Rich Indians and large business families entangled in the stringent black money law are celebrating after the High Court ruled against its retrospective application.

For the first time, the court invoked Article 20 of the Constitution to nullify the retrospective use of the law, which was enacted in 2015 to target offshore bank accounts, properties, and companies of resident Indians.

Article 20 states 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 essence, one cannot be punished under a law that did not exist when the offence was committed. The Karnataka High Court quashed the criminal proceedings initiated by the income-tax department against individuals connected to overseas bank accounts and firms that were closed before the Black Money Act came into force. The court ruled that the prosecution against these petitioners did not meet constitutional standards under Article 20. This decision sets a precedent for numerous court cases, as many Indians had closed their bank accounts and companies before 2015 in anticipation of such a law.

However, under Section 72 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, overseas assets acquired years ago can also be scrutinised. The year the tax office receives the information is considered the year in which a foreign bank account was opened.

Referring to Section 72, Justice M. Nagaprasanna stated that it violates 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 fountainhead of all statutes including the special statute," the court ruled. (Source: ET)