Black Money Act | Section 72(c) Deeming Fiction: Assessment Year Flows from the Year of Section 10 Notice, Not Actual Acquisition — Karnataka High Court
Background and Context
The Karnataka High Court, in Hind Sennoun Vs Union of India (Writ Petition No. 16540 of 2021 (T-It)), delivered a significant ruling on 16/09/2026 concerning the interplay between the deeming fiction under Section 72(c) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the correct determination of the Assessment Year for foreign assets acquired before the Act came into force. The related Assessment Year under challenge was 2018-2019.
The ruling clarifies a nuanced but consequential question: when a foreign asset was acquired prior to the commencement of the Black Money Act, and no declaration was ever made by the assessee under Chapter VI of that Act, which Assessment Year governs the chargeability of such an asset? The Court's answer rests squarely on a purposive and textual reading of Section 72(c).
Facts of the Case
The petitioner, Hind Sennoun, is a Moroccan national and the spouse of one Mr. Mehmood Ayaz, who was residing in India at the relevant time. The petitioner purchased two immovable properties located in Morocco under registered sale deeds dated 26.08.2015 and 28.02.2016 for valuable consideration.
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (referred to hereafter as "the Act of 2015") was enacted by Act No. 22 of 2015 and came into force with effect from 01.04.2016. It is beyond dispute that both foreign assets were acquired well before the Act's commencement date.
On 25.01.2017, the Revenue authorities conducted a search and seizure operation under Section 132 of the Income Tax Act, 1961 against the petitioner's husband, which also covered their matrimonial residence in Bengaluru. Following this, a notice dated 28.04.2017 under Section 8 of the Act of 2015 was served on the petitioner. In compliance, she filed income tax returns on 07.06.2017 for Assessment Year 2017-18 (pertaining to Financial Year/Previous Year 2016-17).
Thereafter, between 04.12.2018 and 25.03.2021, the Revenue issued seven notices to the petitioner under Section 10 of the Act of 2015, all in relation to AY 2018-19 (corresponding to FY/PY 2017-18), requiring her to furnish particulars and explanations regarding the foreign assets. The petitioner responded to each notice. Ultimately, the Revenue passed the impugned assessment order dated 31.03.2021 under Section 10(4) of the Act of 2015, initiating penalty proceedings under Section 45. A Show Cause Notice dated 05.05.2021 followed under Section 46 read with Section 41 of the Act.
Aggrieved, the petitioner approached the Karnataka High Court by way of the present writ petition.
Reliefs Sought by the Petitioner
The petitioner sought the following reliefs before the Court: