Legal Arguments for Relief Under the Black Money Act, 2015

By CA Surekha

Comprehensive Defense Framework – Constitutional, Procedural, Substantive, Statutory, Treaty & Scenario-Based Arguments with Law Language and Drafting Guidance

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“BMA”) is among India’s strictest fiscal statutes:

• 30% tax on undisclosed foreign income/assets

• Penalties up to 300%

• Prosecution for concealment

Despite this severity, courts have consistently checked Revenue overreach, demonstrating that the BMA is not impregnable. Relief is available through layered defenses, supported by constitutional safeguards, procedural rights, prior lawful compliance, inheritance protections, treaty provisions, and proper valuation.

This guide consolidates all available defenses, judicial precedents, statutory interpretation, and practitioner strategies into a single, ultimate reference for tax professionals.

Constitutional Defenses

(a) Article 20(1) – No Retrospective Criminal Liability

Law Language:

“Section 3(1) BMA applies to residents, and criminal liability arises only for nondisclosure of assets post-enactment. Applying BMA to assets acquired prior to 1 July 2015 violates Article 20(1), which prohibits retrospective penal consequences.”

Judicial Support:

• Dhanashree Pandit v. UOI, Karnataka HC, 2023

Draft Argument Example:

“The asset was acquired in 2014 while the assessee was a non-resident. Any attempt to prosecute under BMA is barred under Article 20(1), as confirmed in Dhanashree Pandit.”

(b) Article 20(2) – Protection Against Double Jeopardy

Law Language:

“Income/assets already taxed under the IT Act cannot be reassessed under BMA, as it constitutes double jeopardy contrary to Article 20(2) and Section 5(1)(ii) BMA.”

Judicial Support:

• All Cargo Global Logistics Ltd. v. DCIT (2012) 137 ITD 287 (Mum) (SB)

• Dayawanti v. CIT (2017) 390 ITR 496 (Del)

Draft Argument Example:

“The asset has already been assessed under Section 147/143. Any BMA reassessment would violate Article 20(2) and Section 5(1)(ii), as held in Dayawanti.”

(c) Article 14 – Arbitrary Discretion

Law Language:

“Discretionary powers under Section 43 BMA must be exercised judicially; mechanical imposition of penalties without considering bona fide disclosure violates Article 14.”

Draft Argument Example:

“The Revenue has imposed penalties ignoring prior disclosure and lawful foreign acquisition, rendering the action arbitrary and unconstitutional.”

Procedural Defenses

(a) Defective Notice – Section 10(1)

• Notice must specify asset, value, and proceedings.

• Case: Anandi Laijawala v. DCIT (ITAT Mumbai, 2021)

Draft Argument:

“The notice dated [X] lacks particulars of the alleged assets, rendering proceedings void ab initio under Section 10(1) and principles of natural justice.”

(b) Natural Justice Violations

“Denial of opportunity to respond, or failure to furnish evidence, vitiates the assessment.”

(c) Limitation & Laches

• Section 11 BMA prescribes timelines; undue delay can trigger statutory bar and doctrine of laches.

Substantive Defenses

(a) Disclosure in ITRs

• Assets disclosed in Schedule FA or other ITR fields cannot be treated as undisclosed.

• Law Language: Section 5(1)(ii) BMA excludes previously assessed income.

• Judicial Support: Prasad Nimmagadda v. UOI, Delhi HC, 2019; Leena Tiwari v. ACIT, ITAT Mumbai, 2022

Draft Argument:

“The asset is fully disclosed in ITR AY 2022-23. BMA liability cannot arise under Section 5(1)(ii) (Prasad Nimmagadda).”

(b) Already Assessed Under IT Act

• Law Language: Reassessment of already-assessed income violates Article 20(2).

• Judicial Support: Dayawanti v. CIT; Leena Tiwari v. ACIT

(c) Inherited Assets & Legal Heirs

• Penalties/prosecution are personal; heirs cannot be held liable.

• Law Language: Section 159 IT Act limits assessment to inherited estate; BMA penalties do not extend.

• Judicial Support: Amarchand N. Shroff v. CIT, 48 ITR 59 (SC); S. Srinivasan v. DCIT, ITAT Chennai, 2022; Shantilal C. Shah v. CIT, 144 ITR 57 (Bom)

Draft Argument:

“The assets were inherited posthumously. Any BMA penalties/prosecution against heirs violate Article 14 and established precedent.”

(d) Lawful Acquisition Abroad

• Section 3(1) BMA applies only to residents. Lawful foreign acquisition outside India is excluded.

• Judicial Support: Vikash Marda v. ACIT, ITAT Kolkata, 2021; Srinjoy Bose v. DCIT, ITAT Delhi, 2020; Azadi Bachao Andolan v. UOI, 263 ITR 706 (SC)

Draft Argument:

“The asset was acquired while a non-resident. Section 3(1) BMA does not apply, confirmed by Vikash Marda.”

Statutory Interpretation & Valuation

(a) Section 43 ‘May’ vs ‘Shall’

Revenue has discretion; must consider bona fide disclosure and lawful compliance.

(b) FMV under Rule 3

• Document cost, date, exchange rates, professional valuation.

• Case: Sanjay Shah v. DCIT, ITAT Mumbai, 2021

Administrative & Legislative Relief

CBDT Circular – 18 August 2025

• ₹20 lakh threshold for minor errors

• Prosecution/penalty linkage

• Draft Argument: Cite Circular to seek waiver in minor or inadvertent cases

Treaty-Based Defenses

(a) DTAA Supremacy

Income already taxed abroad cannot be taxed under BMA.

• Case: Vodafone International Holdings B.V. v. UOI, ITAT, 2017

(b) Fiscal Domicile & MAP

• Tie-breaker rules and mutual agreement procedure to mitigate double taxation

Scenario-Based Legal Drafting Matrix

Scenario	Law Language for Representation	Key Steps
NRI pre-return asset	“Section 3(1) BMA does not extend to lawful non-resident acquisitions”	Acquisition proof, bank statements, DTAA filing
Inherited asset	“Penalties under BMA are personal; heirs cannot be prosecuted”	Probate, inheritance certificate, estate inventory
Prior assessed assets	“Income assessed under IT Act is excluded under Section 5(1)(ii); double jeopardy barred by Article 20(2)”	Attach assessment orders, tax payment proofs
Minor technical omission	“CBDT Circular 18 Aug 2025 allows threshold relief; prosecution not triggered”	File representation citing Circular

Professional Drafting Guidance

1. Use statutory language when citing Sections 3, 5, 10, 43, 159, 11.

2. Cite constitutional provisions (Articles 14, 20) wherever overreach occurs.

3. Reference judicial precedents fully, with year, court, and page.

4. Integrate administrative reliefs (CBDT Circulars, instructions).

5. Document and attach evidence: ITRs, valuations, inheritance certificates, foreign tax returns.

6. Organize arguments in layers: constitutional → procedural → substantive → treaty → valuation → scenario.

Conclusion – Justice-Oriented Defense

• BMA, while strict, cannot override constitutional rights, statutory exclusions, prior assessments, lawful foreign acquisition, or inheritance protections.

• Layered, documented, timely defenses maximize relief:

  • Constitutional safeguards

  • Procedural compliance

  • Prior ITR disclosure & assessments

  • Lawful non-resident acquisitions

  • Heir protections

  • Treaty-based safeguards

  • Administrative relief

  • Accurate FMV & valuation documentation

This Ultimate Practitioner Guide provides the strongest legal basis for challenging arbitrary or mechanical BMA action, enabling professionals to draft justice-oriented, evidence-backed defenses that withstand scrutiny in ITAT, High Court, or Supreme Court proceedings.