The Bombay High Court (HC) on Monday, while giving relief to Reliance Anil Dhirubhai Ambani (R-ADA) group chairman Anil Ambani in an alleged Rs420 crore tax evasion matter, asked the income-tax (I-T) department not to take any coercive action against him up to 17 November 2022.
Earlier this month, the I-T department issued a notice to Mr Ambani for allegedly evading Rs420 crore in taxes on undisclosed funds worth more than Rs814 crore held in two Swiss bank accounts.
According to the notice, Mr Ambani was an "economic contributor as well as beneficial owner" of a Bahamas-based entity called 'Diamond Trust' and another company called Northern Atlantic Trading Unlimited (NATU) which was incorporated in the British Virgin Islands (BVI)."
"Mr Ambani 'failed to disclose' these foreign assets in his income tax return (ITR) filings and hence contravened the provisions of the Black Money (undisclosed foreign income and assets) Imposition of Tax Act of 2015 (black money act)," the notice says.
As per the notice, Mr Ambani was liable to be prosecuted under Sections 50 and 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act—which stipulates a maximum punishment of 10 years imprisonment with a fine.
The R-ADA group chief, however, contended that the Act was enacted in 2015, and the alleged transactions took place between FY06-07 and FY10-11. The provisions of the Act cannot have a retrospective effect, he told the Court.
The I-T department requested time to reply to Mr Ambani's contention. In an order, the bench of justice SV Gangapurwala and justice RN Laddha says, "The income tax department shall till the next date not take any coercive action against the petitioner (Mr Ambani) in pursuance to the show cause notice."
The HC also asked the I-T department to respond to the R-ADA group chairman's contention.
An order passed by the Mumbai unit of the I-T investigation wing in March 2022 lists offshore entities and details of transactions in linked bank accounts adding up to over Rs800 crore of Anil Ambani, says a newspaper report in June.
In the report, Indian Express says
, "In the Bahamas, he set up the Diamond Trust in 2006 with an 'underlying' offshore company, Dreamwork Holdings Inc. Following requests sent by the Central Board of Direct Taxes (CBDT) to the Bahamas, through the foreign tax and tax research (FTTR) division, the existence of a linked Swiss bank account—in the Zurich branch of UBS Bank—came to light."
"Another undeclared offshore company, incorporated by Anil Ambani in 2010 in the BVI, is North Atlantic Trading Unlimited. This company was found to have a linked bank account with the Bank of Cyprus," the report says.
According to the newspaper, this entity was among 18 entities linked to Anil Ambani in the recently published Pandora Papers investigation listed by the Indian Express but, evidently, was already on the radar of the I-T authorities.