High Court sets aside black money authority’s notice to Embassy Group chairman Jitendra Virwani

The High Court of Karnataka has quashed a show cause notice issued to Jitendra Virani to Jitendra Virwani, chairman of Embassy Group, under the provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. However, the court gave liberty to the authorities to issue fresh notice as per the law.
A Division Bench comprising Justice P.S. Dinesh Kumar and Justice M.G. Uma passed the order while allowing an appeal filed by Mr. Virwani. He had questioned a single judge’s order of dismissing his petition, in which he had questioned the legality of the notice issued to him on August 11, 2021, by the authority constituted under the BM Act.
“The two transactions examined by us clearly show that the Income Tax Department has sent information without proper verification and the authorities under the BM Act have acted mechanically and sent the notice without application of mind,” the Bench observed.
The I-T Department had initiated proceedings against him following the searches conducted in 2015. The I-T authorities had issued an assessment order under the I-T Act by treating the petitioner as a ‘beneficial owner’ of ‘Romulus Assets Ltd. (RAL), a foreign company.
However, the I-T Appellate Tribunal (ITAT) had on July 30 set aside the assessment order while holding that assessing officer had not discharged the burden cast on him to
prove that Mr. Virwani is the shareholder/beneficial owner of RAL, and had merely acted on a suspicion sans record on legal evidence to prove that he is the beneficial owner of RAL.
The Bench found that the I-T authorities had sent the information on Mr. Virwani’s foreign assets to the BM authorities only on August 6, 2021, which was after the ITAT found fault with the findings of the I-T Department.
When the ITAT had found fault with findings of the I-T authorities, it is trite that the same aspect cannot be reopened in a parallel proceeding, the Bench said, while pointing out that “the dates of action lead to an inference that I-Tax Department sent the information hurriedly, immediately after disposal of case the ITAT, and the authority under BM Act has also acted hurriedly.”