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Recovering black money from Swiss banks was one of the most potent promises of the 2014 general election campaign. Narendra Modi pledged to bring back every rupee stashed abroad. Within a year, his government enacted the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The Supreme Court-appointed Special Investigation Team on black money began examining names.

SwissLeaks arrived in the same period. The 2015 international investigation, coordinated by the International Consortium of Investigative Journalists and published in India by The Indian Express, disclosed 1,195 Indian names connected to HSBC’s Swiss private bank. The list included prominent industrialists, diamond traders and politicians.

A decade later, one case from that list has reached the Supreme Court. The question before the court is whether the government completed its assessment on time.

The family and the account

The Indian Express listed Bhushan Lal Sawhney, Managing Director of Sawhney Tyres, and family as holding a combined $2.69 million in an HSBC Geneva account. The court record confirmed that the account stood in the names of B.L. Sawhney and his wife, Sneh Lata Sawhney.

Income Tax authorities had moved before SwissLeaks. On July 28, 2011, search operations were conducted at the premises of B.L. Sawhney and related persons under Section 132 of the Income Tax Act, 1961. A separate warrant was issued in the name of his son, Praveen Sawhney, whose statement during the search was later relied on by the Revenue as confirming the account. B.L. Sawhney denied maintaining any foreign account.

The assessment order in Praveen Sawhney’s case was passed on March 4, 2015, under Section 153A read with Section 143(3). It added income on account of the HSBC account balance and unexplained expenditure under Section 69C.

The treaty request and its failure

Before completing the assessment, the Revenue sought information from Switzerland. On June 11, 2013, India’s competent authority made a formal request to the Swiss tax authorities under the exchange-of-information clause (Article 26) of the India-Switzerland DTAA.

India and Switzerland had amended their treaty through a protocol signed on August 30, 2010, substituting a new Article 26 that allowed meaningful exchange of banking information for the first time. Before this amendment, the original 1995 treaty had contained a narrower exchange clause – Article 24. Switzerland had historically interpreted it........

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