Rationalisation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

The existing provisions of section 2 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the BM Act) provide inter alia that the “assessee” means a person who is resident in India within the meaning of section 6 of the Income-tax Act.

In order to clarify the legislative intent behind enacting the BM Act, which was to tax such foreign income and assets, which were not charged to tax under the Income-tax Act, it is proposed to amend the said section so as to provide that the “assessee” shall mean a person being a resident in India within the meaning of section 6 of the Income-tax Act, in the previous year, or a person being a non-resident or not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, in the previous year, who was resident in India either in the previous year to which the income referred to in section 4 relates, or in the previous year in which the undisclosed asset located outside India was acquired. It is also proposed to provide that the previous year of acquisition of the undisclosed asset located outside India shall be determined without giving effect to the provisions of section 72(c) of the BM Act.

Further, a clarificatory amendment is also proposed to be made to section 10 of the BM Act so as to include the expressions “re-assess” and “reassessment” in sub-section (3) and (4) of the said section.

These amendments will take effect retrospectively from 1st July, 2015.

[Clauses 195 & 196]

The existing provisions of the section 84 of the BM Act provide, inter alia, for application of certain provisions of the Income-tax Act to the BM Act with necessary modifications.

Considering the significance of cases assessed under the BM Act, it is proposed to amend the said section so as to provide that the provisions of section 144A of the Income-tax Act shall be applicable to the BM Act with necessary modifications.

[Clause 198]

Further, a clarificatory amendment is also proposed to be made in section 17 of the BM Act to clarify that the Commissioner (Appeals) may also vary the penalty order so as to enhance or reduce the penalty.

This amendment will take effect from 1st September, 2019.

[Clause 197]

Extract of Clause 195, 196, 198 & 197 of Finance Bill 2019

195. Amendment of section 2.

In the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereafter in this Part referred to as the principal Act), in section 2, for clause (2), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2015, namely:––

‘(2) “assessee” means a person,––

(a) being a resident in India within the meaning of section 6 of the Income-tax Act, 1961 in the previous year; or

(B) being a non-resident or not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act 1961 in the previous year, who was resident in India either in the previous year to which the income referred to in section 4 relates; or in the previous year in which the undisclosed asset located outside India was acquired:

Provided that the previous year, in case of acquisition of undisclosed asset outside India, shall 5 be determined without giving effect to the provisions of clause (c) of section 72;’.

196. Amendment of section 10.

In section 10 of the principal Act,––

(i) in sub-section (3), after the word “assess”, the words “or reassess” shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2015;

(ii) in sub-section (4), after the word “assessment”, the words “ or reassessment” shall be inserted 10 and shall be deemed to have been inserted with effect from the 1st day of July, 2015.

198. Amendment of section 84.

In the principal Act, in section 84, for the figures “138”, the figures and letter “138, 144A” shall 15 be substituted with effect from the 1st day of September, 2019.

197. Amendment of section 17.

In the principal Act, in section 17, in sub-section (1), in clause (b), for the words “such order”, the words “or vary such order either to enhance or reduce the penalty” shall be substituted with effect from the 1st day of September, 2019.

Note on Clause 195, 196, 198 & 197 of Finance Bill 2019

Clause 195 of the Bill seeks to amend section 2 of the said Act.

The existing provisions of clause (2) of section 2 of the said Act, inter alia, provides that the “assessee” means a person who is resident in India within the meaning of section 6 of the Income-tax Act.

It is proposed to amend the aforementioned clause so as to provide that the “assessee” shall mean a person being a resident in India within the meaning of section 6 of the Income-tax Act, in the previous year, or a person being a non-resident or not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, in the previous year, who was resident in India either in the previous year to which the income referred to in section 4 relates to or in the previous year in which the undisclosed asset located outside India is acquired.

It is further proposed to insert a proviso to provide that the previous year of acquisition of the asset shall be determined without giving effect to the provisions of clause (c) of section 72.

This amendment will take effect retrospectively from 1st July, 2015.

Clause 196 of the Bill seeks to amend section 10 of the said Act which, inter alia, provides for assessment or re-assessment under the said Act.

It is proposed to amend the provisions of sub-sections (3) and (4) of the said section so as to also include the terms “re-assess” and “reassessment” under the said sub-sections.

This amendment will take effect retrospectively from 1st July, 2015.

Clause 198 of the Bill seeks to amend section 84 of the said Act relating to application of provisions of Income-tax Act.

The said section provides for application of certain provisions of the Income-tax Act to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 with necessary modifications.

It is proposed to amend the said section so as to provide that the provisions of section 144A of the Income-tax Act shall also be applicable to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 with necessary modifications.

These amendment will take effect from 1st September, 2019.

Clause 197 of the Bill seeks to amend section 17 of the said Act relating to powers of Commissioner (Appeals).

The existing provisions of clause (b) of sub-section (1) of the said section provide that the Commissioner (Appeals) may confirm or cancel the penalty order.

It is proposed to amend the said clause to provide that the Commissioner (Appeals) may also vary the penalty order either to enhance or reduce the penalty.

This amendment will take effect from 1st September, 2019.

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