NS tax collector You can use black money According to a decision of the tax tribunal last week, to also act on secret foreign bank accounts that were closed long before the new law came into force. Under Black Money (Unknown) foreign income and the Assets) and Imposition of Tax Act, which came into force on 1st July, 2015, the year in which the tax department receives any information, is the year for which the income is deemed to have been earned by the person concerned.

The holder of an old, undeclared offshore bank account that has been in existence after 2015 understandably finds himself on the wrong side of the law because he failed to report it and got cleared by paying tax Is. But what about accounts that were closed and closed before 2015? Can the money lying in such account be brought under the tax net?

The issue was raised by senior advocate Percy J Pardiwala, representing Rashesh Manhar Bhansali, as per the intelligence inputs received. IT departmenthad operated two undisclosed bank accounts, which were closed in October 2008 and May 2011. Bhansali appealed against it. Income tax The Appellate Tribunal challenged the order of the IT Commissioner (Appeals). When asked whether he or his family members had any foreign company or bank account, Bhansali denied.

However, as per ITAT, the relevant date under the Black Money Act is the date on which the Assessing Officer notices the acquisition by an assessee of undisclosed assets located outside India. Thus, “it is immaterial whether it was in existence at the time of taxation, or for that purpose, even at the time when the provisions of BMA came into existence,” the ITAT Mumbai bench comprising Pramod Kumar (Vice-Chairman) and Raveesh Sood (Judicial Member), in his judgment dated November 2, 2021. ITAT upheld the stand of the tax department.

As per the sections of the legal framework, this provision of law may again come under legal scrutiny in future as Article 20 of the Constitution states that one cannot be punished under a law which did not exist at that time. when the crime was committed. The black money law was passed to remove the limitations of existing laws through the Income Tax Act, and tax undeclared money held in foreign bank accounts and often discretionary trusts.

Significantly, the summons issued by the investigation wing of the IT department has asked people named in the Pandora papers to share details of bank accounts that no longer exist and firms that have been dissolved. According to tax practitioners, in talks with various tax haven jurisdictions for the passage of the Black Money Act and entering into information-sharing agreements, many had closed their foreign bank accounts.