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TMI Blog2024 (11) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... ck-date documents to show that the foreign assets/offshore entities were held by the petitioner not in his individual capacity but in a fiduciary capacity as a trustee of the Alrahma Trust, purportedly settled in the UAE in 2006 by one Mr. Hussain Darwish Saleh Alrahma. The documents were also made to show that the petitioner had transferred the sole trusteeship to one Mr. Sumit Chadha in March 2015. It is also pertinent to mention that as per complainant Mr. Sanjeev Kapur stated that the petitioner met him in June-July 2016 along with the petitioner s legal team, and it was decided that a trust structure of the nature described above would be set up, wherein the accused would be appointed as the sole trustee. Thereafter, Alrahma Trust was acquired in Dubai, UAE, and the accused was appointed as the sole trustee, effective from February 2006. Subsequently, it was decided that the accused would resign as the sole trustee effective from March 2015. The complainant alleges that the creation of the Alrahma Trust and changes in the structure of the trust were part of a premeditated scheme to dissociate the accused/petitioner from all his offshore entities/foreign assets by back-dating d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge the assessment order dated 23.03.2020. Consider that has no substance as the petitioner has an efficacious statutory remedy against the assessment order dated 23.02.2020 by way of filing an appeal under Section 16 of the Black Money Act. It is a settled proposition that if there is an adequate efficacious alternative remedy is available and the jurisdiction of the High Court has been invoked without availing the same, except in the exceptional cases, such a writ petition is not required to be entertained. Reference can be made in Genpack India Pvt. Ltd. vs. Deputy Commissioner of Income Tax and Anr. [ 2019 (11) TMI 1118 - SUPREME COURT] . Finally, the respondent department has also pointed out towards the conduct of the petitioner. It has been pointed out that the petitioner s affidavit has not been property attested and even he has not disclosed his the address at United Kingdom. It has also been alleged that the petitioner is evading the process of law. The party who approaches the Court must come with clean hands. Petitioner in the present case as alleged has not disclosed his United Kingdom address. The petitioner is thus has not approached the Court with clean hand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment SA. 3. Banyan Corp. SA. 4. Autentis S.A. R.L. 5. Wenham Major Ltd. 6. OIS Europe 7. Hepworth Court a. Halance Associated. Inc. (which holds apartment no. 122, Hepworth Court, UK which was bought in year 2014) b. Hastel Enterprises Inc. (which holds apartments no 125, Hepworth Court, UK which was bought in year 2014) 5. Global Technologies FZC 5. Interest in Offshore Companies /Entities a. Offset India Solutions FZC, UAE b. Santech International FZC. UAE. c. Serra Dues Technologies UAE d. Shamian Gros, Panama e. Petro Global Technologies FZC, UAE f. MVD Global. 6. MDV Global 7. Bank accounts in the name of Shri Sanjay Bhandari 3. It was alleged that as per provisions of the Income Tax, 1961 along with the return of income from the assessment year 2012-13 the accused failed to disclose as is evident below: S.No. A.Y Date of filing of ROI and Status Return of Income (in Rs.) Assets Declared in the Schedule FA of ITR-4 (available from AY 2012-13) Date Status 1. 2012-13 25-03-13 Belated 12,37,680 Nil 2. 2013-14 25-03-14 12,51,570 Nil 3. 2014-15 30-03-15 Invalid 13,40,890 Nil 4. 2015-16 30-03-16 Return uploaded 12,07,860 Nil 5. 2016-17 20-07-16 Return uploaded 18,74,420 Return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the fabrication of documents related to the trust was found, including a copy of the Alrahma Trust deed dated 18.02.2006, naming the accused as the sole trustee and Hussain Darwish Saleh Alrahma (a UAE resident) as the settler. Correspondence between the accused, Alrahma, and Sumit Chadha dated between 23.02.2015 and 15.03.2017, regarding the accused's resignation and the appointment of Sumit Chadha as trustee, was also discovered. However, in his statement under Section 131 (1A) of the Act, Sh. Sanjeev Kapoor admitted that the signatures on these documents were obtained during his visit to London and Dubai between 31.01.2017 and 05.02.2017. 8. The complainant alleged further that documents and materials recovered from Sh. Sanjeev Kapoor and Sh. Anirudh Wadhwa indicated that the petitioner met Sh. Kapoor in his South Extension Part II office, along with his legal team, including Sh. Anirudh Wadhwa of Wadhwa Law Firm, in June-July 2016. During this meeting, they allegedly decided to establish a trust structure, appointing the accused as the sole trustee. Subsequently, the Alrahma Trust was set up in Dubai, UAE, with the accused as the sole trustee effective February 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Black Money Act, 2015 is designed to address undisclosed assets located outside India that are held by the assessee either as the owner or as the beneficial owner. This is reflected in Sections 3 and 4 of the Act, among others, which address undisclosed foreign income and assets. The complaint lacks any evidence showing that the petitioner is the owner or beneficial owner of the alleged assets, even at a prima facie level. Ownership of an asset is typically proven by documentary evidence, yet no such document is provided by the complainant to establish the petitioner s ownership of the foreign assets in question. Therefore, the learned Additional Chief Metropolitan Magistrate (ACMM) should not have issued summons against the petitioner as the essential elements of the offense are not established, even at a prima facie level. D. For an offense under Section 51 of the Black Money Act, 2015, the assessee must not only be the owner or beneficial owner of the alleged foreign asset, but the ownership must also have occurred after the commencement of the Black Money Act, i.e., after 1st July 2015. In this case, the respondent has failed to provide any evidence that the petitioner owns an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt confirmed that the petitioner s assessment under the Black Money Act, 2015, remains incomplete. This indicates that the mandatory time period under Section 11 of the Act has expired, rendering any criminal proceedings baseless. Without an assessment, there can be no finding of tax evasion, and thus, no grounds for prosecution. J. The respondent must complete assessment proceedings and determine tax evasion before initiating a criminal complaint. It is settled law that completion of assessment is a prerequisite for criminal proceedings; without it, no basis exists to allege tax evasion. K. Without conceding the allegations in the complaint, even if true, they would constitute preparation rather than an attempt. An attempt would only arise if a backdated document were submitted as a defense to the Income Tax Department. Consequently, no willful attempt to evade tax under Section 51 (1) of the Black Money Act is made out. 12. During the pendency of the proceedings, the petitioner filed application CRL.M.A. 10806/2020, seeking to amend the petition. In this application, the petitioner argued that, during the course of the present petition, the respondent issued an assessment order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 2017-18. 16. The deponent stated that evidence regarding the petitioner's ownership of foreign assets has been discussed in detail in the assessment order for the year 2017-18. The deponent submitted that some evidence was obtained during a search and seizure operation on 26.04.2016 at the petitioner's premises under Section 132 of the IT Act, 1961, and was further corroborated through inquiries from Foreign Tax Authorities. The deponent argued that the petitioner s claims lack substance and should be summarily dismissed. B. SUBMISSIONS OF PETITIONER 17. Sh. Dayan Krishnan, learned senior counsel for the petitioner, argued that the present complaint centers solely on the non-disclosure of foreign assets, with allegations related to backdating documents and efforts to disassociate the petitioner from these undisclosed assets. The counsel contended that, at most, the allegations pertain to an offense under Section 50 of the Black Money Act, as the alleged attempts relate to the creation of a scheme to avoid disclosing foreign assets. He argued that the specific act of failing to disclose assets in an income return falls under Section 50 of the Black Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to declare in his returns despite being required to do so. 21. Learned standing Counsel further stated that searches at the premises of CA Sanjeev Kapoor and advocates Anirudh Wadhwa and Abhinandan Banerjee revealed a scheme involving backdating and fabricating documents to show the petitioner as the sole trustee of the UAE-based Alrahma Trust from 2006, thus portraying that foreign assets were held in a fiduciary capacity rather than personal capacity. Allegedly, the sole trusteeship was then transferred to Sumit Chadha in March 2015. Learned counsel submitted that the details of the scheme have been detailedthe complaint which werefurther substantiated by Sanjeev Kapoor s statement, which suggests that the restructuring of the trust was prompted by a notice under Section 10 (1) of the Black Money Act. 22. Learned standing Counsel for the respondent submitted that Criminal Complaint No. 2121 of 2019 was filed by the Income Tax Department before the learned ACMM, Tis Hazari Court, for an offense under Section 51 of the Black Money Act, and that the learned ACMM took cognizance on 10.05.2019, citing a prima facie case. The learned counsel argued that the court s scope in reviewing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore whether or not there has been actual evasion is irrelevant. If the Department discovers the attempt before it is successfully carried out, he will be liable for the offence whether the accused may not have successfully evaded tax. Learned Standing counsel further submitted that in the facts of the present case the accused had successfully evaded taxes by failing to disclose its foreign assets in its IT Returns for Assessment Years 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17. 26. Learned Standing counsel further submitted that Section 51 does not require completion of assessment for initiation of prosecution under that Section. Reference has also been made to Section 48 of the Black Money Act, 2015. D. FINDINGS AND ANALYSIS 27. The petitioner in the present case has challenged the summoning order and has sought quashing of the complaint. 28. In support of his contentions learned senior counsel for the petitioner has relied upon Akhil Krishan Maggu (supra), wherein it was inter alia held that the enunciation of law relating to arrest during investigation reveals that the power of arrest should be resorted to in exceptional circumstances and with full circumspection. It is pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icient grounds to proceed against the accused. 32. Before proceeding further it is necessary to examine the scope of jurisdiction to be exercised by the Magistrate at the time of issuing the summons. Section 204 Cr.P.C. provides as under: 204. Issue of process. (1) If in the opinion of a Magistrate taking cognizance of an offence there is sufficient ground for proceeding, and the case appears to be (a) a summons case, he shall issue his summons for the attendance of the accused, or (b) a warrant case, he may issue a warrant, or, if he thinks fit, a summons, for causing the accused to be brought or to appear at a certain time before such Magistrate or (if he has no jurisdiction himself) some other Magistrate having jurisdiction. (2) No summons or warrant shall be issued against the accused under sub-section (1) until a list of the prosecution witnesses has been filed. (3) In a proceeding instituted upon a complaint made in writing, every summons or warrant issued under sub-section (1) shall be accompanied by a copy of such complaint. (4) When by any law for the time being in force any process-fees or other fees are payable, no process shall be issued until the fees are paid and, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of an offence which is alleged against the accused: (2) where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) where the discretion exercised by the magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction or absence of complaint by legally competent authority and the like. Reliance can also be placed upon Chandra Deo Singh v. Prakash Chandra Bose, (1964) 1 SCR 619: AIR 1963 SC 1430 : (1963) 2 CriLJ 397 and Vadilal Panchal v. Dattatraya Dulaji Ghadigaonker, (1961) 1 SCR 1113: 1960 CriLJ 1490 34. In State of Haryana vs. Bhajan Lal, 1992 Supp (1) SCC 325 the scope of jurisdiction to be exercised by the High Court in respect of quashing of the complaint/FIR was discussed in detail. The Supreme Court after discussing plethora of judgments on inter alia held as under: 102. In the backdrop of the interpretation of the various relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. 35. Learned senior counsel for the petitioner has argued vehemently that the present complaint could not have been filed before completion of the assessment. It is not disputed that at the time when the complaint was filed, the assessment was not completed. The assessment was completed later on only on 23.03.2020. The respondent department has submitted that the assessment and prosecution are independent of each other. In P. Jayappan vs. S.K. Perumal (supra) it was inter alia held that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (6) of Section 6 of the Income Tax Act, who has furnished the return of income for any previous year under sub-section (1) or sub-section (4) or sub-section (5) of Section 139 of that Act, wilfully fails to furnish in such return any information relating to an asset (including financial interest in any entity) located outside India, held by him, as a beneficial owner or otherwise or in which he was a beneficiary, at any time during such previous year, or disclose any income from a source outside India, he shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine. 51. Punishment for wilful 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, wilfully 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 years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 19. It could therefore be seen, that the scheme of the Black Money Act is to provide stringent measures for curbing the menace of black money. Various offences have been defined and stringent punishments have also been provided. However, the scheme of the Black Money Act also provided one time opportunity to make a declaration in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income Tax Act. Section 59 of the Black Money Act provided that such a declaration was to be made on or after the date of commencement of the Black Money Act, but on or before a date notified by the Central Government in the Official Gazette. The date so notified for making a declaration is 30-9-2015 whereas, the date for payment of tax and penalty was notified to be 31-12-2015. As such, an anomalous situation was arising if the date under sub-section (3) of Section 1 of the Black Money Act was to be retained as 1-4-2016, then the period for making a declaration would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to play if even before filing of a return of income, the person is found to have done any of the acts as prescribed in Section 51(3) of Black Money Act, 2015. Apparently the prosecution under this provision cannot be dependent on the assessment. As the offence, if proved, stands completed as soon as the conditions as required under Section 51(3) of Black Money Act, 2015 are fulfilled, irrespective of return of income. 41. In this regard, it is relevant to note that on 27.04.2016, a search and seizure operation was carried out at the premises of the petitioner at B-217, Greater Kailash, Part-I, New Delhi, which revealed that the accused/petitioner generated and held undisclosed foreign income and assets as defined under Section 2 (12) of the Black Money Act. The petitioner allegedly made a statement under Section 131 (1A) on 29.04.2016. During the course of the search action at his office at 12A, Panchsheel Enclave, New Delhi, he admitted to the undisclosed nature of the foreign assets/entities. It is also a matter of record that in reply to the notice under Section 10 (1) of the Black Money Act dated 22.09.2016 and 10.10.2016, by letter dated 03.11.2016, the petitioner stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed based on the entire material on record. The objections of the petitioner regarding the assessment are not relevant, and the petitioner is required to seek the appropriate remedies to challenge the assessment order. 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. It is relevant to note that during the course of submissions, learned counsel for the respondent submitted that the petitioner prepared fabricated/back-dated documents to show him holding his foreign assets as a trustee of the Alrahma Trust effective from February 2006 and having resigned as trustee from March 2015. Furthermore, several documents, which form part of the scheme, including trust deeds, resignation letters, and correspondences, were signed by the accused/petitioner and his aides.It was submitted that this constitutes an overt act on the part ofthe Petitioner towards the commission of the offence. In this regard reliance was placed on Abhayanand Mishra v. State of Bihar, (1962) 2 SCR 241 , wherein it was held as under: 24. We may summarise our views about the construction of Section 511 IPC, thus: A per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the summoning order cannot be set aside as the court has to see the entire record as a whole some and not in piece-mail. 48. The petitioner had also moved an application for amendment of the present petition to challenge the assessment order dated 23.03.2020. I consider that has no substance as the petitioner has an efficacious statutory remedy against the assessment order dated 23.02.2020 by way of filing an appeal under Section 16 of the Black Money Act. 49. It is a settled proposition that if there is an adequate efficacious alternative remedy is available and the jurisdiction of the High Court has been invoked without availing the same, except in the exceptional cases, such a writ petition is not required to be entertained. Reference can be made in Genpack India Pvt. Ltd. vs. Deputy Commissioner of Income Tax and Anr. 2019 SCC OnLine SC 1500. 50. Finally, the respondent department has also pointed out towards the conduct of the petitioner. It has been pointed out that the petitioner s affidavit has not been property attested and even he has not disclosed his the address at United Kingdom. It has also been alleged that the petitioner is evading the process of law. The party wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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