Richie rich facing tax cases may be spared court visit

The richie rich, whose names pop up in Swiss bank accounts and tax haven outfits, are relieved to discover that they would not be huddled together with muggers, shoplifters and pickpockets in crowded magistrate courts once the tax office begins prosecution proceedings against them.

In one such case, the Calcutta High Court ruled about a fortnight ago that the personal appearance of a person hauled up by the Income Tax (I-T) department under the Black Money law will not be necessary.

The person in question, who along with her husband and mother-in-law, was found to be one of the directors of two companies in the British Virgin Islands (BVI), a Caribbean tax haven, will however have to give an undertaking that she will not leave the country without the prior permission of the trial court.


"This is a positive ruling. Under the applicable laws, magistrate courts have been granted discretion and in fit cases, they can dispense with personal appearance of the parties involved. The high court observed that this was a complaint based on documents and personal attendance could be dispensed with. This could also have a positive impact in several ongoing prosecution cases concerning TDS defaults under the Income Tax Act," said Ashish Mehta, partner at Khaitan & Co.

While the magistrate court is empowered to spare the accused personal attendance, such discretion was seldom exercised.

The ruling comes at a time when hundreds of wealthy individuals are inundated with I-T notices for offshore assets they never disclosed in the annual income tax returns. Most abhorred court appearances to escape media glare and out of embarrassment of being linked to crores of hidden money.

All cases under the Black Money (undisclosed Foreign Income & Assets) and Imposition of Tax (BMA) --- a law passed in 2015 to tax undisclosed foreign assets of residents --- typically begins with the I-T department receiving information from overseas authorities under the information sharing pacts with those jurisdictions or running into leaked data. If such assets have not been disclosed by an assessee, the tax office sends a notice under BMA. If the latter's response (to such a notice) is found unacceptable, the I-T department passes the assessment order.