Prosecution Can Be Initiated Under Black Money Act Even Before Completion of Assessment | HC

Case Details: Sanjay Bhandari vs. Income-tax Office - [2024] 168 taxmann.com 389 (Delhi)

Judiciary and Counsel Details

• Dinesh Kumar Sharma, J.
• Dayan Krishnan, Sr. Adv., Avneesh Arputham, Ankit Sharma & Abhishek, Advs. for the Petitioner.
• Zoheb Hossain, Sr. Standing counsel, Sanjeev Menon, Jr. standing counsel, Vivek Gurnani & Manish Dubey, Advs. for the Respondent.

Facts of the Case

A search and seizure operation was conducted on the assessee’s premises. During the search and seizure operation, incriminating documentary evidence and information were discovered, establishing that the assessee held undisclosed foreign bank accounts and properties. Notices under section 10(1) of the Black Money Act, 2015, were issued to the assessee, to which he responded.

Subsequently, the Additional Commissioner of Income Tax (Central), New Delhi, had filed the complaint against the assessee for an offence under section 51(1) of the Black Money Act, and the assessee was summoned for the offence.

The assessee contended that the prosecution was initiated without completing the assessment proceedings. There was no finding by the department that the assessee evaded any tax. Furthermore, there was no evidence showing that the alleged foreign assets belonged to him. Aggrieved by the complaint, the assessee filed a writ petition to the Delhi High Court.

High Court Held

The Delhi High Court held that the bare perusal of Section 48 of the Black Money Act makes it clear that the offences and prosecution, which fall 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 Act is being made under Section 10, which falls in Chapter III. Therefore, the submission of the assessee does not hold any force in the eyes of the law.

The initiation of the prosecution is not dependent on the completion of the assessment. If the conditions as required under Section 51 of the Black Money Act are fulfilled, the prosecution can be initiated irrespective of the completion of the assessment.

Section 51 of the Black Money Act would come into play if, even before filing a return of income, the person is found to have done any of the acts as prescribed in Section 51(3) of the Black Money Act, 2015. Apparently, the prosecution under this provision cannot depend on the assessment. The offence, if proven, stands completed as soon as the conditions as required under Section 51(3) of the Black Money Act, 2015 are fulfilled, irrespective of the return of income.

At this stage, the complainant is not required to bring the material on record that could prove the guilt of the accused or even be sufficient for framing the charge. This is a very initial stage where the Magistrate has to form an opinion that there are sufficient grounds for issuing the process. Such an opinion is to be formed based on the entire material on record. The objections of the petitioner regarding the assessment are not relevant. In regard to the evidence to show that the petitioner owned foreign assets, the complainant shall be obliged to produce the same at an appropriate time.

Accordingly, the petition was dismissed.

List of Cases Referred to

• and Nagawwa v. V.S. Konjalgi 1976 3 SCC 736 (para 22 and 33),
• Sasi Enterprises v. ACIT (2014) 5 SCC 139 (para 24),
• Act. Reliance has been placed upon Koppula Venkat Rao v. State of A.P. (2004) 3 SCC 602 (para 24),
• necessary intention. Reliance has been placed upon Chaitu Lal v. State of Uttarakhand (2019) 20 SCC 272 (para 24),
• petitioner has also heavily relied upon Birla Corporation Ltd. v. Adventz Investments & Holdings Ltd., (2019) 16 SCC 10 (para 31),
• In State of Haryana v. Bhajan Lal (1) SCC 325 (para 34),
• offence. In this regard reliance was placed on Abhayanand Mishra v. State of Bihar 2 SCR 241 (para 44),
• Reliance was also placed on Malkiat Singh v. State of Punjab (para 45),
• Reliance was also placed on Koppula Venkat Rao v. State of A.P. (2004) 3 SCC 602 (para 46)
• Genpack India Pvt. Ltd. v. Dy. CIT and Anr. 2019 SCC OnLine SC 1500 (para 49).