9911796707
TMI Blog2023 (7) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby became a case of evasion of tax - The perusal of the order of the Adjudicating Authority shows much emphasis on certain provisions of the Income-tax Act, ignoring Section 3 and 4 of the Act of 2015. The entire order of the Adjudicating Authority does not make a proper consideration of the aforesaid provisions to find out whether it is a case of evasion of Tax. Cross border implications - When the Scheduled Offence under section 51 of the Act of 2015 would be made out under Part C of Schedule appended to the PMLA Act, 2002? - HELD THAT:- The provision of Section 2(1) thus makes it clear that definition is to be applied in the context it is to be used. In the case in hand, the definition of offence of cross border implication under section 2(1)(ra) is to be read in the context. The item no. 4 of Part 'C' Schedule makes a reference to the offence under section 51 of the Black Money Act, 2015. It is an offence of evasion of tax, penalty or interest imposable or chargeable under the Black Money Act, 2015. The definition of offence of cross border implication cannot be applied in the context to item No. 4 of part (c) of Schedule. It is for the reason evasion of tax cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posable under section 3 of the Black Money Act of 2015. Section 50 would be made out on failure of the assessee to furnish information about any foreign assets and income including financial interest in any entity, located outside India. The Income-tax Authority admittedly initiated action under section 50 of the Black money Act of 2015 which means that the Respondent willfully failed to furnish Return and information relating to assets and income outside India during the relevant years. The initiation of action under section 50 had direct bearing on an offence under section 51 of the Black Money Act of 2015. Non-disclosure of the foreign assets and financial interest in those assets while submitting return resulted in evasion of tax when it was necessary to disclose it from 1st April, 2016 onwards as is coming out from section 3 of the Black Money Act of 2015 - The Learned Adjudicating Authority even ignored the material sufficient to pass Provisional Attachment Order when the Appellant Department could know that non attachment of the property would frustrate the proceedings under the Act of 2002. The Respondent was in the process to transfer the foreign assets and, therefore, sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to tax-evaded money. The Central Government felt that evasion of tax robs the nation of critical resources necessary for economic growth. It also puts dis-proportionate burden on the honest taxpayers as they have to bear the brunt of higher tax to make up a revenue leakage caused by evasion. The money stashed away abroad by evading tax cannot be used and otherwise threatens national security. The Central Government, in the year 2014, committed itself to the task of tracking down and bringing back undisclosed foreign assets and income which legitimately belongs to the nation. In the Budget Speech of 2015, the Central Government disclosed its intention to bring enactment to address the black money parked outside the nation. 2. The Apex Court of India has also expressed concern over the problem of black money. The Special Investigation Team constituted by the Central Government to implement the judgment of the Supreme Court expressed its view and suggested the measures to be taken to curb the menace of black money. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (in short the Act of 2015 ) was brought to address serious problem of black money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale dated 12-8-2009 of Maurya C-303, in favour of Sanjay Bhandari with value of property at 54,94,350 AED. (ii) Flat No. 6, Grosvenor Hill Court, Bourdon Street, London- During the Search and Seizure action at the residence of one Sh. Ashok Shankar, A-341, Defence Colony, New Delhi, close associate of Sanjay Bhandari, Page No. 57-66 of annexure B-3 were found and seized. These pages were bearer share custody agreement which were signed by Respondent No. 11 as a beneficial owner of corporation Shamlan Gross-I Inc, incorporated under the laws of Republic of Panama with an authorized capital of 500 common shares. In the statement recorded u/s 132 (4) of I.T. Act, of Respondent No. 11, it was admitted that the property Flat No. 6, Grosvenor Hill Court, Bourdon Street, London was bought in 2013 for a consideration of Rs. 10 Crore. All the 500 shares of Panama based entity were purchased by investing Rs. 10 Crore in 2013 to acquire the flat through two bearer certificates which Respondent No. 11 had kept with his attorney in London namely Patricia Bouchara and Associate, 117 A, Mounster Lane, London. Admittedly the source of acquisition of the property and other expenses were out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholder and beneficial owner of Serra Dues technologies. In his statement recorded u/s 132(4) of the income Tax Act, Respondent No. 11 had admitted that he was the beneficial owner of Serra Dues Technologies. (vii) Shamlan Gross - During the course of search action at residence of one Ashok Shankar, close associate of Respondent No. 11, certain documents belonging to Respondent No. 11 were found and seized which revealed that Respondent No. 11 was the beneficial owner of an entity incorporated in Panama called Shamlan Gross. Respondent No. 11 also admitted that two bearer share certificates of this foreign entity were kept in London with his attorney Patricia Bouchar and Associates. (viii) Petro Global Technologies FZC - The seized copies of the emails extracts revealed his interest in an entity called Petro Global Technologies FZC, incorporated in UAE. The information gathered revealed that he was one of the owners of this entity having 33.3% shareholding. (ix) MVD Global - Pages 17-23 of annexure A-5 found and seized as part of copies of email extracts, included a mail from Barclays dated 9-6-2011, to him regarding outstanding fee for MVD Global Ltd evidencing his interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t his office premises D-36, South Extension Part-2, New Delhi on 7-2-2017. During the course of search, it was found that Shri Sanjeev Kapoor was carrying fabricated and back dated documents to facilitate Respondent Sanjay Bhandari to alienate his foreign assets and offshore entities into a trust in Dubai. 8. The statement of Shri Sanjay Bhandari was recorded on oath by the Income Tax Department on 29/30-04-2016, 25-5-2016, 01-7-2016 and 5-7-2016 under section 132(4) and 131 of the Income-tax Act, 1961 (in short the Act of 1961 ). The Respondent Sanjay Bhandari admitted interests in the entities incorporated outside India i.e. Santech International FZE, Dubai, Offset India Solutions, UAE, Shamlan Gross-1 Inc, Panama , Serra Dues Technologies FZC, RAK, UAE, MVD Global, Petro Global Technologies FZE, UAE. The income accrued from those entities were not reflected in the Income-tax Return and it was further admitted that he owned three properties in Dubai and London and had not disclosed in the Income-tax Returns. 9. The Income Tax Department, New Delhi vide its letter dated 05-4-2017 sent copies of Panchnama prepared on search at various premises of Sanjay Bhandari, Ashok Shankar and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order. Challenge to the Impugned Order 15. The order of the Adjudicating Authority has been challenged by the Appellant Enforcement Directorate alleging that the Authority below has failed to refer to the relevant facts while considering irrelevant facts to draw erroneous conclusion and recorded perverse finding resulted in refusal to confirm the Provisional Attachment Order. The Adjudicating Authority even failed to take proper interpretation of the provisions of law applicable on the subject and at the same time ignored relevant provisions, thus impugned order has been challenged by the Appellant. 16. It was submitted that the Enforcement Directorate received information from the Income-tax Department alongwith the material to show various foreign assets and income in the hands of Shri Sanjay Bhandari and his associates. The foreign assets were consist of bank account, movable and immovable properties not disclosed in the Income-tax Return. The facts aforesaid were admitted by Shri Sanjay Bhandari in his statement recorded by Income-tax Authority. The search and seizure was conducted not only at different places belongings to Shri Sanjay Bhandari but person connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department, the Provisional Attachment Order was not confirmed. 19. The detailed argument on all the issues raised by the Appellant has been contested by the Learned Counsel for the Respondent. He has taken additional grounds to endorse the order passed by the Adjudicating Authority. The written argument have been submitted by both the parties and thereby we would be dealing with each issue raised by the parties and taken up by the Adjudicating Authority but before that we would refer relevant provisions with interpretation. (1) The Offence under section 51of Black money Act, 2015 20. The Scheduled offence involved in this case is under section 51 of Black money Act of 2015 thus it would be relevant to quote the said provision:- Section 51 Punishment for willful attempt to evade tax - (1) If a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, willfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to ten year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection, value of an undisclosed asset means the fair market value of an asset (including financial interest in any entity) determined in such manner as may be prescribed. Section 4 of total undisclosed foreign income and asset - (1) Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be, (a) the income from a source located outside India, which has not been disclosed in the return of income furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the Income-tax Act; (b) the income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 of the said Act; and (c) the value of an undisclosed asset located outside India. (2) Notwithstanding anything contained in sub-section (1), any variation made in the income from a source outside India in the assessment or reassessment of the total income of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is the offence of cross border implications and is specified in, (1) Part A; or 4[***] (3) the offences against property under Chapter XVII of the Indian Penal Code.] 5 [(4) The offence of willful attempt to evade any tax, penalty or interest referred to in Section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.] 26. Part C of Schedule quoted above makes a reference to offence of cross border implication . According to the Respondent, to fall under Part C, an offence should be of cross border implication which is not the case in hand. To make out a case of cross border implication there has to be transfer of property out of India. According to the Respondent, there is no transfer of proceeds of crime outside India to fall in the definition of offence of cross border implication . According to them Appellant could not produce material to prove the aforesaid. The foreign assets alongwith entities in Dubai were existing prior to coming into force the Black Money Act of 2015 without its transfer thus a case of cross border implication would not be made out. We find that even the Adjudicating Authority has recorded its finding in referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n offence under section 51 of the Black Money Act of 2015. The offence under the aforesaid provision would be made out on evasion of tax, penalty or interest chargeable or imposable under the Black Money Act of 2015. It is in reference to foreign income and assets. The offence under section 51 of the Black Money Act, 2015 would be made out when tax chargeable under the said Act is evaded. The evasion of tax cannot have an element of transfer as it is a liability of tax not disclosed and paid. The evasion of tax is an amount not paid by the assessee thus question of its transfer cannot arise. The interpretation given by the Respondent and accepted by the Adjudicating Authority would make item No. 4 of 'C' of Schedule redundant and in no case, an offence under section 51 of the Black Money Act of 2015 would be made out. It is the reason that evaded tax cannot have an element of transfer out of India. It is obligatory on the Courts to take proper interpretation of the provision which does not make it to be redundant. Thus, item No. 4 of part 'C' of Schedule brought by way of amendment in the year 2015 is to be read separately from of the rest of the provision. It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that an insurance agent who had served the insurer exclusively for at least ten years would be under a disability as against an insurance agent who had worked only between five years and ten years in that, he could not claim the percentage on the renewal premium, if he directly or indirectly solicited or procured insurance business for any other person after he ceased to be an insurance agent for the particular company. The said decision deals with the clauses under the Insurance Act. It is to be noted that section 44 of the Act was made applicable to LIC as per GSR 734 dated 23-8-1958 published in the Gazette of India dated 23-8-1958 and the same was amended as per GSR 262(E) dated 24-7-1972 published in the Gazette of India dated 24-7-1972 The pointed question involved in this case, as mentioned hereinbefore, is as to whether the second limb of clause (c) of the proviso to Section 44(1) of the Act is one which would apply to the other different clauses thereunder viz., clauses (a), (b), (bb) and (bbb) introduced to that proviso for application to LIC so as to import the said embargo even in respect of persons falling under clauses (a) to (bbb). Therefore, we are of the considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and entitled to renewal commission for the policies effected through them, even after cessation of such agency under all the clauses, would and should satisfy the condition enjoined under the second limb of clause (c) of the proviso, to avoid cessation of payment of such commission. In strict sense, in such circumstances, it cannot be said that it is purely a part of clause (c) alone having applicability in the cases of persons falling under the first limb prohibiting payment to them if they directly or indirectly solicited or procured insurance business for any other person. The purpose revealed from the second limb of clause (c) of the proviso to Section 44(1) of the Act applicable to LIC, cannot brook any construction other than that the said condition is intended to act as an embargo applicable to all the clauses carrying eligibility criteria for renewal commission on cessation of agency and that it is one which would disqualify the contravenors who directly or indirectly solicit or procure insurance business for any other person, from receiving renewal commission. If clause (c) as such is taken as independent clause and the embargo lies in the second limb as one applicable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to us, the second limb of clause (c) of the proviso to section 44(1) of the Act is one which would apply to the other different clauses thereunder applicable to LIC viz., clauses (a), (b), (bb) and (bbb) introduced to that proviso so as to import the said embargo even in respect of persons falling under clauses (a) to (bbb). 32. In view of the aforesaid, the Scheduled offence under item No. 4 of part (c) is not to be governed the definition of cross border implication and accordingly we hold that the interpretation of the provision taken by the Adjudicating Authority is after mis-reading of the provision, thus cannot be endorsed or accepted. 33. The issue is required to be considered even in reference to Section 2(1) of the Act of 2002 which defines the words and phraseology under the Act of 2002. It is quoted hereunder for ready reference:- Section 2 of The Prevention of Money-Laundering Act, 2002 2 Definitions. (1) In this Act, unless the context otherwise requires 34. As per the provision aforesaid, the definition is to be applied as has been given under the definition clause unless context requires otherwise. The provision of Section 2(1) thus makes it clear that definition i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Black money Act thus Provisional Attachment Order could not have been issued. 38. To analyze the aforesaid issue, it would be relevant to quote Section 5 of the Act of 2002 and is quoted thus:- 5. Attachment of property involved in money-laundering. (1) Where the Director, or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that (a) any person is in possession of any proceeds of crime; (b) such proceeds of crime are likely to be has been charged of having committed a scheduled offence; and (c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty after recording reasons of belief in writing. The Provisional Attachment Order can be passed if a person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in a manner which may result in frustrating the proceeds for confiscation. The second proviso to Section 5(1) pre-supposes possession of the proceeds of crime and which is likely to be concealed, transferred or dealt with in a manner which may frustrate the confiscation. 40. The first proviso, however, mandates that an order of attachment can be made when a report has been forwarded to the Magistrate under section 173 Cr. P.C. for a Scheduled Offence or a complaint has been filed by an officer competent to investigate the offence for taking cognizance by a Court of Magistrate. As per the first proviso, the attachment of the property cannot be made unless the compliant for the Scheduled Offence is recorded for investigation or sent to the Magistrate. The second proviso is an exception to first proviso. It does not require any of the formalities indicated in the first proviso. If the Director records reason of belief based on the material that the property inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is relevant to the extent it makes reference to the action prior to issuance of Provisional Attachment Order and quoted hereunder:- 'Before the letter dated 11-9-2017 was produced by the Counsel for the Complainant during the course of hearing on 9-11-2017, the written replies filed by the defendants in the matter had as one of its annexure produced, letter dated 11.10.2017 received by/on behalf of the Defendant No. 11. As aforesaid the said replies were filed by the Counsel for the Defendants on or about 16-10-2017. As the said letter dated 11-10-2017 received by the defendant no. 11 from the Principle Commissioner of Income Tax, Central-3, New Delhi is very relevant, the same is reproduced hereunder. Dated 11-10-2017 F. No. Pr. CIT/C-3/Prosecution(B.M.Act)/2017-18/1838 To Sh. Sanjay Bhandari B-2017, Greater Kailash-1 New Delhi (PAN-AACPB3772G) Sir, Sub: Proposal for launching prosecution proceedings under section 50 of the Black money (undisclosed foreign income and assets) and Imposition of Tax, Act,2017 (In short Black money Act) in the case of Sh. Sanjay Bhandari (PAN-AACPB3772G) for A.Y 2017-18-reg. Kindly refer to the above cited subject 2. A search and seizure opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25.03.14 1251570 NIL 11 2014-15 30.03.16 Invalid 1340890 NIL 12 2015-16 30.03.16 Return uploaded 1207860 NIL 13 2016-17 20.07.16 Return uploaded 184420 NIL 4. Subsequently, search operation was conducted on 7-2-2017 u/s 132 of the Income-tax Act, 1961 against Sh. Sanjeev kapur (DoS 07/02/2017) and Sh. Anirudh Wadhwa and Sh. Abhinandan Banerjee (DoS 07/02/2017) u/s 132 of the Income-tax Act, 1961. 5. During these searches, incriminating evidences and documents were unearthed and it was establish in statement recorded on oath, that were preparing to alienate you foreign assets and off-shore entities by fabricating and back dating documents in order to evade income Tax under the Black Money (Undisclosed Income Foreign Assets) Act,2015. 6. In view of the above documents, you are hereby communicated, that:- During the course of search and seizure action u/s 132 of IT. Act, 1961 initiated on 27-4-2016 in you case and connected cases, several documents were found and seized. The Above information so collected establishes that your owned foreign assets in the form of foreign bank account, foreign immovable properties and interests in various foreign entities. It has been gathered that you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was to appoint you as the sole trustee of a trust (Alrahama Trust) based in UAE, with effect from 2006. Further, it would be shown that all the foreign assets/offshore entities held by you, was not in you individual capacity, but in the fiduciary capacity, as the trustee of the trust. Further, attempt was to transfer the sole trusteeship from you to Sumit Chadha (your close associate and U.K. national) retrospectively from March 2015, which would be before the Black Money (Undisclosed foreign Income and assets) and imposition of Tax Act, 2015 came into effect. Thus, the scheme would have enabled you, to alienate you foreign assets by brining all the offshore entities and foreign assets under the umbrella of the trust, had it been successful. All this was proposed to be achieved through fabrication and back dating of documents. During the course of search u/s 182 of the Act on the person of Sh. Sanjeev Kapoor at the IGI Airport, New Delhi, several incriminating evidence was found to establish fabrication of documents in relation to proposed trust. Copy of the trust deed of Alrahma Trust was found, which was dated 18-2-2016, you were named as the sole trustee of this trust, and Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UAE and you were appointed as the sole trustee. The trust was made effective from February 2006. Subsequently, it was decided that you would resign as the sole trustee effective from March 2015 and Sh. Sumit Chadha would be appointed retrospectively in his place on the same date. Sh. Sanjeev Kapoor has further stated that the necessary documentation with respect to the same was prepared under the guidance of Sh. Anirudh Wadhwa an sent through the pen drive (marked as Annexure A-5) to him by Wadhwa lay Associates. Sh. Sanjeev Kapoor has further stated on oath that the said soft copy of the draft correspondence/letter were taken by him to London and dubai, and the signatures of relevant persons such as you, Sh. Sumit chada and settle of the Alrahma trust on the said correspondence/letters dated 23-2-2015 to 15-3-2015 were actually made during his visit to London and Dubai, i.e. 31-1-2017 and 5-2-2017. Sh. Sanjeev Kapoor was also questioned regarding the trigger for wanting to change the structure of the trust. In response to the said question, Sh. Sanjeev that the trigger was the notice under the black money act, and details of your foreign assets and offshore entities, proposed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inandan Banerjee and survey u/w 133A of the Act was conducted in the office of Wadhwa Law Chambers. During the course of search and survey action, various incriminating evidence was found which corroborated with the statement of Sh. Sanjeev Kapoor and evidence found from his possession. 10. Sh. Ahinandan Banerjee, admitted in his statement recorded on oath, that the draft documents with respect to the trust, were prepared by him and that he was working on you case on the express instructions of his Superiors In the light of the findings it is established that the creation of the trust and change in its structure were a premeditated scheme to disassociate you from all you offshore entities/foreign assets by back dating the documents. It is pertinent to mention that you have failed to comply with the numerous summons issued to him u/w 131 (1A) of the income Tax Act, 1961, from time to time. A show cause for penalty u/s 272A(1)(c) r.w.a 274 of the Income-tax (Inv.) Unit-6, Delhi for the said failure. However no response to the same was received. Consequently, penalty of Rs. 30000 has been levied u/s 272 A (1)(c) for the aforesaid failure to comply with the summons. The investigation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above properties in fiduciary capacity and you are in no way the beneficial owner of these foreign properties and that you have resigned from all such fiduciary positions in relation to all such foreign assets prior to April,2015 which is prior to the enforcement of this act and any such transition under taken by you in the past, especially in capacity as a trustee, are not covered by the terms of this Act. Later you sought time for submitting these documents but never submitted the same even after 3 months. Finally summon u/s 131 of the Income-tax Act 1961 was issued to you on 7-2-2017, to explain you residential status and submit replies w.r.t. questionnaire issued earlier to you. Nobody appeared and the AR also submitted the Application for withdrawal of his power of attorney after attaching the proof of serving notice to you in this regard. You have filed returns of income tax for various assessment years on dated mentioned against the column in the table. Declaring a net taxable income as shown there (Annexure-1). As per the above returns the total tax liability in Schedule FA (introduced from AY.2012-13 in the Income-tax returns) has been declared as Nil till date as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be given while dealing with the factual issues after completion of the finding on the legal issue. We may refer to the definition of proceeds of crime given under section 2(1)(u) and is quoted hereunder:- Section 2(1) (u) proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country] [or abroad]; 45. Section 3 of the Act of 2002 is also quoted which defines money laundering:- Section 3. Offence of money-laundering.- Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. 46. A case of money laundering would be made out when someone directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisional attachment under Section 5 there need not be a pre-registered criminal case in connection with scheduled offence. This is because the machinery provisions cannot be construed in a manner which would eventually frustrate the proceedings under the 2002 Act. Such dispensation alone can secure the proceeds of crime including prevent and regulate the commission of offence of money-laundering. The authorised officer would, thus, be expected to and, also in a given case, justified in acting with utmost speed to ensure that the proceeds of crime/property is available for being proceeded with appropriately under the 2002 Act so as not to frustrate any proceedings envisaged by the 2002 Act. In case the scheduled offence is not already registered by the jurisdictional police or complaint filed before the Magistrate, it is open to the authorised officer to still proceed under Section 5 of the 2002 Act whilst contemporaneously sending information to the jurisdictional police under Section 66(2) of the 2002 Act for registering FIR in respect of cognizable offence or report regarding non-cognizable offence and if the jurisdictional police fails to respond appropriately to such informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign assets and entities controlled by Sanjay Bhandari were not disclosed in the Income-tax return for the purpose of taxation. The details of the properties have been given and pursuant to which, the Income-tax Authority issued various notices however the Respondent and the Adjudicating Authority has made much emphasis on the notices dated 14-9-2016 issued under section 127 of Income-tax Act. It is after ignoring the notice dated 22-9-2016 where details of the foreign assets alongwith all relevant material disclosed to the Appellant Department. It was to show evasion of tax under the Black Money Act of 2015 as in the Return from the year 2016 and onwards, those foreign assets and income were not disclosed thus not subjected to tax. The complete notice dated 22-9-2016 is quoted hereunder:- Office of the Joint Commissioner of Income Tax Central Range-7, Room No. 329 E-2, Jhandelwalan Extension, New Delhi-110055 Telephone No. 23593436 email id: [email protected] F.No.JCIT/CR-7/2016-17/878 Dated: 22-9-2016 NOTICE UNDER SECTION 10(1) OF THE BLACK MONEY (UNDISCLOSED) FOREIGN INCOME AND ASSET) AND IMPOSITION OF TAX ACT, 2015 PAN-AACPB3772G To Sh. Sanjay Bhandari B-217, Gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty. (b) Details of total investment in purchase of this property and also in subsequent renovation etc. along with source and manner of payment thereof, with supporting evidence. (c) Details of payment made to broker/consultant for acquisition of this property along with source and manner of payment thereof, with supporting evidence. (d) Details of expenses incurred in upkeep of this property with source of expenses and manner of payment, with supporting evidence. (e) Fair market value of this property as on 1st April, 2016 with supporting evidence. (ii) Flat No. 6 Grosvenor Hill Court Bourdon Street, London: During the course of search seizure action at the residence of Sh. Ashok Shankar, A-341, Defence Colony, New Delhi, page no. 57 to 66 of Annexure B-3 were found and seized. In your statement recorded u/s 132 (4) of the I.T. Act, 1961. It was admitted that these pages were bearer share custody agreement which was signed by you as a beneficial owner of the corporation Shamlan Gros-l Inc. It was admitted that the property viz. flat 6, Grosvenor Hill Court, Bourdon Street, London was bought for a consideration of Rs. 10 crore in 2013. The flat was owned by the corporation Shamlan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was found and seized as page 48 of Annexure A-5. There is another email dated 25-6-2010 from a consultant at Barclays, sent to your email i.d. enclosing an invoice from HB] (the legal consultants for the deal involving the Bryanston Square property) dated 22-6-2010 with respect to the sale of Bryanston Square property in you statement recorded u/s 134(4) of the Act on 29/30-4-2016, it was admitted that these papers pertain to property transactions for the property 12, Ellerton House, Bryanston Square, London WIH 2DQ, which was held by Vertex Management. Holding Limited. The holding company was purchased by you in lieu of consideration of 19 lakhs Pounds and the payment was made from Santech International Dubai. It was further admitted that the above transaction was not accounted for in your Income-tax Returns. In this connection, it is requested to furnish the following details: (a) Details of purchase and sale of Vertex Management Holdings Limited along with source and manner of payment thereof, with supporting evidence. Gain out of this transaction. (b) Details of total investment in purchase of this property and also in subsequent renovation etc., along with source and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized from the Hard Disk, annexurized as A-16, during the course of search found and seized action u/s 132 of the I.T. Act at your office Premise, 12-A Panchsheel Enclave, New Delhi. In the email extracts, am company license certificate dated 3-12-2015 or Santech International FZC was found, which list you as one of the owners of the entity, incorporated on 21st February, 2006. In your statement recorded u/s 132(4) of the Act on 29-30-4-2016, it was admitted that incorporated this entity. It has been further admitted that the income accrued from this entity was not reflected in your Income-tax Returns. It has been gathered that you are one of the directors of the entity as well as majority shareholders. In this connection, it is requested to furnish the following details along with evidence: (a) Audit Report and Audited financial statements for all the financial year since the inception of the entity. Copy of Incorporation Certificate and Memorandum of the entity. (b) Copies of your account with the company for all the financial year since the inception of the entity. (c) Details with source and manner of your investment in the above said entity with supporting evidence. (d) Detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eption along with narration of entries. (f) Your percentage of ownership in the entity along with complete names and addressed of all other Indian residents who are beneficial owners of the entity. Details of financial interest of different shareholders in the entity. (g) Details and addresses of all Immovable and other assets owned by the entity. (h) Fair market value of your share in the entity as on 1st April, 2016 with supporting evidence. (vii) Shamlan Gros During the course of search action at the residence of Sh. Ashok Shankar, your close associate, certain documents belonging to you were found and seized. It was found that you were the beneficial owner of an entity incorporated in Panama called Shamlan - Gros. A draft bearer share custody agreement stating the same was also found from the premise. You have also admitted that the two bearer share certificates of the foreign entity, Shamlan Gros-1 are kept with your attorney in London, Patricia Bouchar, Bouchar and Associates, 117-A, Mounster Lane, London. In this connection, it is requested to furnish the following details along with evidence: (a) Audit Report and Audited financial statements for all the financial years sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Indian residents who are beneficial owners of the entity. Details of financial interest of different shareholders in the entity. (g) Details and addresses of all Immovable and other assets owned by the entity. (h) Fair market value of your share in the entity as on 1st April, 2016 with supporting evidence. (x) MVD Global: Pages 17-23 of Annexure A-5, found and seized as part of the copies of the email extracts, include a mail from Barclays dated 9-6-2011 to you regarding fee outstanding for MVD Global Limited. Another email dated 20-7-2012, discuss outstanding annual fee for MVD Global Limited. Please clarify your interest in this entity. In this connection, it is requested to furnish the following details along with evidence; (a) Audit Report and Audited financial statements for all the financial years since the inception of the entity. Copy of Incorporation certificate and Memorandum of the entity. (b) Copies of your account with the entity for all the financial years since the inception of the entity. (c) Details with source and manner of your investment in the above said entity with supporting evidence. (d) Details of income generated/accrued to you from this entity since i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to [email protected] from Sh. Rajesh Ambikan reveal the bank account number of Serra Dues Technologies Limited. The information gathered reveal that you are the authorized signatory of this bank account. In this connection, it is requested to furnish copies of all bank statements of Serra Dues Technologies Limited since its incorporation along with source of credits till date and narration of entries. Also furnish copy of account opening form with details of authorized signatories. (xii) Account number 1011507575301 in the name of the Offset India Solutions. held with Emirates Bank International. Dubai: In your statement recorded on oath u/s 132(4) of the I.T. Act on 29-30-4-2016, it was admitted to have a bank account in the name of Offset India Solutions with the Emirates Bank The Information gathered reveal that Offset India Solutions has the following four banks accounts with the following details with Emirates Bank International, Dubai and you are the authorized signatory of this bank account: (a) Account number 1011507575301 (AED), (February, 2014, credit of 1878 AED) (b) Account number 1011507575302 (c) Account number 1011507575303 (EURO), (18-9-2010 4-6-2012, credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay Bhandari and Sonia Bhandari did not appear before for the statement under section 50 of the Act of 2002 despite several notice. One Ajay Kumar Agarwal in his statement on 14-6-2016 and 15-6-2017 admitted about the receipt of Rs. 22 Crore from Sanjay Bhandari for arranging accommodation entries. The record further shows that after initiation of the action by the Income-tax Department and service of notice to the Respondent Sanjay Bhandari, he had attempted to transfer foreign assets to a trust in Dubai. All those facts were sufficient to show an offence under section 51 of the Black Money Act of 2015. 55. The Adjudicating Authority referred certain notices issued by the Income-tax Authority to show that no case was registered for an offence under section 51 of the Black money Act of 2015 before recording of ECIR and issuance of Provisional Attachment Order. It is in ignorance of the fact that registration of the case for Scheduled Offence is not a pre-requisite for issuance of the Provisional Attachment Order when second proviso to section 5(1) is invoked thus the Adjudicating Authority has recorded erroneous finding about the non-registration of the case for an offence under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty or interest under this Act, he shall, 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 willful 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) willfully 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. 59. Section 50 would be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Black money Act of 2015 in reference to the foreign income and assets prior to coming into force the Black Money Act of 2015. 62. At this stage, we may refer to the ECIR and the Provisional Attachment Order which has also been quoted by the Respondent and even by the Adjudicating Authority. In the written argument submitted by the Respondent, reference of para 3 7 (a) of the ECIR has been given to indicate reference of the order dated 14-9-2016 alone while in para 3 of the ECIR, the reference of order dated 22-9-2016 has also been given with the complete material referred thereafter to make out a case for offence under section 51 of the Black Money Act. In the same manner, para 7 (a) of the ECIR has been referred only in reference of the order dated 14-9-2016 under section 127 of the Income-tax Act while perusal of the para 7 makes a disclosure of all the relevant facts to satisfy the offence under section 51 of the Black Money Act of 2015. It has referred other notices also. In the same manner, a reference of the para of 2.4 of the Provisional Attachment Order dated 1-6-2016, has been referring to the order dated 14-9-2016 only, ignoring other notice alongwith material. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
