These sources added that the probe initiated in 2019 under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax or BM (UFI&A) & IT Act was closed with the probe officer concluding “…an internal noting of a bank official is not sufficient proof to indict an assessee as the owner of a foreign asset under the said Act”, an official told ET quoting the findings. These sources added the department also found that since the same foreign assets were under investigation in the Swiss bank leaks (HSBC list) linked to a company, Motech Software Pvt Ltd , the probe on the four assessees will amount to be a case of double jeopardy under the law. Motech Software is being probed by IT under the Swiss bank cases.
“Based on the observation that internal notings of a bank official is not sufficient enough and that the action under IT Act on the same foreign asset has already been taken in the case of Motech Software by the department, the case was deemed fit to be closed,” explained another official. “Also communiques sent to different countries either remained unanswered or were replied partially, which didn’t help the IT’s case,” said one of the persons quoted above.
The decision by the IT department to end the probe was first reported by Business Standard in its April 1 edition.
Sources said that orders with regard to the four family members were passed under section 10 (3) of the new black money law. The probe initiated in 2019 became time barred on March 31 as per the provisions of the Act.
Email sent to both RIL and income tax department remained unanswered until press time.
In March, 2019 , the tax department had issued notices under the provisions of the BM (UFI&A) & IT Act. The notice said the assessees “… failed to disclose details of the trust Capital Investment Trust, whose underlying company is Infrastructure Company Ltd (ICL) based at Cayman Island,” the IT department said in its March 28 notice. “That you being an ultimate beneficiary of the Capital Investment Trust, through various foreign and domestic entities, are liable to tax/disclose in respect of your undisclosed foreign income and assets or any other sum of money” under the BM (UFI&A) & IT Act.
The notice said the assessees had failed to disclose details of ICL and its assets, of which they were the ultimate beneficiaries, through various foreign and domestic entities.
“As per Section 3 of the BM(UFI&A)& IT Act, any undisclosed assets located outside India shall be charged of tax on its value in the previous year in which such asset comes to the notice of assessing officer,” according to the notice.
In December of that year, the department under the Foreign Tax and Tax Research (FTTR) unit wrote to the US, the UK, Belgium, Switzerland, Mauritius, Armenia and Luxembourg. It had also written to St Lucia seeking information under the mutual legal assistance treaty, people in the know said.
Ambani Response
The Ambanis had contested the status of HSBC internal note, saying that it’s not a “legal document,” said one of the persons with knowledge of the matter. “They have argued that the internal noting which IT has relied upon doesn’t have sanctity under the law.” Sources added that the Ambanis had also argued that the law cannot be applied retrospectively.
“Their contention is that the information on which IT is acting upon was before the Act came into effect and therefore the department cannot act retrospectively,” said one of them.
Replying to an ET query at an earlier occasion, a RIL spokesperson had said, “We once again strongly deny any suggestion that any member of Mukesh Ambani family had or has any undisclosed foreign income or asset and that they failed to disclose the same”, the email reply read.
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