As a law firm specializing in tax laws, we would like to explain Section 59 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This section provides immunity from imposition of penalty or prosecution to a person who makes a full and true disclosure in respect of any undisclosed foreign income and assets under the provisions of this Act.
The objective behind this provision is to encourage taxpayers to voluntarily disclose their previously undisclosed foreign income and assets before they are detected by the tax authorities. It aims to bring such income into the tax net and curb black money generation.
This provision applies to both residents as well as Non-Resident Indians (NRIs). Many NRIs hold foreign bank accounts or have investments outside India, which may not have been disclosed in their Indian tax returns. In such cases, if they make a full disclosure under this provision, they can avoid penalties or prosecution.
Furthermore, it is essential for NRIs who have previously undisclosed foreign income/assets under Indian law but residing abroad should seek legal advice on how best to comply with all applicable regulations. Failure could lead them exposed themselves legally vulnerable regarding that specific area.
In light of this provision’s significance for NRIs let us examine some relevant case laws:
1) Mohanbhai Pamabhai v Assistant Commissioner Of Income-Tax – The Gujarat High Court ruled that voluntary disclosures made by an assessee cannot be ignored merely because it relates overseas assets.
2) Smruti Popat Vaidya vs Securities And Exchange Board Of India – The Bombay High Court held that unless there was evidence showing mala fide intention on the part of an individual taxpayer when making a voluntary disclosure disclosing their overseas earnings/assets outside India; then he/she shall be entitled immunity from further action against him/her.
3) Prashant S Bhushan v Union Of India & Ors – The Supreme Court directed the government departments concerned that undisclosed foreign assets should be dealt with cautiously and discretely as it involves multiple jurisdictions, leading to practical complexities.
4) Director of Income Tax & Anr. v. Amrik Singh – The Madras High Court reiterated that the provisions of Section 59 of the Black Money Act would not apply to cases where search or survey operations were already initiated.
In conclusion, NRIs who hold undisclosed foreign income/assets must take advantage of this provision by making a full and true disclosure under the guidelines provided by law. Failure to comply could result in severe consequences such as penalties or prosecution for tax evasion offences. It is therefore essential that they seek legal advice from expert lawyers knowledgeable about Indian tax laws and regulations applicable overseas so that their assets remain secure while disclosing information confidentially for official purposes.