MUMBAI: Many wealthy Indians and members of large business families caught in the web of the harsh black money law are popping the champagne.

For the first time, the court has invoked Article 20 of the Constitution to squash law’s retrospective use which was enacted in 2015 to allow the taxman to go after offshore bank accounts, properties and companies of resident Indians.

Article 20 lays down that “no person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence”. In other words, one cannot be punished under a law which did not exist when the offence was committed. The Karnataka High Court has quashed the criminal proceedings initiated by the income-tax department against persons connected to overseas bank accounts and firms which were closed well before the Black Money Act came into force.

Legal Implications


The court has ruled that the prosecution initiated against these petitioners did not and cannot pass constitutional muster under Article 20 of the Constitution of India.

The ruling would set a precedent for several court cases as many Indians, sensing the advent of such a law, had either shut their bank accounts and companies before 2015.

However, under Section 72 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act – commonly known as the black money law – overseas assets acquired years ago can also come under scrutiny. The year the tax office gets hold of the information is taken as the year in which a foreign bank account was opened.

Referring to Section 72, Justice M Nagaprasanna, in his ruling said that it falls foul of Article 20 of the Constitution. “The Special enactment is a statute. Article 20 comes under Chapter III of the Constitution of India, a fundamental right. The Constitution of India is not a statute. It is the fountain head of all statutes including the special statute,” said the court ruling.

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