The Delhi High Court in a notable judgment held that prosecution proceedings under Section 51(1) of The Black Money ( Undisclosed Foreign Income And Assets ) and Imposition Of Tax Act, 2015 ( Black Money Act ) is independent of Assessment or Reassessment proceedings that may be initiated under Section 10 of the Black Money Act.
The observation was made by the Delhi High Court while hearing a Criminal Miscellaneous Petition and allied Applications filed by alleged arms dealer Sanjay Bhandari seeking to quash criminal complaints filed by The Additional Commissioner of Income Tax (Central), New Delhi under Section 51(1) of the Black Money Act and allied summon order issued by the Court of the learned Additional Chief Metropolitan Magistrate, Tis Hazari Court, Delhi ( ACMM ).
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Briefly stated, the facts follow search and seizure conducted at the premises of the Petitioner wherein it was uncovered that the Petitioner had failed to file their returns of income for the Assessment Year (A.Y.) 2012-13. Numerous allegations were raised against the Petitioner, including the Petitioner’s upkeep of alleged foreign bank accounts, immovable properties, and interests in offshore entities.
In light of the allegations raised, the Petitioner was served with Notice under Section 10(1) of the Black Money Act, 2015 demanding the production of documents and evidence in pursuance of the investigation to which the Petitioner responded stating that he is neither the owner nor beneficial owner of any alleged foreign assets. The Petitioner also claimed that no assessment order can be made following two years from the end of the financial year for which notice under Section 10(1) is issued, in reference to Section 11(1) of the Black Money Act, 2015.
Counsel for Sanjay Bhandari, Dayan Krishnan along with Avneesh Arputham, Ankit Sharma and Abhishek among other grounds contended that the Respondent Income Tax Department may not proceed with a case under Section 51 unless the petitioner is first assessed to tax under Section 10; issued a demand under Section 13, and declared to be in default under Section 30(4), all of the Black Money Act, 2015.
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The Single-Judge Bench of the Delhi High Court presided over by Justice Dinesh Kumar Sharma referenced Section 48 of the Black Money Act to clarify that the offences and prosecution which fall under Chapter V of the Black Money Act are independent of any order made under the Act. Since the assessment is purported by the Revenue under Section 10 falling under Chapter III of the Act, the same shall be deemed independent of initiation of prosecution under Section 51 of the Act.
Alluding to the Supreme Court decision in Union of India vs Gautam Khaitan (2019), the single-judge Bench observed that Section 51 of the Black Money Act would come into play even before filing of a return of income, if the person is found to have done any of the acts as prescribed in Section 51(3) of Black Money Act, 2015.
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