The intention of the legislature is pretty clear from recent development in the field of law dealing with white-collar crimes. The legislature focuses on setting out legal provisions which will help the government in curbing out the issue of Black Money. One of the major developments in this aspect is the enactment of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This Act was enacted specifically to deal with the problem of Undisclosed Foreign Assets held outside India by Indian residents. The Income Tax Act, 1961 makes it mandatory for an ordinary resident1 to declare all of his/her foreign assets and income. When a person being a resident does not disclose a foreign asset, such person is considered to be evading tax and can be penalized under The (Indian) Income Tax Act,1961 and other relevant legislation dealing with the offences pertaining to evasion of tax.
A bare reading of all these Acts and various International Treaties such as Double Taxation Avoidance Agreements (DTAA) indicates that prosecution for evading tax liabilities about undisclosed foreign income has become inevitable. However, the ground reality regarding admissibility and evidentiary value of the evidence procured from foreign countries and foreign banks falls in a no man’s land from the perspective of the prosecuting Authorities.
This is a well-established principle of law that for establishing the guilt of a person, mere accusations and arguments are not enough. One has to produce cogent proof and evidence to substantiate its accusations which could be “considered by the courts” while they are deciding the matter and after being satisfied, the courts can rely on the same to establish the culpability of the accused.
The phrase “considered by the courts” mentioned above is of a great significance when one is dealing with evidentiary value and admissibility of evidence submitted in a court of law. When Income Tax Authorities prepare a case against a tax-evading resident (being an ordinary resident under section 6 of Income Tax Act 1961), having Undisclosed Foreign Assets held outside India, they try to gather all the information and proof regarding such undisclosed foreign assets.