2022 (4) TMI 1199 - HC - Income Tax

Black money - Punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India - complaint under Section 50 of the BMI Act against the petitioner/accused, alleging that he has not disclosed about his financial interest in the bank accounts held by him with the Investec Bank (Channel Island) Limited in its Jersey Branch for the ITR filed by him for the assessment year 2016-17 - contention of petitioner is that the petitioner was a minor at the time of investment i.e. only about two-three years and the petitioner s grandfather made investment in the said company/trust - HELD THAT - Even assuming the allegations of the complainant to be true, the petitioner was required to disclose the said details in the ITR, as the account was opened in the year 2015 on 25.05.2015 (Financial Year 2014-15) i.e. assessment year 2015-16. Further as per definition of Previous Year under Section 2 (9) of the BMI Act, there was no requirement, at that stage to disclose the same. Further, it has also been contended that petitioner was not benefitted by any benefit and has not received even a single penny. Reference was also made to the provisos to Section 139 along with explanation 4 and 5 of the Income Tax Act. It is contended that the petitioner, on being nominated as beneficiary, an expectancy or anticipation of hope of distribution in his favor, existed and nothing more and Revenue authorities are yet to quantify the assets and/or income received from such assets under assessment proceedings Under Section 10 of BMI Act. The contentions raised by counsel for petitioner appear to be forceful and carry merit subject to the reply to be filed on behalf of respondent. Considering the aforesaid aspects and in the totality of the facts and circumstances, it is directed that the proceedings before the learned trial court shall be subject to the final orders passed in the present petition. However we not inclined to stay the proceedings before the learned ACMM, at this stage and an opportunity is granted to the respondent to file a reply on merits as well as on the point of grant of sanction under Section 55 of BMI Act. Reply be filed on behalf of the respondent within 04 (four) weeks with advance copy to learned counsel for the petitioner. Counsel for petitioner has vehemently prayed that petitioner be granted exemption from appearance before learned Trial Court in case the proceedings are not stayed, since the petitioner is a student undertaking studies at Harvard Kennedy School, John F. Kennedy School at USA. The proceedings initiated on complaint are based primarily upon documents and identity of petitioner is not disputed. Exemption if granted shall not prejudice the complainant in any manner. Learned ACMM may consider granting an exemption from personal appearance to the petitioner through Authorized Representative in accordance with law, in case an appropriate application in this regard is moved before the learned ACMM.

Summary

Issues Involved:
1. Quashing of complaint under Section 190(a) read with Section 200 Cr.P.C. for offence under Black Money (Undisclosed Foreign Income and Assets and Imposition of Tax Act, 2015 (BMI Act)).
2. Validity of the sanction order under Section 55 of the BMI Act.
3. Stay of proceedings in Complaint Case No. 1964/2021.
4. Exemption from appearance for the petitioner.

Issue-wise Detailed Analysis:

1. Quashing of Complaint:
The petitioner sought the quashing of the complaint under Section 190(a) read with Section 200 Cr.P.C. for the offence under the BMI Act for the assessment year 2016-17. The complaint alleged that the petitioner failed to disclose his financial interest in bank accounts held at Investec Bank (Channel Island) Limited, Jersey Branch. The learned ACMM observed a prima facie case under Section 50 of the BMI Act and issued summons to the petitioner.

2. Validity of the Sanction Order:
The petitioner challenged the sanction order dated 12.07.2021 under Section 55 of the BMI Act, claiming it was not valid as per the Act's requirements. The petitioner argued that the sanction was coercive and intended to harass. Furthermore, the petitioner contended that the assessment proceedings under Section 10 of the BMI Act were still pending, and no assets or income had been quantified. Additionally, the petitioner highlighted discrepancies in the sanctioning authority, arguing that the sanction was granted by an authority not mentioned in the sub-clause (1) of Section 2(11) of the Act.

3. Stay of Proceedings:
The petitioner sought a stay on the proceedings of Complaint Case No. 1964/2021. The court noted that the complaint was filed for the alleged commission of an offence under Section 50 of the BMI Act, which mandates specific requirements, including the resident status of the person and the willful failure to furnish information about an asset located outside India. The court considered the petitioner's argument that he was a minor when the investment was made and that the account was opened in the financial year 2014-15, during which he was a non-resident. The court found the petitioner's contentions forceful but did not stay the proceedings, allowing the respondent time to file a reply on merits and the sanction order.

4. Exemption from Appearance:
The petitioner requested an exemption from appearing in person before the trial court, citing his ongoing studies in the USA. The court acknowledged that the proceedings were based primarily on documents and that the petitioner's identity was not disputed. The court directed the learned ACMM to consider granting an exemption from personal appearance to the petitioner through an Authorized Representative if an appropriate application was moved.

Conclusion:
The court directed that the trial court proceedings would be subject to the final orders in the present petition but did not stay the proceedings. The respondent was granted four weeks to file a reply, and the petitioner was allowed to file a rejoinder within four weeks thereafter. The court also directed the trial court to consider the petitioner's application for exemption from appearance. The matter was listed for further hearing on 28.07.2022.