Black money list: Assessment of names before March 2015 is impossible

By S Murlidharan The Attorney General, Mukul Rohatgi, while handing over the sealed covers detailing the foreign bank accounts of 627 persons, seems to have added that the last date of assessment in all these cases is 15 March 2015, since the bank details of the persons named relate to 2006. The limitation period of nine years perhaps stems from the chapter in the income tax law dealing with reassessment. Reassessment can be done only after serving a notice on the defaulter. After hearing the defaulter’s reply, reassessment proceedings would start, culminating in a demand notice. It’s already October, and the Special Investigation Team (SIT) has an unenviable task - just five months. And these five months are not fully available, given the fact that the Commissioner of Income-Tax would have to step in once the SIT submits its findings. This means even if the SIT swings into action and works overtime it would have to sift the grain from the chaff within two to three months,  an impossible task given  that it may have to make a couple of sporadic visits to Switzerland and other places. And the concerned commissioners would thereafter have to complete the reassessment proceedings. [caption id=“attachment_1775225” align=“alignleft” width=“380”]  Centre revealed three names in its black money list. AFP[/caption] There is no time limit for issuing notices for reassessment when the assessee has been remiss in not filing his return or has not cared to give honest and complete details or when his assets are abroad. Therefore, the law must be amended out of abundant caution that in cases of black money unearthed abroad by the SIT or any other government apparatus, the law of limitation would apply if at all only after the assessee has replied to the show cause notice. One wonders how the Attorney General figured that the assessments would have to be completed by 15 March 2015 when the process of reassessment has not even been kickstarted. Anyway, it would be perfectly in order for the government  to make a clarificatory amendment harking back to 1961 a la the Vodafone amendment. The retrospective Vodafone amendment was assailed by foreign investors and a large section of the Indian commentariat on the ground that in fiscal laws, where one’s tax fortunes are at stake, retrospective amendments are simply not on. This is a fair point, though there is an equally persuasive view that the Indian law was open-ended enough all through to catch income earned abroad when there was a connection between a transaction consummated abroad and underlying Indian assets. In the black money issue, on the other hand, there are a lot of extenuating reasons for the government making a retrospective amendment. First, the present government has taken over only a few months ago. Second, those who do illegal acts cannot take shelter behind laws meant for legal transactions. Thirdly, the Indian government got possession of the bank account details only in 2012 and, therefore, the law of limitation at worst should start from that date. It is significant to note that half of the 627 names disclosed are of Indians and the other half are NRIs. The needle of suspicion is obviously on the first half because the law does not allow an Indian resident to open foreign bank accounts. Assuming the SIT zeroes in on these 300-and-odd names, it would still be an impossible task to take the cases to their logical conclusion by 31 March 2015. Clearly, an ordinance making a retrospective amendment is in order. Otherwise, it would be a hasty job with attendant consequences—open to attack by the assessees on grounds of conjectures and slipshod work characterising the assessments. It is also curious that the Attorney General has had an income tax fixation. Illicit money stashed away abroad has ramifications transcending the income tax law. One wonders if there is a law of limitation to heckle the SIT in such cases.