TaxTMI 
TaxTMI 
2024 (11) TMI 649
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....hi, has filed the complaint under Section 51 (1) of the Black Money (Undisclosed Foreign Income and Assets and Imposition of Tax) Act, 2015 (hereinafter referred to as the "Black Money Act"). The complaint alleges that a search and seizure operation was conducted on the assessee's premises at B-217, Greater Kailash-I, New Delhi, on 27.04.2016. 2. During the search and seizure operation, incriminating documentary evidence and information were discovered, establishing that the accused (Sanjay Bhandari) held the following undisclosed bank accounts and properties, tabulated as under; S.No. Foreign Bank Accounts SI.No. Foreign Properties including interests in foreign companies. 1. Offset India Solutions FZC 1. Property No. C-303, Maurya Grandeur, Palm Jumeirah, Dubai (in Sanjay Bhandari name) 2. Santech International FZC 2. Flat No. 6, Grosvenor Hill Court, Bourdon Street, London. (In the name of Shamian Gros whose beneficial owner was Sanjay Bhandari) 3. Serra Dues Technologies Ltd. 3. Property no. 12, Ellerton House, Bryanston Square, London, (Held by Vertex Management Holdings Lt. whose shares were purchased by Sanjay Bhandari) ....
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.... against Sh. Anirudh Wadhwa and Sh. Abhinandan Banerjee, advocates allegedly involved in similar activities under Section 132 of the IT Act, 1961. 6. The complainant alleged that incriminating evidence and documents were unearthed during these searches. Statements recorded under oath established that the accused, Sanjay Bhandari, was preparing to alienate his foreign assets and offshore entities by backdating documents to evade taxes under the Black Money Act, 2015. The investigation revealed that the accused held foreign assets in the form of foreign bank accounts, immovable properties, and interests in foreign entities. He had incorporated entities in Dubai as a director and/or beneficial shareholder, and further inquiries indicated he had financial interests in an entity incorporated in Panama. Notices under Section 10 (1) of the Black Money Act, 2015, were issued to the accused on 22.09.2016 and 10.10.2016, which he responded to on 03.11.2016. 7. The complainant alleged that evidence, including the admission of Sh. Sanjeev Kapoor, the accused's Chartered Accountant, revealed a scheme to appoint the accused as the sole trustee of the Alrahma Trust (based in the UAE) effect....
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....on was initiated without completing the assessment proceedings, and there is no finding by the complainant's department that the petitioner evaded any tax. Furthermore, the petitioner submitted that there is no evidence showing that the alleged foreign assets belonged to him. The summons issued to the petitioner remained unserved, as he does not reside at the address given in the complaint and has been abroad for over three years. It was argued that the learned Magistrate illegally issued non-bailable warrants, against which Criminal Revision Petition No. 444/2019 was filed but subsequently dismissed. 11. The petitioner has predominantly sought the quashing of the criminal complaints on the following grounds; A. The impugned criminal complaint fails to disclose any evidence linking the alleged foreign assets to the petitioner. The Income Tax Department, has not produced any evidence in the complaint to connect the petitioner with the alleged assets. In the absence of such evidence, no case is made out against the petitioner as the essential elements of the offense are not established. B. The complaint in paragraph 3 states that "information was received thr....
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.... petitioner does not own any of the alleged foreign assets, making the complaint unfounded and potentially an act of harassment and misuse. F. Further, criminal prosecution should not commence without first completing the petitioner's assessment proceedings to determine any tax evasion. The legislative intent is clear from a reading of Sections 2, 10, 13, and 30 of the Black Money Act, 2015. It is settled proposition that if criminal prosecution is contingent on the determination of tax evasion, it cannot be initiated before completing assessment proceedings. G. The Income Tax Department cannot proceed with a case under Section 51 of the Black Money Act unless the petitioner is first assessed to tax under Section 10, is issued a demand under Section 13, and declared to be in default under Section 30 (4). Section 30 (4) of the Black Money Act states that an assessee will be considered in default if tax arrears remain unpaid after 30 days from receipt of the demand notice. Once an assessee is declared in default, recovery proceedings follow, as outlined in the Act. It is essential for the assessing officer to establish tax liability before alleging that an assessee ....
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....Delhi, filed a detailed counter-affidavit, asserting his familiarity with the case due to his role in the assessment wing of the Income Tax Department. 13. The deponent denied all of the petitioner's claims, labeling them as false, misleading, and contrary to legal standards, and submitted that the petition is not maintainable as it lacks an apostille, similarly to the amendment application, and stated that the affidavits filed with the petition and amendment were drawn in London, U.K. As per law, affidavits executed abroad must be legalized or apostilled, and thus, the affidavits lack legal validity. It was further argued that Section 51 (1) of the Black Money Act, under Chapter V, operates independently under Section 48(2) and is not dependent on any assessment order under the Act. Therefore, any order not made due to time limitations or other reasons cannot be used as a defense. The deponent emphasized that assessment proceedings and orders are entirely separate from the prosecution initiated against the petitioner. 14. Additionally, the deponent submitted that if the petitioner is aggrieved by the assessment order, he has an effective alternative remedy under Section ....
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....rely non-disclosure. Since a complaint under Section 50 already exists, this separate prosecution should be quashed. He also argued that the Income Tax Department cannot pursue prosecution under Section 51 without first completing the tax assessment under Section 10, followed by an unpaid demand under Section 13 and declaring the assessee in default under Section 30 (4). Learned senior counsel highlighted that a notice under Section 10 (1) was issued on 22.09.2016, which the respondent replied to on 09.07.2019, confirming the petitioner's assessment was still incomplete. He pointed out that the complaint was filed on 22.12.2018, prior to the assessment order issued on 23.02.2020. Reliance was placed on Akhil Krishan Maggu v. Dy. Director, GST, 2019 SCC OnLine P&H 7785. 19. Learned senior counsel also highlighted discrepancies between the complaint and the assessment order dated 23.03.2020, claiming that several alleged undisclosed properties in the complaint were omitted from the assessment order. He argued that the assessment order itself was time-barred and should be set aside, as there can be no tax evasion without a valid assessment. He further argued that the alleged fabric....
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....ion was exercised arbitrarily without proper basis. 23. Learned standing counsel further submitted that in the present case, the Petitioner held undisclosed foreign assets which were never disclosed in the Petitioner's IT returns for multiple assessment years although he was required to mandatorily do so. It has further been submitted that the Petitioner did not disclose these foreign assets within the window provided under Section 59 of the Black Money Act. It has further been submitted that pursuant to the search and the notice under Section 10 (1) of the Black Money Act served upon the Petitioner he hatched a scheme to back-date and fabricate documents in order to project himself as holding the properties as a sole-trustee/in fiduciary capacity and in order to project that sole trustee ship was transferred. Learned Standing counsel further submitted that these allegations, taken at face value, make out a prima-facie case of commission of the offence of willful attempt to evade tax under Section 51 of the Black Money Act. 24. Learned Standing counsel further submitted that Assessment and Prosecution are independent proceedings. Reliance has been placed upon P. Jayappan ....
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....o relied upon Jayachandran Alloys vs. Superintendent of GST & C.Ex., 2019 SCC OnLine Mad 39017. This case also relates to the CGST Act. In this case, the court inter alia held that the power to punish set out in the CGST Act would be triggered only once it is established that an assessee has 'committed' an offence, which has to necessarily be post-determination of the demand due from an assessee, following the process of an assessment. This judgment is also distinguished on the facts and circumstances of this case, as the procedures in the CGST Act and the Black Money Act are entirely different. 30. Learned senior counsel for the petitioner has also relied upon Makemytrip (India) Pvt. Ltd. vs. Union of India & Ors., 2016 SCC OnLine Del 4951, which was upheld in Union of India vs. Make My Trip India Pvt. Ltd. (2019) 11 SCC 765. The reliance has been placed on this to buttress the point that prosecution should normally be launched only after the adjudication is complete. It is pertinent to mention that this case relates to the Finance Act, 1994. This case involved the power of the Directorate General of Central Excise Intelligence (DGCEI) regarding the investigation and assessment....
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....under Section 202 of the Code of Criminal Procedure is extremely limited - limited only to the ascertainment of the truth or falsehood of the allegations made in the complaint (i) on the materials placed by the complainant before the court (i) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and (iii) for deciding the question purely from the point of view of the f the complainant without at all adverting to any defence that the accused may have. It is not the province of the magistrate to enter into a detailed discussion of the merits or demerits of the case nor can the High Court go into this matter in its revisional jurisdiction which is a very limited one. In proceedings under Section 202 the accused bas got absolutely no locus standi and is not entitled to be heard on the question whether the process should be issued against him or not. However, the magistrate in such proceedings can take into consideration inherent improbabilities appearing on the face of the complaint or in the evidence led by the complainant in support of the allegations but there appears to be a very thin line of demarcation between a probab....
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....r Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156 (1) of the Code except under an order of a Magistrate within the purview of Section 155 (2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support o....
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....against the assessee are completed. It is pertinent to mention here that this was a case under the income tax Act. Similarly, the department has placed reliance on Radheshyam Kejriwal v. State of W.B., (2011) 3 SCC 581 and Sasi Enterprises v. ACIT Crl.A. No. 61 of 2007 dated 30.01.2014. 36. It is pertinent to mention here that Section 48 of the Black Money Act provides as under: Section 48. Chapter not in derogation of any other law or any other provision of this Act. (1) The provisions of this Chapter shall be in addition to, and not in derogation of, the provisions of any other law providing for prosecution for offences there under. (2) The provisions of this Chapter shall be independent of any order under this Act that may be made, or has not been made, on any person and it shall be no defence that the order has not been made on account of time limitation or for any other reason. 37. The bare perusal of Section 48 of the Black Money Act makes it clear that the offences and prosecution which falls in Chapter V of the Black Money Act are independent of any order made under this Act. It is relevant to note that the assessment under the Black Money A....
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...., without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine. (3) For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person- (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or (ii) makes or causes to be made any false entry or statement in such books of account or other documents; or (iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or (iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof." 17. Section 50 p....
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....d have been lapsed by 30-9-2015 and the date for payment of tax and penalty would have also been lapsed by 31-12-2015. However, in view of the date originally prescribed by sub-section (3) of Section 1 of the Black Money Act, such a declaration could have been made only after 1-4-2016. Therefore, in order to give the benefit to the assessee(s) and to remove the anomalies the date 1-7-2015 has been substituted in sub-section (3) of Section 1 of the Black Money Act, in place of 1-4-2016. This is done, so as to enable the assessee desiring to take benefit of Section 59 of the Black Money Act. By doing so, the assessees, who desired to take the benefit of one time opportunity, could have made declaration prior to 30-9-2015 and paid the tax and penalty prior to 31-12-2015." 39. Thus Section 50 of Black Money Act provides punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India, whereas Section 51 of Black Money Act provide punishment for willful attempt to evade tax. Besides this, the bare perusal of Sections 50 and 51 makes it clear that both the provisions function in different realms. T....
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....0.2016, by letter dated 03.11.2016, the petitioner stated that he does not own and is not the beneficial owner of any foreign assets, whether in the form of bank accounts or foreign immovable property. 42. The case of the complainant/Income-Tax Department is that the petitioner stated that his association with certain foreign assets was only in the past and that too in the capacity of a trustee, and that he had resigned from all such fiduciary positions in relation to such foreign assets prior to April 2015. It is pertinent to mention that the Black Money Act came into force on 01.07.2015. Additionally, the case of the complainant is that on 07.02.2017, a search was conducted against one Sanjeev Kapur, who was the Chartered Accountant of the petitioner. During the course of the search, it was discovered that the petitioner had attempted to fabricate and back-date documents to show that the foreign assets/offshore entities were held by the petitioner not in his individual capacity but in a fiduciary capacity as a trustee of the Alrahma Trust, purportedly settled in the UAE in 2006 by one Mr. Hussain Darwish Saleh Alrahma. The documents were also made to show that the petitioner h....
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....We may summarise our views about the construction of Section 511 IPC, thus: A person commits the offence of attempt to commit a particular offence when- (i) he intends to commit that particular offence; and (ii) he, having made preparations and with the intention to commit the offence, does an act towards its commission; such an act need not be the penultimate act towards the commission of that offence but must be an act during the course of committing that offence." 45. Reliance was also placed on Malkiat Singh v. State of Punjab, (1969) 1 SCC 157 wherein it was held as under: "7. The test for determining whether the act of the appellants constituted an attempt or preparation is whether the overt acts already done are such that if the offender changes his mind and does not proceed further in its progress, the acts already done would be completely harmless." 46. Reliance was also placed on Koppula Venkat Rao v. State of A.P., (2004) 3 SCC 602 wherein it was held as under: "10. An attempt to commit an offence is an act, or a series of acts, which leads inevitably to the commission of the offence, unless something, which the do....