Bombay HC Grants Interim Relief to Anil Ambani in Black Money Case; Halts Coercive Action

Kaustav Chowdhury
Jun 15
3 min read

The Bombay High Court has granted interim relief to industrialist Anil Ambani in a case involving alleged undisclosed foreign assets worth over Rs 814 crore and a tax liability exceeding Rs 420 crore under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The court has halted all coercive action, including prosecution and penalties, while admitting Ambani's writ petition challenging the constitutional validity of certain provisions of the Act. For background on how SEBI has approached enforcement in Ambani-linked matters, see Supreme Court Sets Aside Rs 447 Crore SEBI Disgorgement Order Against Reliance Industries.

Background of the Case

The Income Tax Department issued a notice to Ambani on 8 August 2022, alleging that he evaded Rs 420 crore in taxes on undisclosed funds of more than Rs 814 crore held in two Swiss bank accounts. The assessment was made under the Black Money Act, 2015, which imposes a flat 30 per cent tax rate on unreported foreign assets or income, with additional penalties of up to 90 per cent of the tax payable and a maximum imprisonment term of 10 years for wilful evasion.

Ambani's Constitutional Challenge

Ambani's writ petition contends that certain provisions of the Black Money Act are ultra vires (beyond the powers of) the Constitution of India. The Act reverses the traditional burden of proof: unlike the Income Tax Act, the taxpayer must prove the legitimacy of foreign assets. Ambani argues that this reversal, combined with the severity of penalties, violates fundamental rights. The case follows a separate proceeding where the NCLT admitted SBI's personal insolvency plea against Anil Ambani under the IBC.

The Interim Order

A division bench of Justices B.P. Colabawalla and Firdosh Pooniwalla admitted the petition and directed that no coercive action, including prosecution and penalty proceedings, shall be taken against Ambani until the hearing and final disposal of the writ petition. The court noted that other petitions challenging the constitutionality of the same Act are also pending before the High Court. Since the assessment order has already been passed, Ambani's appeal before the Commissioner of Income Tax (Appeals) is permitted to continue.

Key Provisions of the Black Money Act, 2015

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was enacted to address the problem of black money held abroad. Section 3 establishes the basis of charge, while Section 5 prescribes how undisclosed foreign income and assets are calculated. The Act imposes a flat 30 per cent tax on unreported foreign assets, with additional penalties that can reach 90 per cent of the tax payable. Section 50 provides for prosecution, with imprisonment of up to 10 years for wilful attempts to evade tax. The Act also enables international cooperation and information exchange with foreign tax authorities.

Significance for Tax Law

This ruling is significant because it is among the first instances where a High Court has admitted a constitutional challenge to the Black Money Act and simultaneously stayed coercive proceedings. The decision does not mean the Act is unconstitutional; it only means the court considers the challenge arguable enough to warrant full hearing. The case will be closely watched by taxpayers with foreign assets and by the tax department alike. For the latest on income tax developments, see Income Tax Rules 2026: New Framework Replacing the 1962 Rules from April 2026.

Key Takeaways

First, the Bombay High Court has stayed all coercive action against Anil Ambani under the Black Money Act, 2015 while his constitutional challenge is heard. Second, the Black Money Act imposes a flat 30 per cent tax on unreported foreign assets, with penalties up to 90 per cent and imprisonment up to 10 years. Third, the Act reverses the burden of proof, requiring the taxpayer to prove legitimacy of foreign assets, which is the core of Ambani's constitutional objection. Fourth, the assessment order stands and the appeal before CIT(A) continues. Fifth, the case is among the first constitutional challenges to the Black Money Act to be admitted by a High Court, setting a significant precedent for future cases.