Unverified Documents from France About Foreign Bank Account Cannot Support Income Tax Prosecution Without Swiss Authentication: Delhi HC [Read Order]

Anurag Dalmia, the petitioner, filed criminal miscellaneous petitions under Sections 482 and 483 of the Code of Criminal Procedure seeking to quash two criminal complaints initiated against him under Sections 276C(1)(i), 276D, and 277(1) of the Income Tax Act, 1961.

These complaints were based on alleged undisclosed foreign bank accounts in HSBC Bank, Switzerland, and related non-compliance with income tax notices.

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The petitioner had earlier filed his original income tax returns for the assessment years 2006–07 and 2007-08, which were processed and refunds issued. Years later, in 2011, the Income Tax Department received information from the French government indicating that the petitioner was connected to certain Swiss bank accounts.

Based solely on this information, a search was conducted at the petitioner’s premises in 2012. No incriminating material was found during the search.

The petitioner’s counsel argued that the documents from France were neither authenticated by Swiss authorities nor confirmed through any independent verification. The counsel further argued that the assessment order dated 23 March 2015, which formed the basis of the criminal complaints, was set aside by the Income Tax Appellate Tribunal (ITAT) in its order dated 15 February 2018.

The ITAT had found that no incriminating evidence had been recovered during the search and that there was no justification for reopening the assessment or for making additions to the petitioner’s income.

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The department’s counsel argued that the ITAT order was based on technical grounds and did not examine the matter on the merits. They also argued that the petitioner’s refusal to sign the consent waiver form, which would have allowed Indian authorities to request account details from Swiss banks, showed non-cooperation and supported the case for prosecution.

The bench comprising Justice Neena Bansal Krishna observed that the foundation of the prosecution rested entirely on documents that were not verified by Swiss authorities and were not supported by any independent or corroborative evidence.

The court explained that merely having the petitioner’s name in documents received from a foreign country, without authentication or material proof, was not enough to sustain criminal charges. It also pointed out that the petitioner had already been penalised under Section 271(1)(b) of the Act for not signing the consent waiver form, and that this alone could not justify criminal prosecution.

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The court further explained that the prosecution under Section 276C(1)(i), which requires proof of wilful attempt to evade tax, could not be supported in the absence of reliable evidence showing concealment of income. There was no material to show that the petitioner had made any false statements under Section 277 or committed any offence under Section 276D.

After reviewing the facts, the court held that the reopening of the assessments and the related criminal complaints were based on unverified and insufficient evidence. Since the ITAT had already quashed the assessment order on legal grounds and there was no incriminating material found during the search, the complaints had no legal basis.

The court quashed the criminal complaints against Anurag Dalmia and allowed the petitions.

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