Prosecution for Wilful Tax Evasion Under Black Money Act Allowed; Assessee Can Raise Defenses in Trial

Issue: Whether prosecution under Section 51 of the Black Money Act, 2015, for wilful attempt to evade tax can be initiated before the completion of assessment, and whether the assessee can raise defenses during the trial.

Facts:

A search and seizure operation revealed that the assessee held undisclosed foreign bank accounts and properties.
The assessee was allegedly preparing to alienate these assets to evade taxes under the Black Money Act.
The assessee was summoned for an offense under Section 51(1) of the Act.
The assessee challenged the criminal complaint before the High Court.
The High Court held that prosecution can be initiated even before the completion of assessment, as the offense is complete when the conditions of Section 51(3) are met.

Decision:

The Supreme Court partly upheld the High Court’s order.
The court clarified that the assessee is entitled to raise all legal and factual defenses available to them before the concerned authority under the Black Money Act.
The court emphasized that the assessee’s contentions should be considered on their merits, without being influenced by the High Court’s order.
The SLP filed against the High Court’s order was disposed of with these clarifications.

Key Takeaways:

This case confirms that prosecution for wilful tax evasion under the Black Money Act can be initiated before the completion of assessment.
The offense is considered complete when the conditions of Section 51(3) are met, regardless of the assessment proceedings.
However, the assessee retains the right to defend themselves and challenge the allegations during the trial.
This decision balances the need for swift action against tax evaders with the assessee’s right to a fair hearing and due process.

SUPREME COURT OF INDIA

Sanjay Bhandari

Income-tax Officer

Mrs. B.V. Nagarathna and SATISH CHANDRA SHARMA, JJ.

SLP (Crl.) No(s). 18321 & 18348 of 2024
IA Nos. 299987 & 300559 of 2024

JANUARY 21, 2025

Kapil Sibal, Gaurav Agrawal, Sr. Advs., Avneesh Arputham, AOR and Ankit Sharma, Adv. for the Petitioner. Tushar Mehta, S.G., Suryaprakash V. Raju, A.S.G., Zoheb Hossain, Annam Venkatesh, Hitarth Raja, Chandra Prakash, Karuna Sharma, Kanu Agarwal, Advs., Arvind Kumar Sharma and Raj Bahadur Yadav, AORs for the Respondent.

ORDER

SLP (Crl.) No(s). 18348/2024

1. We have heard learned senior counsel Shri Kapil Sibal for the petitioner and learned A.S.G. Shri S.V. Raju for the respondent, on advance notice.

2. Learned senior counsel for the petitioner sought permission to take all contentions legal as well as factual, available to the petitioner herein before the concerned authority under the provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. He therefore, submitted that consequently the impugned order passed by the Delhi High Court may not come in the way of the petitioner raising all such contentions that are available to him before the concerned authority.

3. Learned A.S.G submitted that having regard to the submissions made by learned senior counsel appearing for the petitioner, appropriate orders may be made in the matter.

4. We take note of the submissions made by learned senior counsel for the petitioner and permit the petitioner herein to raise all contentions, legal as well as factual which arise under the provisions of the aforesaid Act before the authority concerned. Should such contentions be raised by the petitioner herein, the same shall be considered on their own merits and without being influenced by the impugned order in any manner.

5. The Special Leave Petition is disposed of in the aforesaid terms.

6. Pending application(s) shall stand disposed of.

7. At this stage, learned senior counsel for the petitioner submitted that if a statutory appeal as against the Assessment Order is to be filed now, the issue of limitation may be an impediment. He submitted that having regard to legal proceedings which were instituted by the petitioner herein, some time may be granted to the petitioner to file the statutory appeal. Should such an appeal be filed within the time frame to be granted by this Court, the appellate authority may not raise the issue of limitation as against the petitioner herein.

8. Learned A.S.G submitted that appropriate orders may be made on the said submissions.

9. In view of the fact that proceedings were initiated by the petitioner herein before the High Court as well as before this Court, we grant the petitioner herein two weeks time from today to to avail the statutory appellate remedy. Should the appeal be filed within the aforesaid period the issue of limitation shall not be raised by the respondent herein as well as by the appellate authority against the petitioner herein.

SLP (Crl.) No(s). 18321/2024

10. We have heard learned senior counsel for the petitioner and learned A.S.G. for the respondent/caveator.

11. We have perused the impugned order passed by the High Court wherein a challenge was made to Summoning Order dated 24.12.2019 and the proceedings emanating therefrom in a petition filed under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) seeking quashing of the Misc. Application No. 249/2019 dated 13.12.2019 filed under Sections 4, 10 and 12 of the Fugitive Economic Offenders Act, 2018.

12. On hearing learned senior counsel for the petitioner and learned A.S.G. for the respondent, we dispose of this Special Leave Petition by reserving liberty to the petitioner herein to raise all contentions, legal as well as factual, available to the petitioner herein before the concerned authority.

13. It is needless to observe that if such contentions are raised by the petitioner herein, the same shall be considered in accordance with law on their own merits and having regard to the provisions of the 2018 Act, referred to above.

14. We further clarify that when the relevant contentions are raised by the petitioner herein before the concerned authority, the same shall be considered on their own merits and without being influenced by any of the observations made by the High Court in the writ petition disposed of by the High Court.

15. Pending application(s) shall stand disposed of.