Hind Sennoun v. Union of India

What happened

Hind Sennoun challenged an assessment order dated 31 March 2021 passed under section 10(4) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for assessment year 2018-19, treating her foreign assets as taxable. The Assessing Officer had issued the first notice under section 10 to her on 4 December 2018. It was found that she had acquired the assets before the commencement of the Act and had admittedly furnished no declaration in respect of them under the compliance window in section 59. She argued that the proceedings were for the wrong assessment year; the department supported the order and the Court had also been addressed on section 3 and its proviso.

Questions before the court

• For which assessment year can undeclared pre-Act foreign assets be assessed under the Black Money Act, given section 72(c)?

Why the court ruled this way

The Court held that section 72(c) creates a statutory deeming fiction, under which the acquisition of such an asset is deemed to have taken place in the year in which the notice under section 10 is issued, without further inquiry into the actual date of acquisition. By necessary implication the year in question is the previous year preceding the relevant assessment year, and the fiction is self-executing and conclusive and must be carried to its logical conclusion (paragraph 15). The scheme of the Act also defines the "previous year" and "assessment year" sequentially, with income earned or assets acquired in one year assessed in the next (paragraph 16). Because the first notice under section 10 was issued on 4 December 2018, the assets are deemed to have been acquired in the previous year 2018-19, corresponding to assessment year 2019-20, so the proceedings for assessment year 2018-19, corresponding to the previous year 2017-18, were ex facie illegal and without jurisdiction (paragraphs 22 and 20).

Controlling point

For pre-Act assets not declared under section 59, section 72(c) deems acquisition in the year of the first section 10 notice, so an assessment for any other year is without jurisdiction.

Order and next steps

The petition was allowed and the order of 31 March 2021 and all further proceedings pursuant to it were quashed. The Court did not decide the other contentions on section 3 and its proviso, which became unnecessary.

Practical implications

In a proceeding under the Black Money Act, the year of assessment for an undeclared pre-Act foreign asset depends on the date of the first notice under section 10, and an assessment for an earlier or later year can be challenged for want of jurisdiction. The date of that notice should be checked at the outset.

Limits of this ruling

• The ruling concerns assets acquired before the Act and not declared, and the Court expressly left the contentions on section 3 and its proviso undecided.