Foreign Investments disclosed in revised return – Assessments not completed – Foreign Assets acquired with amount disclosed in return and remitted through banking channels – Prosecution not valid.
Held : The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, was enacted to deal with the problem of Black Money, that is undisclosed foreign incomes assets. If an asset is purchased outside the country, from a source within the country which is disclosed, the Black Money Act is not attracted. An analysis of Sec 2(11) & (12) of the BMA would show that Sec 2(11) applies when an assessee has undisclosed foreign assets from a source of income within the country. On the other hand, to attract Sec 2(11) of the Act, an assessee must have undisclosed foreign incomes and assets. If the assessee, has not disclosed a foreign asset and has no sources of income outside the country, an offence under section 49 of BMA is attracted. If an assessee has both undisclosed foreign income and undisclosed foreign assets, the offence U/s 50 is attracted. A reading of Sec 50 indicates that the assessee can submit returns U/s 139(1) or (4) or (5) of ITA and in such return, the assessee should have willfully failed to furnish any information relating to any asset including financial interest in any entity. Sec 50 cannot be read dehors Sec 2(11) of BMA or Income Declaration Scheme, 2016, which permits submission of return U/s 139(5).
In Sec 50, the words, “or” and “such” are used. Having regard to statutory rights of an assessee to submit return U/s 139(5), the word, “or” in Sec 50 of BMA has to be read as distinctive only and the word “or” cannot be mean to read “and” and it would result in an absurd situation of taking into consideration three returns together, which is not the legislative intent. Thus, the word “or” has to be understood to mean only as, alternative. The word “such” indicates something just before being specified or spoken of, that is, proximately, and not previously. It particularises the immediately preceding antecedent and not everything that has gone before. The words starting from, “who has furnished the return of income for any previous year under sub-section (1) or sub-section (4) or (5) of Section 139 of ITA, followed by comma, and the word such return, can mean only one return. If such interpretation is not given, then the use of the words, “or” and “such return” in Sec 55 of the BMA would be redundant. If the word “or” is not given meaning as alternative or substitute i. e. disjunctive, there will be material alteration to Sec 55 of the BMA, 2015.
Unless there is any ambiguity it would not be open to the court to depart from the normal rule of construction which is that the intention of the Legislature should be primarily gathered from the words which are used. It is only when the words used are ambiguous that they would stand to be examined and construed in the light of surrounding circumstances and the Constitutional principle and practice.
It is trite law that a section which has penal consequences has to be read strictly and therefore the words, “or sub-section (4) or sub-section (5) of Section 139” have to be given some meaning and an offence U/s 50 of the BMA would be attracted only after the period to file revised return U/s 139(5) is over and if there is a wilful failure to furnish the information of a foreign asset or foreign interest in the return. The exception is cases where there is a complete fraud played by the assessee by filing a false return. Under the definition 2(11) of the BMA, (1) there should be an asset including financial interest in any entity, (2) it must be outside India, (3) the assessee must have no explanation to offer about the source of investment in such asset, or the explanation offered by the assessee, is in the opinion of the AO unsatisfactory. Sec 2(11) of the BMA contemplates exercise of power with duty. Power coupled with a duty to act, to promote the object of the Act, cannot be exercised arbitrarily.
Srinidhi Karti Chidambaram Vs PrCIT (Tamilnadu and Puducherry) and others [2019] 411 ITR 1(Mad).