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Anil Ambani Receives Short-term Respite In Swiss Bank Funds Tax Evasion Case

Ambani received a warning from the I-T department on 8 August, 2022, for allegedly avoiding taxes on undeclared funds totaling more than Rs 814 crore

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The Bombay High Court rejected the Income Tax department's attempt to file charges under the Black Money Act against Reliance Anil Dhirubhai Ambani Group (ADAG) Chairman Anil Ambani on Monday due to alleged tax fraud and raised the issue of whether actions that make certain actions unlawful may have a retroactive effect.

According to a notice from the department, Ambani was subject to prosecution under Sections 50 and 51 of the Black Money (undisclosed foreign income and assets) Imposition of Tax Act of 2015, which carries a maximum penalty of 10 years in prison plus a fine.

Ambani received a warning from the I-T department on 8 August, 2022, for allegedly avoiding taxes on undeclared funds totaling more than Rs 814 crore stored in two Swiss bank accounts by Rs 420 crore.

When hearing Ambani's plea to overturn a show-cause notice the I-T department had given to him, Justices Gautam Patel and S. G. Dige formed a division bench. When someone is questioned about why they behave in a specific way, the government's future intentions become clear.

The case was scheduled for hearing on 20 February. The high court has already prolonged the order prohibiting the I-T department from employing coercion against Ambani until its expiration in September 2022.

 The government has accused Ambani (63), of "wilful" tax evasion, claiming that he "deliberately" withheld information about his financial interests and overseas bank account information from Indian tax officials.

According to Ambani's lawsuit, which claims that the Black Money Act was passed in 2015, the alleged transactions are from the assessment years 2006–2007 and 2010–2011.

The judges questioned how the government can construct acts that criminalise specific activities with a retroactive effect during the brief hearing on Monday.

When a person acts in a certain way, you (the government) criminalise it with backwards consequence. Then, how does one conduct oneself or herself? said Justice Patel.

You may declare that a person will no longer be able to do this, and that's OK, but how can it have a retroactive effect? You can specify a time frame from which a specific activity is unlawful, he said.

The court cited an instance where someone had been buying books and claiming deductions for them when all of a sudden the government declared that doing so was against the law. How can you say that just because someone claimed (deductions) in the past, it is now unlawful?

 How is it possible to predict your government's actions for the next ten years? This is the simplest and most ridiculous example he can provide, remarked Justice Patel.

The suit filed by Ambani questioned the constitutional legitimacy of the Black Money Act, therefore the bench adjourned the case and served notice to the Attorney General of India.

The court also gave Ambani permission to respond to the income tax division's affidavit that was submitted on Monday.

The I-T notification stated that Ambani was a "economic contributor as well as beneficial owner" of Northern Atlantic Trading Unlimited (NATU), a business formed in the British Virgin Islands, and Diamond Trust, a firm with its headquarters in the Bahamas (BVI).

The department claimed that Ambani "failed to disclose" these foreign assets in his income tax return (ITR) filings and as a result violated the terms of the Black Money Act, which was introduced by the Narendra Modi administration shortly after it took office in 2014.

Tax authorities have determined that the combined worth of the unreported funds in the two accounts is Rs 814 crore, with Rs 420 crore in taxes due.

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