Retrospective Application of Section 50 of the Black Money Act Unconstitutional: Karnataka High Court
The Karnataka High Court has ruled that the retrospective application of Section 50 of the Black Money (Undisclosed Foreign Income and Assets) Imposition of Tax Act, 2015, is unconstitutional. This landmark decision quashes criminal prosecutions against several businessmen accused of failing to disclose foreign assets before the Act came into force.
Background of the Case
Justice M. Nagaprasanna presided over the case involving petitions filed by Dhanashree Ravindra Pandit and others, who challenged the criminal proceedings initiated against them. The petitioners were charged under Section 50 of the Black Money Act, which penalizes the failure to disclose assets located outside India, including financial interests. The Union Government had enacted the Act on April 1, 2016, and in June 2018, assessment proceedings under the Act commenced, leading to the sanction for prosecution.
The petitioners argued that they were merely directors of companies that had been closed in 2010, long before the Act was enforced. They contended that, according to Article 20 of the Constitution of India, individuals can only be prosecuted for violations of the law as it existed at the time the alleged offense was committed, not under laws enacted subsequently.
Court’s Observations
The respondents countered by citing Section 72 of the Act, which they claimed had retrospective effect, allowing for the initiation of proceedings even if the offenses occurred before the Act’s enforcement.
Upon reviewing the arguments, the High Court determined that the petitioners had neither financial interests nor foreign assets on the date the Act came into force, as everything had been closed by 2010. Justice Nagaprasanna noted that at the time of the alleged offenses, the law requiring disclosure of such assets did not exist. Therefore, initiating criminal proceedings under the Black Money Act against the petitioners did not meet the constitutional standards set by Article 20 of the Constitution of India.
Key Legal Points
The court emphasized that Article 20(1) of the Constitution safeguards individuals from being prosecuted for acts that were not offenses under the law at the time they were committed. This fundamental right ensures that no ex post facto law can be applied to prosecute individuals.
Justice Nagaprasanna cited the Supreme Court judgment in Kumaran v. State of Kerala (2017), which clarified that legal fictions or deeming provisions should not be extended beyond their intended purpose. He observed that Section 72(c) of the Black Money Act creates a legal fiction by deeming assets acquired before the Act’s commencement to be acquired in the year the notice is issued by the Assessing Officer, thereby imposing criminal liability. However, this retrospective application violates Article 20 and cannot be upheld.
Conclusion
The Karnataka High Court’s decision to quash the criminal prosecutions under Section 50 of the Black Money Act is a significant affirmation of constitutional protections against retrospective laws. The court’s ruling underscores the importance of adhering to constitutional mandates and ensuring that legislative enactments do not infringe upon fundamental rights.
Case Details
- Case Title: Dhanashree Ravindra Pandit AND The Income Tax Department
- Case Nos: CRIMINAL PETITION No.101368 OF 2019 C/W CRIMINAL PETITION No.101369 OF 2019 CRIMINAL PETITION No.101370 OF 2019 CRIMINAL PETITION No.101371 OF 2019 CRIMINAL PETITION No.101372 OF 2019 CRIMINAL PETITION No.101373 OF 2019 CRIMINAL PETITION No.101374 OF 2019 CRIMINAL PETITION No.101375 OF 2019
- Advocates for Petitioners: Sangram S. Kulkarni
- Advocates for Respondents: Y.V. Raviraj
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