BLACK MONEY ACT

This act is applicable to whole India. This act only deals with the black money generated or
kept outside India, for the black money generated or kept in India will be dealt under IT Act.
The Black Money Act would be applicable from 1st July, 2015 onwards. The provisions of
this act do not apply to Indian sourced income.

KEY FEATURES OF THE BLACK MONEY ACT

 To provide for the stringent tax on undisclosed income associated with foreign
sources and assets.
 To keep a check and curb the menace of black money kept outside the country by
Indians.

APPLICATION OF THE ACT

 May be applicable on individuals who are resident/HUF and ordinarily resident in

India.
 May be applicable on firm and AOP resident in India. They are said to be Indian
residents if their control and management is wholly or partially situated in India.
 Foreign company whose POEM is in India. May also be covered under the definition
of assessee.

If a person was non resident at the time when he acquired the foreign asset out of income not
chargeable to tax in India shall not be considered as undisclosed asset located outside India
under the act. The income included in the total undisclosed foreign income and asset under
the Black Money Act shall not be a part of total income under IT Act.

RELEVANT AND KEY SECTIONS

Section 2 deals with various definitions for example assessee, undisclosed asset outside India
and undisclosed foreign income. Every person who is deemed to be an assessee in default
under the act is also included in the definition of assessee.
Section 3 of the act is the charging section. Undisclosed income if found will be taxed at
30%. In case of assets, they shall be charged to tax on its value in the previous year of being
founded.

Section 5 of the act says that in computing the total undisclosed foreign income and asset
there shall not be allowed any deduction of expenditure or allowance or any set off of any
losses to the assessee even if such deduction or set off is allowable as per the provisions of
the IT Act.

Section 6 deals with tax authorities given under the act. It also talks about the jurisdictions of
the authorities and powers as to how to move ahead with the procedure. Whereas, Section 7
deals with change in tax authorities/change in jurisdiction due to any reason.

Section 8 talks about powers of authorities.

POWERS OF TAX AUTHORITIES

Powers of Civil Court

 Discovery and inspection

 Enforcing attendance of any person
 Compelling production of books and documents
 Issuing commission

Powers to impound books

 Impound books and other documents

Prescribed tax authorities (assessing officer, joint commissioner, commissioner,

commissioner of principal commissioner and chief commissioner and principal chief
commissioner) have the same powers as those of the court under Code of Civil Procedure,
1908 while trying a suit in the same matters mentioned above under the powers of civil court.

Section 9(1) says that any proceeding under the Black Money Act before a tax authority shall
be deemed to be a judicial proceeding within the meaning of- Section 193, 228 and 196 of the
IPC.

Section 10 talks about assessment of the foreign income and assets. The procedure may
include-
 I. Notice to produce documents
II. Inquiry
III. Assessment
IV. Best judgment assessment

The time limit for passing an order of assessment or reassessment u/s 10 of the act is 2 years
from the end of the financial year in which the notice u/s 10(1) was issues by the AO. This is
given under section 11(1) of the act.

Section 19 deals with the appeal to high court. An appeal can be filed against every order
passed by tribunal only if the High Court is satisfied that there is a substantial question of law
involved. Time appeal shall be filed within 120 days of the issuance of order, though there is
a clause which allows to file even after these 120 days. Similarly, Section 21 deals with
appeal to Supreme Court if the High Court certifies to be a fit case for the appeal to SC.

Section 43 gives provisions for penalty for failure to furnish information of foreign asset or
foreign income in return of income. Any person being a resident in India would be liable to a
penalty of Rs 10 Lakhs if such person fails to furnish any information or furnishes inaccurate
particulars in return of income relating to- any asset located outside India or Any income
source located outside India.

Procedure for imposing penalty is given under section 46 of the act. Procedure for the
imposition would be as follows-

i. Show cause notice

ii. Time limit for issuing show cause notice
iii. Opportunity of being heard
iv. Prior approval

Section 47 gives the bar of limitation for imposing penalty. Chapter V deals with offences
and prosecution.

Section 49 gives the punishment for failure to furnish return in respect of foreign income and
asset. Any person being a resident in India would be punishable with rigorous imprisonment
of 6 months to 7 years with fine if there is any wilful failure to furnish return u/s 139 (1) of
the IT act in due time.
Section 50 deals with punishment for failure to furnish information of foreign asset or foreign
income in return of income.

Section 51 gives the provisions for punishment for wilful attempt to evade tax. Where any
person being a resident in India u/s 6(6) wilfully attempts to evade any tax, penalty or interest
under the Black Money Act, he shall be punishable with rigorous imprisonment of 3 years to
10 years with fine.

Section 54 says that in any prosecution for any offence under the Black Money Act which
requires a culpable mental state on the part of the accused, the court shall presume the
existence of such mental state but it shall be a defence for the accused to prove otherwise.

MY UNDERSTANDING OF THE ACT IN RELATION TO THE GIVEN CASE

In my opinion Mr Ratul Puri should be prosecuted under the Black Money Act because of the
various provisions of the act applicable to the present case.

As per Section 139(1) of the Income Tax Act, it is mandatory for a resident person to file an
income tax return if he’s the owner of any undisclosed foreign asset or foreign source of
income. In para 3.10 of the counter by the state, it is clearly mentioned that when Mr. Puri
was asked about Pristine River Investments, he explicitly denied of even hearing the name of
the firm in the past but on the contrary when the KYC documents of the beneficiaries of the
firm were looked into, it came out that Mr. Ratul Puri was the sole beneficial owner of
Pristine River Investments.

Section 50 and 51 of the Black Money Act that deal with punishment for failure to furnish
information of foreign asset or income source and punishment for wilful attempt to evade tax
respectively would be appropriate sections here as Mr. Puri knowingly and wilfully hid the
foreign asset and income source from the government.

Also, Section 49 which deals with punishment for failure to furnish return in respect to the
foreign income or asset can be looked into.

The same act of his can be penalized under Section 43 of the Black Money Act as per proper
procedure of imposing penalty given under Section 46 of the act.