Delhi District Court
Directorate Of Enforcement vs Sanjay Bhandari on 5 July, 2025
IN THE COURT OF SH. SANJEEV AGGARWAL,
ERSTWHILE SPECIAL JUDGE (CBI) (PC ACT)-10,
ROUSE AVENUE COURT COMPLEX, NEW DELHI
NOW POSTED AS DISTRICT JUDGE (COMMERCIAL)-04,
WEST DISTRICT, TIS HAZARI COURTS, DELHI
(VIDE TRANSFER ORDER OF HON'BLE HIGH COURT
BEARING NO.15/D-3/Gaz.IA/DHC/2025, DATED 30.05.2025)
CNR No. : DLCT11-000029-2020
Case No. : MISC DJ ASJ/5/2020
Directorate of Enforcement
Represented through its Deputy Director
Government of India
10-A, Jamnagar House, Akbar Road
New Delhi-110011 ... Applicant
Versus
Sh. Sanjay Bhandari
S/o. Late Sh. R.K. Bhandari (as per records)
R/o. B-217, Greater Kailash-I,
New Delhi
Aged 58 Years
(Email [email protected])
... Accused / Respondent
Date of institution of the application : 24.12.2019
Date reserved for judgment : 24.05.2025
Date of pronouncement of Judgment : 05.07.2025
JUDGMENT
1. Vide this judgment, I shall dispose off the present
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Directorate of Enforcement Vs. Sanjay Bhandari
application moved on behalf of the ED u/S. 4 r/w. S. 10, 12 of the
Fugitive Economic Offenders Act.
2. Brief facts, as stated in para 1 to 7 in the above
application are reproduced as under :
1. That the Directorate of Enforcement (“ED”) is the
statutory agency under the Fugitive Economic Offenders
Act, 2018 (“Act”) entrusted with the authority to
implement the provisions of the Act and is also the
competent agency to investigate into offences under the
Prevention of Money Laundering Act, 2002 (“PMLA”).
The Applicant is competent to file this Application as
per Authorization No: F.No. LD/Fugitive Ordinance/
Rules/51/2018 dated 15.01.19. A copy of the said
Authorization is annexed herewith as Annexure A-1.
2. That the present application is being filed by the
Applicant u/s 4 of the Act for declaration of the Accused
named above as a Fugitive Economic Offender u/s 12 of
the Act and for confiscation of the Properties mentioned
in Annexure A-2 and Annexure A-3.
3. The Accused herein is covered under the definition of
Fugitive Economic Offender as defined u/s 2(f) of the
Act. The amount involved in the Scheduled Offence is
more than Rs. 100 Crores. The Accused herein has been
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Directorate of Enforcement Vs. Sanjay Bhandari
evading the process of law in India by staying outside
the jurisdiction of Indian Courts, and therefore it is
necessary to bring the Accused back to face prosecution,
to preserve the sanctity of the rule of law in India & for
matters connected therewith or incidental thereto.
4. The investigation under the Black Money
(Undisclosed Foreign Income and Assets) and
Imposition of Tax Act (Black Money Act), 2015 was
initiated by the Income Tax Authorities and a
Prosecution Complaint dated 22.12.2018 in CC No.
2121/2019 was filed by them against the said Accused
which is pending adjudication before the Ld. ACMM,
Tis Hazari Courts.
5. That the Complaint filed by the Income Tax
Authorities under the provisions of Section 51(1) of the
Black Money Act discloses hat the Accused has wilfully
not disclosed various mandatory information in his
returns of income, relating to foreign assets(including
financial interest in any entity) located outside India
acquired by him. Further, by acquisition of Al-Rahma
Trust in Dubai and a change in its structure, as a part of
the pre-meditated scheme to dissociate himself from all
his offshore entities/foreign assets and by fabricating
and back dating the documents, he has made another
attempt to wilfully cause such circumstances to exist
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Directorate of Enforcement Vs. Sanjay Bhandari
which will have the effect of enabling him to evade tax,
penalty or interest chargeable or imposable under the
Black Money Act as envisaged in the provisions of
Section 51(3) of the said Act. A copy of the Prosecution
Complaint filed by the Income Tax Authorities is
annexed herewith as Annexure A-4.
6. That since Section 51 of the Black Money
(Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015 (“Black Money Act”) is a
Scheduled Offence under the Fugitive Economic
Offenders Act, 2018 and since the proceeds of crime
involved are in excess of Rs. 100 crores and a NBW is
pending against the Accused issued by the Hon’ble
ACMM Court Tis Hazari, Delhi, the instant Application
is being preferred by the Applicant herein.
7. That simultaneously, the Enforcement Directorate is
also conducting investigation against the said Accused
in ECIR/HQ/03/2017 for the offence of Money
Laundering. Another criminal case is also registered by
Delhi Police under Official Secrets Act in case FIR No.
173/2016 and he has been declared a Proclaimed Person
in that case.
8. STATEMENT OF REASONS TO BELIEVE THAT
THE ACCUSED IS A FUGITIVE ECONOMIC
OFFENDER
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Directorate of Enforcement Vs. Sanjay Bhandari
a) The income tax authorities have filed a prosecution
complaint dated 22.12.2018 in CC No. 2121/2019
against the above accused u/S. 51 of The Black Money
Act.
b) That an open ended NBW was issued against the
above accused on 31.10.2019 in the above CC on the
reasonable belief that the accused deliberately evaded
the process of law, the copy of the NBW has been
annexed.
c) That the proceeds of the crime in the scheduled
offence under the Fugitive Economic Offenders Act
2018 is an excess of Rs. 100 Crores. The same has been
confirmed by the income tax authorities vide
communication dated 09.07.2019, which is also
annexed. The undisclosed bank account and properties
held by Mr. Sanjay Bhandari outside India are tabulated
in para 2 (page no. 2 & 3) in the prosecution complaint
filed by the income tax authorities mentioned above.
d) The material on record and the reasons to believe
show the complicity of the accused regarding the
commission of the scheduled offence have been duly
provided in the above prosecution complaint dated
22.12.2018 filed by the income tax department. The
contents of the same be also read as part and parcel of
the present application.
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Directorate of Enforcement Vs. Sanjay Bhandari
e) That the said accused has left the country under
suspicious circumstances, evading the process of law in
India by staying outside the jurisdiction of Indian
Courts, so as not to face criminal prosecution. A look
out circular was issued at the instance of the ED on
14.02.2017 against the said accused. Further a Red
Corner Notice (RCN) dated 16.10.2017 had also been
issued against the said accused in another FIR bearing
no. 173/2016, investigated by the Crime Branch, New
Delhi in which the above accused has been declared as a
proclaimed offender, his passport was also impounded
by the Regional Passport office, the relevant orders
annexed.
The accused however, still evaded the process of
law and despite well aware and having knowledge of the
above mentioned developments, has still chosen to
deliberately not to return the country and submit to the
jurisdiction of this Court.
9. STATEMENT OF INFORMATION AVAILABLE ON
THE WHEREABOUTS OF THE ACCUSED
a) It is suspected that as per the information available,
that the accused may be presently resided in United
Kingdom, where he has substantial pecuniary interest(s).
10. That the ED and other agencies have made all out
efforts to bring back the above fugitive economic
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Directorate of Enforcement Vs. Sanjay Bhandari
offender back to India to face criminal proceedings. The
gist of efforts made by them have been annexed with the
present application.
11. That a list of such property / value of such properties
connected to the proceeds of the crime in the present
case for which confiscation is sought has also been
annexed with the present application.
12. That during the investigations, it was found that
accused has various properties not only in foreign
countries, but also in India as well. These assets were
found either in the name of the accused or held by
Benamidar of the accused, since his properties were
acquired from the funds of the accused.
13. That the list of properties or benami properties
owned by accused in India, for which confiscation is
sought is also annexed. Some of these properties are
held by Sh. Sanjay bhandari through his companies, in
which he has substantial control through benami
holders. The name of the said companies / benami
holders have been mentioned in the relevant annexure.
The same are as under :
a. OIS Aerospace Pvt. Ltd.
b. Santech Petro Global Pvt. Ltd.
c. Santech Energy System and Services P Ltd
d. Santech IT Services Pvt. Ltd.
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Directorate of Enforcement Vs. Sanjay Bhandari
e. OIS Advanced Technology Pvt. Ltd.
f. Offset India Solutions Pvt. Ltd.
g. Santech Investment Pvt. Ltd.
h. OIS Transport technology Pvt. Ltd.
i. Avaana Software and Services Pvt. Ltd.
j. Niho Realtors (India) Pvt. Ltd.
k. Smt. Sonia Bhandari w/o Sh. Sanjay Bhandari
1. Smt. Ayushi Bhandari D/o Sh. Sanjay Bhandari
m. Smt. Nelofar D/o Sh. Farooq Ahmad Dar.
Further some of the properties held through the companies
are as under :
S. NO. Company Shell comapnies holding shares
1. Micromet ATI India Pvt. 1. SB Hospitality & Services Pvt. Ltd.
Ltd. (Majority shareholder- 46.67%)
2. Amarjit Motor Finance Pvt. Ltd.
3. Century Buildpro Pvt. Ltd.
4. Kaksh Impex Pvt. Ltd.
5. Madhur Buildcon Pvt. Ltd.
6. Saraswati Buildhome Pvt. Ltd.
7. Sunshine Infraprojects Pvt. Ltd.
2. S.B. Hospitality Pvt. Ltd. 1. Amarjit Motors Finance Pvt. Ltd.
(Majority Shareholder- 23.7%)
2. Surabhi Infraprojects Pvt. Ltd.
3. Eace Exim Pvt. Ltd.
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Directorate of Enforcement Vs. Sanjay Bhandari
4. Jasmine Soft Solutions Pvt. Ltd.
5. Mystic Fashions Pvt. Ltd.
6. Paksh Marketing Pvt. Ltd.
7. Toor Finance Company.
8. Bhola Motor Finance Pvt. Ltd.
9. Vimuri Finance Pvt. Ltd.
10. Cygnet Relator Pvt. Ltd.
14. That the accused is the owner of the properties
mentioned in Annexure A-2 and A-3, which were
purchased / acquired by him and are found involved in
the commission of the scheduled offence.
15. That from the above, it is clear that since the
proceeds of the crime in the present case stand at more
than Rs. 100 Cr. as on date and further since non bailable
warrants have been issued against the accused, the
accused falls within the scope of Section 2(1)(f) of the
FEO.
16. It is stated that as per Section 21 of the FEO,
2018, the provisions of this Act shall have overriding
effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force.
17. That the applicant further is asking for the leave
of this Court u/S. 13 of the FEO Act, as the investigations
in the scheduled offence are still ongoing and also with
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Directorate of Enforcement Vs. Sanjay Bhandari
reference to properties of the accused, which are either in
his name or owned by him as beneficial owner.
Therefore, it is prayed as under :
a) That notice u/S. 10 of the FEO Act requiring the
accused to appear in person before this Court by giving
time not less than six weeks from the date of the notice
and ;
b) Issue notice to the individuals / entities
mentioned in the application and the relevant Annexure
A-10, who have interest in the properties for which
confiscation is being sought;
c) Declare the accused mentioned above as Fugitive
Economic Offender and order for confiscation of the
properties to the Central Government, if he fails to
appear on the specific place and time, as envisaged u/S.
12 of the FEO Act.
3. Reply has been filed on behalf of the accused Sanjay
Bhandari to the averments made in the above application u/S. 4
r/w Sec. 10, 12 of the FEO Act.
PRELIMINARY SUBMISSIONS
It is stated at the outset that a bare perusal of the
material on the record will show that the actions of the ED
are perverse, further no case is made out against the
accused, as the ingredients of the provisions sought to be
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Directorate of Enforcement Vs. Sanjay Bhandari
invoked against the accused are not even prima facie
made out and the accused has been falsely implicated in
the present case.
In para 4 of the preliminary submissions, it is stated as
under :
(i) The Directorate of Enforcement registered
Enforcement Case Information Report (“ECIR”) an
on 10.02.2017 against the accused herein under the
Prevention Money Laundering of Act being
ECIR/HQ/03/2017. The ECIR stated that the
Scheduled Offence is under Section 51 of the Black
Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015 (hereinafter referred to
as the “Black Money Act, 2015”). The principal
allegation raised against the accused in the ECIR is
that he owned certain assets abroad which he did not
disclose to the Indian Income Tax Authorities and
therefore, he is alleged to have committed an offence
under Section 51 of the Black Money Act, 2015.
(ii) Thereafter, on 01.06.2017, the Directorate of
Enforcement issued the First Provisional Attachment
Order No. 03/2017 under the PMLA indiscriminately
attaching various properties totalling to over Rs. 21
crores of the accused, his wife and certain companies
in which he is a shareholder. The said attachmentCNR No. : DLCT11-000029-2020 Page 11 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
order was in relation to the ECIR/HQ/03/2017 which
stated that the Scheduled Offence is under Section 51
of the Black Money (Undisclosed Foreign Income
and Assets) and Imposition of Tax Act, 2015. It is
important to note that through the Provisional
Attachment Order, the Directorate of Enforcement
had attached properties which were allegedly
owned/acquired by the accused much prior to the
date of the alleged offence and even prior to the
coming into force of the Black Money Act. That
pursuant to the Provisional Attachment Order, the
Directorate of Enforcement filed the Complaint No.
784/2017 dated 28.06.2017 before the Adjudicating
Authority, under the Prevention of Money
Laundering Act, 2002 seeking confirmation of the
Provisional Attachment Order.
(iii) It is submitted that on 28.08.2017, Writ Petition
(Criminal) No. 2456/2017 was filed by the accused
Sanjay Bhandari seeking quashing of the
ECIR/HQ/03/2017. It is submitted that vide the
Order dated 29.08.2017, this Hon’ble Court directed
the Directorate of Enforcement to file its Status
Report by the next date of hearing. It is submitted
that the said Writ Petition (Criminal) No. 2456/2017
is presently pending adjudication before the Hon’bleCNR No. : DLCT11-000029-2020 Page 12 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
High Court.
(iv) It is submitted that after hearing arguments in
detail and considering all the aspects involved, the
Ld. Adjudicating Authority under the Prevention of
Money Laundering Act rejected and dismissed the
Complaint No. 784/2017 and consequently did not
confirm the Provisional Attachment Order dated
01.06.2017. It is submitted that the reasons given by
the Adjudicating Authority in rejecting the ED’s
Complaint were that upon consideration of the entire
material available, no scheduled offence under Part C
of the PMLA and specifically no offence of cross
border implications including Section 51 of the Black
Money Act, 2015 is made out. It was categorically
held that “the case is out of the purview of the
scheduled offence and hence the Prevention of
Money Laundering Act is not applicable.” A copy of
the final judgment dated 17.11.2017 passed by the
Adjudicating Authority in Complaint No. 784/2017 is
annexed herewith and marked as Annexure R1.
(v) It is submitted that the Directorate of
Enforcement filed an appeal before the Hon’ble
PMLA Appellate Tribunal on 05.01.2018 against the
judgment passed by the Ld. Adjudicating Authority,
wherein it was admitted that there is no evidence to
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prove the mandatory ingredient of cross border
transfer without which the Scheduled Offence cannot
apply and the entire PMLA proceedings become
illegal. A copy of the Appeal dated 05.01.2018 filed
by the Directorate of Enforcement before the Hon’ble
PMLA Appellate Tribunal in FPA-PMLA-2146/DLI/
2018 is annexed herewith and marked as Annexure
R2.
(vi) It is submitted that the same Directorate of
Enforcement had also attached the assets of certain
companies vide the order dated 26.12.2017 under the
Foreign Exchange Management Act, where the
accused is a shareholder. The assets of the same
companies were earlier attached under the First
Provisional Attachment Order No. 03/2017 dated
01.06.2017 and thereafter rejected vide the judgment
dated 17.11.2017 of the Ld. Adjudicating Authority.
It is submitted that the attachment made by the
Directorate of Enforcement under the FEMA was
challenged in WP(C) No. 4000/2018 and the Hon’ble
High Court vide the order dated 12.07.2018
permitted the said Companies to operate the bank
accounts subject to the balance being maintained as
on the said date. A copy of the said order dated
12.07.2018 in WP(C) 4000/2018 is annexed hereto as
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Directorate of Enforcement Vs. Sanjay Bhandari
Annexure R3.
(vii) It is submitted that on the very next date i.e.
13.07.2018, after the Hon’ble High Court had passed
the order dated 12.07.2018, the Directorate of
Enforcement issued the Provisional Attachment
Order No.5/2018 dated 13.07.2018 under the PMLA
Act. It is evident that the Provisional Attachment
Order failed to meet even the basic requirements
under the PMLA and had been passed with a biased
and mala fide intent solely to harass and intimidate
the accused herein. This is all the more evident when
seen in light of the fact that the Directorate of
Enforcement’s appeal was still pending adjudication
before the Hon’ble PMLA Appellate Tribunal and no
stay has been granted against the judgment dated
17.11.2017 passed by the Ld. Adjudicating Authority.
A copy of the Provisional Attachment Order
No.5/2018 dated 13.07.2018 under the PMLA Act
issued by the Directorate of Enforcement is annexed
hereto as Annexure R4.
(viii) The accused herein challenged the Provisional
Attachment Order No.5/2018 dated 13.07.2018 and
the subsequent proceedings before the Adjudicating
Authority before the Hon’ble High Court in WP(C)
No. 10106/2018 and the Hon’ble High Court vide
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Directorate of Enforcement Vs. Sanjay Bhandari
order dated 04.10.2018 was pleased to stay the
proceedings before the Adjudicating Authority with
the observation that “Prima facie, it would not be for
the concerned authority to once again pass a
provisional order of attachment, when the issue at
hand has been substantially adjudicated by the
Adjudicating Authority.” A copy of the order dated
04.10.2018 passed by the Hon’ble High Court in
WP(C) No. 10106/2018 is annexed hereto as
Annexure R5.
(ix) It is submitted that thereafter the Income Tax
Department filed Criminal Complaint No. 2121/2019
dated 22.12.2018 before the Tis Hazari Court, Delhi
alleging an offence under Section 51 of the Black
Money Act against the accused. Thereafter, vide
order dated 02.07.2019, Non Bailable Warrants were
issued against the accused, which were challenged in
Criminal Revision Petition No. 444/2019. The said
Revision Petition was finally dismissed vide
judgment and final order dated 23.10.2019.
(x) It is submitted that thereafter the Criminal
Complaint No. 2121/2019 was listed before the
ACMM, Tis Hazari Court, Delhi and vide the order
dated 31.10.2019, the Court issued Non Bailable
Warrants against the accused. It is submitted that the
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Directorate of Enforcement Vs. Sanjay Bhandari
said Criminal Complaint was not even listed that day
before the Magistrate and therefore, the passing of
the order dated 31.10.2019 is entirely contrary to
procedure and principles of natural justice.
(xi) It is submitted that the Directorate of
Enforcement thereafter filed the present Misc.
Application No. 249/2019 dated 13.12.2019. Vide
order dated 24.12.2019, the Hon’ble Court had issued
summons against the accused returnable on
26.02.2020.
(xii) The accused has sought quashing of the
Criminal Complaint No.2121/2019 dealing with
Section 51 of the Black Money Act, 2015 vide
Criminal MC No. 805/2020 which is pending before
the Hon’ble Delhi High Court. The Hon’ble Court
vide order dated 13.02.2020 was pleased to issue
Notice in the matter and directed the Income Tax
Department to file its reply/status report before the
next date of hearing i.e. 24.02.2020. It is submitted
that the Scheduled Offence in the present Misc.
Application No. 249/2019 under the Fugitive
Economic Offenders Act is Section 51 of the Black
Money Act, 2015. A copy of the Criminal MC No.
805/2020 filed by the accused before the Hon’ble
Delhi High Court is annexed hereto as Annexure R6.
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(xiii) The Income Tax Department has filed its Status
Report and Counter Affidavit in the said Criminal
MC No. 805/2020 wherein it has been admitted that
the assessment under the Black Money Act of the
accused has till date not been carried out. A copy of
the status report filed by the Income Tax Department
in Criminal MC No. 805/2020 is annexed hereto as
Annexure R7. Further, the Counter Affidavit filed by
the Income Tax Department in Criminal MC No.
805/2020 is annexed hereto as Annexure R8.
(xiv) It is submitted that the accused has also sought
quashing of the present Misc Application No.
249/2019 vide Criminal MC No. 1002/2020 which is
pending before the Hon’ble Delhi High Court. The
Hon’ble Court vide order dated 24.02.2020 was
pleased to direct that no coercive steps be taken in
the matter against the accused herein. A copy of the
Criminal MC No. 1002/2020 filed before the Hon’ble
Delhi High Court by the accused herein is annexed
hereto as Annexure R9. Further, a copy of the order
dated 24.02.2020 passed by the Hon’ble High Court
in Criminal MC No. 1002/2020 is annexed hereto as
Annexure R10.
(xv) It is submitted that there are various information
available to show that the foreign properties/assets in
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Directorate of Enforcement Vs. Sanjay Bhandari
question are not owned by the accused and are in fact
owned by others. The Directorate of Enforcement has
failed to meet its evidentiary requirements under
Section 16 of the Fugitive Economic Offenders Act
and as demonstrated hereinafter, the accused has
obtained information from his own best efforts and
due diligence that show that the ownership of the
foreign assets are in someone else’s name and not in
his name.
(xvi) It is submitted that the accused was subjected to
undue harassment and pressure from the various
enforcement agencies including the Directorate of
Enforcement, Income Tax Department and the
Central Bureau of Investigation, to compel him to
give false statements against the political opponents
of the Government. It is due to this undue harassment
and false prosecution that the accused was
constrained to leave India.
4. It is further stated that bare essentials for the
applicability of FEO, 2018 are not made out, therefore, the present
application deserves to be dismissed. It is further stated that
ingredients of Section 2(f) are not made out, as it is stated in the
said application that the proceeds of crime in the scheduled
offence are in excess of Rs. 100 crores. The same has been
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Directorate of Enforcement Vs. Sanjay Bhandari
confirmed by the income tax authorities vide their communication
dated 09.07.2019, however, there is not iota of evidence to show
that the proceeds of crime alleged to have been generated by the
accused from the schedule offence are Rs. 100 crores or more.
It is also submitted that the ED has relied upon
communication dated 09.07.2019 from the income tax department
to state, that the alleged proceeds of the crime are in excess of Rs.
100 crores, however, the same communication also states that the
assessment under Black Money Act against the accused has yet
not been finalized. Therefore, in the absence of any conclusive
assessment against the accused under the Black Money Act, there
is no basis whatsoever to say that the alleged proceeds of crime
are in excess of Rs. 100 crores, as a consequence the entire
proceedings are pre mature and politically motivated.
Further a mere letter from the income tax department
to the ED cannot be a basis for proving that the accused has
committed a schedule offence, where the proceeds of crime are in
excess of Rs. 100 crores. It is also stated that the declaration of
the accused as fugitive economic offender entails very serious
consequences including confiscation of his property and barring
him from defending any civil claims, effectively amounting to
economic death penalty. Therefore, the burden of proof placed on
the ED to prove that the accused is a fugitive economic offender
ought to be equally high as set out in Section 16 of the FEO Act.
Further the proof that the proceeds of the crime in the
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Directorate of Enforcement Vs. Sanjay Bhandari
schedule offence are in excess of Rs. 100 crores cannot in any
manner be proved by a mere letter from one agency to another.
Further the requirement u/S. 2(1)(m) is not met, therefore, the
complaint / application is liable to be dismissed.
5. It is further submitted that the income tax department
cannot proceed against an assessee for an offence u/S. 51 of the
Black Money Act, unless and until he is first assessed to tax under
Sec. 10 of that Act and the demand issued u/S. 13 is not paid and
he is then declared “assessee in default” u/S. 30(4), which
provides that an assessee shall be deemed to be in default, if tax
arrears are not paid in time prescribed, which is usually 30 days
from the date of receipt of notice of demand. Once the assessee is
declared to be in default, the tax recovery proceedings through the
tax recovery officers or the assessing officers follows through the
procedure set out in Black Money Act. For that it is essential for
the assessing officer to first establish tax liability on the assessee
and only then he can proceed to allege that such assessee willfully
attempted to evade such tax or not.
Therefore, the tax only arises after the completion of
the assessment and not before that. Therefore, no prosecution for
tax evasion can be launched without first determining whether any
tax was payable or not in the first place, therefore, without the
income tax first completing the assessment proceedings, therefore,
there is no basis for the ED to allege that proceeds of crime from
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Directorate of Enforcement Vs. Sanjay Bhandari
the schedule offence under the FEO are in excess of Rs. 100
crores, therefore, the application is liable to be dismissed on this
ground itself.
It is further stated that the mandatory period
prescribed u/S. 11 of the Black Money Act for carrying out
assessment has already been expired. Therefore, the entire
criminal proceedings are without any jurisdiction. Therefore, no
prosecution can be launched against the accused.
6. It is further stated that the present application
requires that the concerned officer of the ED should satisfy
himself that there are “reasons to believe” on the basis of the
material in his possession that the accused can be brought within
the ambit of FEO Act, the said reasons to believe cannot be a
rubber stamping opinion already founded by someone else. The
officer who is supposed to write down his reasons to believe has
to independently apply his mind. It cannot be a mechanical
reproduction of the words in the Statue. The said requirement as
stated above, has not met.
Further it is submitted that the ED has failed to
consider that even if the allegations made in the complaint no.
2121/2019 relating to Section 51 of the Black Money Act are
assumed to be correct for the sake of arguments only without
conceding the same, even then it would at the best amount to
preparation and not even attempt. As the stage of attempt would
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arise only when the alleged back dated document was tendered to
the income tax department by the accused as part of his defence
and prior to that such alleged document can only be classified as
preparation and not even attempt. The complaint lacks the same.
Therefore, the entire complaint no. 2121/2019 fails to reveal any
willful attempt to evade tax. Therefore, no case u/S. 51(1) of the
Black Money Act is made out, therefore, the proceedings under
the FEO Act are also no maintainable.
Further it is submitted that the malafide acts of the
ED are evident from the fact that they have picked up entire
complaint filed by the income tax department before the Tis
Hazari Courts bearing no. 2121/2019, without even verifying or
checking the veracity of the allegations made therein, for example,
one of the properties alleged to be owned by the accused is
property no. 2414, Floor no. 24, Building no. 1, AL NO JOUM
Tower, Burj Khalifa, UAE. On inspection it was found that said
property is owned by one Sanjay Bhandari, having passport no.
Z2042109, who was born in Kolkata and is in no way linked with
the present accused.
It is further stated that in the misc. complaint itself,
DOE has itself had admitted that one of the alleged properties i.e.
property no. 12 ELLERTON House, BRYANSTON Square,
London was allegedly bought in 2009 and thereafter sold in June
2010. Therefore, the said property cannot come within the
preview of black Money Act, 2015, as the said applicability of the
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Directorate of Enforcement Vs. Sanjay Bhandari
said Act commenced w.e.f. 01.07.2015 despite that the said
property is included in the complaint no. 2121/2019 filed by the
income tax department u/S. 51 of the Black Money Act, which
shows non application of mind.
It is also stated that the accused has on numerous
occasions told the income tax department i.e. he is not the owner
of the alleged properties and bank accounts, as mentioned in the
misc. application, yet in the absence of any clear and cogent
evidence regarding the ownership of these alleged foreign assets,
the same have been included qua the present accused, which
cannot be done and the entire case under FEO 2018 is to be
dismissed on this ground alone.
It is also stated that the DOE has failed to consider
that the alleged proceeds of crime (i.e. the alleged foreign assets
of the accused), as stated in the misc. application were all in
existence prior to the commencement of Black Money Act, since
the proceeds of crime have to be generated from the commission
of the schedule offence and the same cannot predate the
commission of the schedule offence, therefore, they cannot be said
to be the proceeds of crime as the Black Money Act came into
existence on 01 July, 2015 and the entire assets claimed by the
DOE were in existence prior thereto, therefore, the same cannot
be said to be the proceeds of crime, therefore, no case under FEO
Act is made out.
It is further submitted that Section 51 of the Black
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Directorate of Enforcement Vs. Sanjay Bhandari
Money Act relates to evasion of taxes. In this regard it is stated
that the proceeds of crime have to be derived from or obtained
from the commission of the schedule offence and in case of tax
evasion, there cannot be any positive generation of any proceeds
of crime.
7. It is further stated as under :
20. It is submitted that even otherwise an offence under
Section 51 of the Black Money Act relates to evasion of
taxes which in itself cannot lead to deriving of anything
positive and therefore, cannot generate any proceeds of
crime. It is reiterated that the proceeds of crime have to
be “derived from” or obtained from the commission of
the scheduled offence, and in case of tax evasion there
cannot be any positive generation of any proceeds of
crime.
21. It is further submitted that the essential requirement
under Section 4 of the Fugitive Economic Offenders
Act, 2018 is that the Directorate of Enforcement must
provide to the Court “a list of properties or the value of
such properties believed to be the proceeds of crime,
including any such property outside India for which
confiscation is sought” (See Section 4(2)(c)). Further,
under Section 12, upon the declaration of a person as aCNR No. : DLCT11-000029-2020 Page 25 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
Fugitive Economic Offender, it is these “proceeds of
crime” and any other property or benami property in
India or abroad, owned by the fugitive economic
offender which the Special Court may order to stand
confiscated to the Central Government.
22. Therefore, the quintessential requirement is that the
proceeds of crime must be derived or obtained as a
result of criminal activity relating to a Scheduled
Offence. There cannot be any “proceeds of crime
independent of the Scheduled Offence and more
importantly, the “proceeds of crime” must come into
place only after the commission of the Scheduled
Offence. In the present case, the Misc. Application
ought to be rejected at the outset as it treats the alleged
foreign assets of the accused as the “proceeds of
crime”, even though the alleged assets were all in
existence much prior to the commencement of the
Black Money Act i.e. 1st July 2015. Therefore, on this
ground alone, the Misc. Application ought to be
rejected.
23. It is submitted that the Hon’ble Delhi High Court in
M/s Himachal Emta Power Ltd. v. Union of India and
Ors., vide the final order dated 23.08.2018, has
categorically held that:
“17. It is clear from the language of Section 2(u) of the
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Directorate of Enforcement Vs. Sanjay Bhandari
PML Act that the expression “proceeds of crime” refers
to a property, which is “derived or obtained” by any
person as a result of criminal activity. Therefore, in
order to pass an order of provisional attachment, it was
necessary for the ED to have reasons to believe that the
property sought to be attached was “derived or
obtained” from any scheduled crime.”
From the above said judgment, it is evident that the
proceeds of crime must be derived or obtained from the
commission of the Scheduled Offence and not
otherwise. This is clear from a combined reading of
Sections 3 and 5 of the PMLA read with the relevant
definitions, as clearly held in the present judgment of
M/s Himachal Emta Power Ltd.
24. Further, even with respect to the bank accounts, the
Directorate of Enforcement has failed to show as to
what part of the money in the respective accounts is
“proceeds of crime” for the purposes of the present case
dealing with S. 51 of the Black Money Act.
25. It is further submitted that the Directorate of
Enforcement has made a mere bald allegation that the
proceeds of crime are in excess of Rs. 100 crores,
without even first quantifying as to what the proceeds
of crime are. It is submitted that without first
quantifying as to what is the alleged “proceeds of
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Directorate of Enforcement Vs. Sanjay Bhandari
crime”, the Directorate of Enforcement could not have
proceeded under the Fugitive Economic Offenders Act,
2018.
26. It is submitted that the accused has been
consistently harassed by the Directorate of Enforcement
by carrying out one attachment after another under
various Acts. It is submitted that the Directorate of
Enforcement first attached the accused’s properties in
India under the PMLA vide the First Provisional
Attachment Order No.3/2017 dated 01.06.2017. The
Adjudicating Authority under the PMLA is the
specialised body to adjudicate on offences under the
Prevention of Money Laundering Act. It is submitted
that while adjudicating on the First Provisional
Attachment Order No.3/2017 dated 01.06.2017, the
Adjudicating Authority categorically held that there
cannot be any prosecution under Section 51 of the
Black Money Act without first completing assessment
and the scheduled offence under the PMLA is not made
out. It was also held that the alleged properties were in
existence prior to the enactment of the Black Money
Act and therefore, could not be proceeds of crime.
27. It is further submitted that the Adjudicating
Authority vide the judgment dated 17.11.2017 has
categorically observed and held that there is no
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Directorate of Enforcement Vs. Sanjay Bhandari
scheduled offence that has been made out in the present
case. In this regard, the relevant extracts from the
judgment dated 17.11.2017 are as follows:
(a) “It is pertinent to note that there is no prosecution
instituted or launched for the offences punishable under
Section 51 of the Black Money Act and consequently
there is no scheduled offence in existence.” – Internal
Page 106.
(b) “In the absence of any material which would have
fairly established the initiation and institution of a
prosecution under Section 51 of PMLA, the Joint
Director could not have formed a belief that an offence
under Section 51 of the Black Money Act, which alone
is the scheduled offence, is registered. The reasonable
belief held by the Joint Director is thus vitiated and is
unsustainable.” – Internal page 172
(c) “From the record produced by the parties during the
course of hearing in this adjudication and the
submissions specifically made by the Counsel for the
Defendants, it is gathered that no assessment in terms
of Section 10 of the Black Money Act is
done/complete. It may be for the Income Tax authority
to examine the issue that when there is no demand of
tax, no levy or any recovery proceedings against the
assesee the notice proposing prosecution is appropriate.
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Directorate of Enforcement Vs. Sanjay Bhandari
[225 ITR 506] – Internal page 125
(d) “In view of the consideration of the entire material
available it is seen that no scheduled offence covered
under Part C of the schedule to PMLA and specifically
no offence of cross border implications and specified in
the offence of wilful attempt to evade any tax, penalty
or interest referred in Section 51 of the Black Money
(Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015 can be said to exist in the
present case. The statutory provisions enacted cannot
be disregarded. The case is out of the purview of the
scheduled offence and hence the Prevention of Money
Laundering Act is not applicable.” – Internal page 191
28. It is submitted that the Directorate of Enforcement
had also attached the assets of certain companies vide
the order dated 26.12.2017 under the Foreign Exchange
Management Act, where the accused is a shareholder.
The assets of the same companies were earlier attached
under the First Provisional Attachment Order No.
03/2017 dated 01.06.2017 and thereafter rejected vide
the judgment dated 17.11.2017 of the Ld. Adjudicating
Authority. It is submitted that the attachment made by
the Directorate of Enforcement under the FEMA was
challenged in WP(C) No. 4000/2018 and the Hon’ble
High Court vide the order dated 12.07.2018 permitted
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Directorate of Enforcement Vs. Sanjay Bhandari
the said Companies to operate the bank accounts
subject to the balance being maintained as on the said
date.
29. It is submitted that on the very next date i.e.
13.07.2018, after the Hon’ble High Court had passed
the order dated 12.07.2018, the Directorate of
Enforcement issued the Provisional Attachment Order
No.5/2018 dated 13.07.2018. It is evident that the
Provisional Attachment Order failed to meet even the
basic requirements under the PMLA and had been
passed with a biased and mala fide intent solely to
harass and intimidate the accused. This is all the more
evident when seen in light of the fact that the
Directorate of Enforcement’s appeal was still pending
adjudication before the Hon’ble PMLA Appellate
Tribunal and no stay has been granted against the
judgment dated 17.11.2017 passed by the Ld.
Adjudicating Authority.
30. The accused herein challenged the Provisional
Attachment Order No.5/2018 dated 13.07.2018 and the
subsequent proceedings before the Adjudicating
Authority before this Hon’ble Court in WP(C) No.
10106/2018 and the Hon’ble High Court vide order
dated 04.10.2018 was pleased to stay the proceedings
before the Adjudicating Authority with the observation
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Directorate of Enforcement Vs. Sanjay Bhandari
that “Prima facie, it would not be for the concerned
authority to once again pass a provisional order of
attachment, when the issue at hand has been
substantially adjudicated by the Adjudicating
Authority.”
31. This clearly shows that the Directorate of
Enforcement has been continuously harassing the
accused with a mala fide intent and acting on the basis
of ulterior considerations. The accused has repeatedly
faced attachment orders from the Directorate of
Enforcement one after another and this has caused
immense trauma and unnecessary harassment,
especially when the Hon’ble High Court has repeatedly
stayed the actions of the Directorate of Enforcement. It
is evident from the actions of the Directorate of
Enforcement that they are acting solely on the basis of
political considerations and are seeking to serve certain
vested considerations by acting in this mala fide
manner.
XXXX XXXX XXXX XXXX
PARA WISE REPLY
34. In response to para 1, it is submitted that there
cannot be a general authorisation for all cases by the
Director in favour of Deputy Directors and there has to
be a specific authorisation for each case. It is submitted
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Directorate of Enforcement Vs. Sanjay Bhandari
that the powers under the various provisions of the
Fugitive Economic Offenders Act is vested in the
Director or any other person authorised by him subject
to the restriction that the officer cannot be below the
rank of Deputy Director. Therefore, there has to be a
specific authorisation in each case by the Director in
favour of a particular Deputy Director rather than a
blanket delegation of power as done vide the
Authorisation Notice dated 15.01.2019. Further, a
perusal of the letter dated 15.01.2019 reveals that the
power has been delegated “with effect from 21st April,
2018”, which is entirely impermissible as the
authorisation or delegation of power can only be
prospective and not with retrospective effect.
35. In response to para 2, it is submitted that no case is
made out against the accused under the Fugitive
Economic Offenders Act and therefore, there is no basis
to seek confiscation of properties set out in Annexures
A-2 and A-3. In this regard, the contents of the
preliminary submissions aforesaid are reiterated and not
repeated herein for the sake of brevity.
36. In response to para 3, it is submitted that the
Directorate of Enforcement has not provided any
evidence whatsoever as to how the amount involved in
the Scheduled Offence is more than Rs. 100 crores. It is
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Directorate of Enforcement Vs. Sanjay Bhandari
submitted that the ingredients under Section 2(1)(f) are
not made out. It is reiterated that the accused has been
repeatedly harassed and maliciously prosecuted by the
Directorate of Enforcement and other government
agencies solely for political purposes and therefore, the
accused was constrained to leave India. It is submitted
that it is the Directorate of Enforcement which has
violated the Rule of Law by filing one false and
malicious case after another in order to harass and
intimidate the accused. In this regard, the contents of
the preliminary submissions aforesaid are reiterated and
not repeated herein for the sake of brevity.
37. In response to para 4, it is submitted that the
Complaint No. 2121/2019 initiated by the Income Tax
Department is malicious and not tenable as admittedly
no assessment has been carried out and therefore, in the
absence of assessment, there cannot be any tax evasion.
Further, the assessment under the Black Money Act
cannot be carried out as it is time barred by virtue of
Section 11 of the Black Money Act, and therefore, in
the absence of assessment there cannot be any evasion.
The accused has sought the quashing of the criminal
complaint no. 2121/2019 vide Criminal MC No.
805/2019 and the same is pending adjudication before
the Hon’ble Delhi High Court. In this regard, the
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Directorate of Enforcement Vs. Sanjay Bhandari
contents of the preliminary submissions aforesaid are
reiterated and not repeated herein for the sake of
brevity.
38. In response to para 5, it is submitted that the
Directorate of Enforcement has failed to consider the
material filed in the complaint no. 2121/2019 as the
entire complaint fails to disclose as to how the accused
is the owner of any of the alleged foreign assets in
question. It is submitted that a bare perusal of the entire
complaint no. 2121/2019 would reveal that there is no
evidence whatsoever of any foreign asset being owned
by the accused and therefore, there is no question of
disclosing it in his returns as he doesn’t own the same.
The Directorate of Enforcement has also failed to
consider that the accused has denied his ownership of
the alleged foreign assets and despite the same, no
assessment has been carried out under the Black Money
Act as provided for in Section 10. The accused has
sought the quashing of the criminal complaint no.
2121/2019 vide Criminal MC No. 805/2019 and the
same is pending adjudication before the Hon’ble Delhi
High Court. In this regard, the contents of the
preliminary submissions aforesaid are reiterated and not
repeated herein for the sake of brevity.
39. In response to para 6, it is submitted that the
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Directorate of Enforcement Vs. Sanjay Bhandari
Directorate of Enforcement has not provided any
evidence whatsoever as to how the amount involved in
the Scheduled Offence is more than Rs. 100 crores. The
Deputy Director has failed to provide the Reasons to
believe on the basis of the material in his possession as
to how the ingredients of the offence are made out
under the Fugitive Economic Offenders Act. In
particular, there is no material produced on record that
can reveal any cogent basis whatsoever that the
scheduled offence involves an amount in excess of Rs.
100 crores. It is submitted that even otherwise, a mere
letter from the Income Tax Department to the
Directorate of Enforcement cannot form the basis for
proving that the accused herein has committed a
Scheduled Offence where the proceeds of crime are in
excess of Rs. 100 crores. It is submitted that the
declaration of the accused as a Fugitive Economic
Offender, as sought for in the Misc. Application, entails
very serious consequences including confiscation of his
property and barring him from defending any civil
claims, effectively amounting to an economic death
penalty. Therefore, the burden of proof placed upon the
Directorate of Enforcement to prove that the accused is
a Fugitive Economic Offender ought to also be equally
high, as set out in Section 16, and the proof that the
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Directorate of Enforcement Vs. Sanjay Bhandari
proceeds of crime in the Scheduled Offence are in
excess of Rs. 100 crores can in no manner be proved by
a mere letter from one Government agency to another.
In this regard, the contents of the preliminary
submissions aforesaid are reiterated and not repeated
herein for the sake of brevity.
40. In response to para 7, it is submitted that on
28.08.2017, Writ Petition (Criminal) No. 2456/2017
was filed by the accused Sanjay Bhandari seeking
quashing of the ECIR/HQ/03/2017. It is submitted that
vide the Order dated 29.08.2017, this Hon’ble Court
directed the Directorate of Enforcement to file its Status
Report by the next date of hearing. It is submitted that
the said Writ Petition (Criminal) No. 2456/2017 is
presently pending adjudication before the Hon’ble High
Court. It is reiterated that the accused has been
repeatedly harassed and maliciously prosecuted by the
Directorate of Enforcement and other government
agencies solely for political purposes and therefore, the
accused was constrained to leave India. It is submitted
that it is the various government agencies which have
violated the Rule of Law by filing one false and
malicious case after another in order to harass and
intimidate the accused. In this regard, the contents of
the preliminary submissions aforesaid are reiterated and
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Directorate of Enforcement Vs. Sanjay Bhandari
not repeated herein for the sake of brevity.
41. In response to para 8, it is reiterated that the Deputy
Director has failed to provide the Reasons to believe on
the basis of the material in his possession as to how the
ingredients of the offence are made out under the
Fugitive Economic Offenders Act. In particular, there is
no material produced on record that can reveal any
cogent basis whatsoever that the scheduled offence
involves an amount in excess of Rs. 100 crores. It is
submitted that even otherwise, a mere letter from the
Income Tax Department to the Directorate of
Enforcement cannot form the basis for proving that the
accused herein has committed a Scheduled Offence
where the proceeds of crime are in excess of Rs. 100
crores. It is submitted that the declaration of the
accused as a Fugitive Economic Offender, as sought for
in the Misc. Application, entails very serious
consequences including confiscation of his property
and barring him from defending any civil claims,
effectively amounting to an economic death penalty.
Therefore, the burden of proof placed upon the
Directorate of Enforcement to prove that the accused is
a Fugitive Economic Offender ought to also be equally
high, as set out in Section 16, and the proof that the
proceeds of crime in the Scheduled Offence are in
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Directorate of Enforcement Vs. Sanjay Bhandari
excess of Rs. 100 crores can in no manner be proved by
a mere letter from one Government agency to another.
It is further submitted that merely listing foreign assets
in the name of the accused cannot amount to proof of
ownership and the Directorate of Enforcement has
failed to consider that the entire complaint no.
2121/2019 does not disclose any proof of ownership in
the name of the accused. It is reiterated that the accused
has been repeatedly harassed and maliciously
prosecuted by the Directorate of Enforcement and other
government agencies solely for political purposes and
therefore, the accused was constrained to leave India. It
is submitted that it is the various government agencies
which have violated the Rule of Law by filing one false
and malicious case after another in order to harass and
intimidate the accused. Further, the references made to
the various other proceedings have no bearing
whatsoever to the present case and does not satisfy the
requirements under the Fugitive Economic Offenders
Act. In this regard, the contents of the preliminary
submissions aforesaid are reiterated and not repeated
herein for the sake of brevity.
XXXX XXXX XXXX XXXX
44. In response to paras 11 and 12, it is submitted that
the Directorate of Enforcement has failed to provide
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Directorate of Enforcement Vs. Sanjay Bhandari
any evidence whatsoever to show that the foreign assets
referred to in an Annexure A-2 are owned by the
accused Sanjay Bhandari. It is further submitted that a
bare perusal of Annexure A-2 would reveal that a large
number of the alleged foreign assets in question are in
the name of companies. The Directorate of
Enforcement has failed to produce any evidence
whatsoever as to who are the shareholders of the said
Companies and how they are connected with the
accused person. It is reiterated that mere bald
statements that the accused is the owner of foreign
assets cannot meet the evidentiary requirements set out
in Section 16 of the Fugitive Economic Offenders Act.
Further, in the Misc. Complaint itself the Directorate of
Enforcement has admitted that one of the alleged
properties being Property No.12, Ellerton House,
Bryanston Square, London was allegedly bought in
2009 and thereafter sold in June 2010 by the accused.
Therefore, assuming that the Directorate of
Enforcement’s claims are correct, the alleged property
cannot come within the purview of the Black Money
Act, 2015 as the accused ceased to be the owner of the
alleged property in 2010 and therefore, there is no
applicability of the Black Money Act, 2015 which was
enacted and commenced on 1st July 2015. It is
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Directorate of Enforcement Vs. Sanjay Bhandari
submitted that it is settled law that a criminal statute
cannot have any retrospective effect. Despite the same,
the said property is included in the Complaint No.
2121/2019 filed by the Income Tax Department under
Section 51 of the Black Money Act. This clearly shows
the brazen arbitrariness and non application of mind
with which the Directorate of Enforcement has acted
solely with a mala fide intent to harass the accused. In
this regard, the contents of the preliminary submissions
aforesaid are reiterated and not repeated herein for the
sake of brevity.
XXXX XXXX XXXX XXXX
XXXX XXXX XXXX XXXX
Therefore, it is prayed that the misc. application no.
249/2019 dated 13.12.2019 be dismissed with exemplary cost(s).
8. Rejoinder has been filed by the DOE to the reply
dated 02.03.2020 by the accused in which the allegations made in
the reply have been firmly refuted and those made in the
application have been reiterated as correct. Besides that along
with the rejoinder an assessment order dated 23.03.2020 for the
assessment year 2017-18 qua the accused Sanjay Bhandari u/S.
10(4) of the Black Money Act has been filed, in which the total
undisclosed foreign income of the accused has been assessed to be
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Directorate of Enforcement Vs. Sanjay Bhandari
Rs. 655,62,15,670/- and the tax chargeable in respect of such
undisclosed foreign income and assets as per Section 3(1) of the
Black Money Act has been worked out to be Rs. 196,68,64,700/-.
In support of the contention of the prosecution that the total
willful evasion of tax was more than Rs. 100 Crores as per Section
2(m) of the FEO Act 2018.
9. I have heard Sh. Zoheb Hossain, Ld. Special Counsel
for the applicant/DOE along with Sh. N.K. Matta, Ld. SPP for the
applicant/DOE, Sh. Pranjal Tripathi, Sh. Mohd. Faizan Khan and
Sh. Kartik Sabarwal, Advocates for ED and Sh. Maninder Singh,
Senior Advocate along with Sh. Avneesh Arputham, Sh. Ankit
Sharma, Ms. Aekta Vats and Ms. Sanjana Nair, Ld. Counsel(s) for
the accused / respondent Sanjay Bhandari and perused the record.
I have also gone through the written submissions filed on behalf
of the DOE as well as the above accused / respondent.
10. Ld. Special Counsel for the DOE has relied upon
following judgments in support of their contentions :
a) Vijay Madanlal Choudhary Vs. Union of India and
Ors. 2022 SCC Online SC 929;
2022 Live Law (SC) 867;
c) Lakshmi Narayan Guin and Others Vs. Nirajnan
Modak (1985) 1 SCC 270;
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Directorate of Enforcement Vs. Sanjay Bhandari
d) CIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd.
(2008) SCC 208;
e) Rajendra Singh Verma Vs. Ltd. Governor (NCT of
Delhi) (2011) 10 SCC 1;
f) Satyendar Kumar Jain Vs. Directorate of
Enforcement (2023) 5 High Court Cases (Del) 461;
g) Pradeep Nirankarnath Sharma Vs. Directortae of
Enforcement and Another 2025 SCC OnLine SC 560;
h) Radhika Agarwal Vs. Union of India and Others
2025 SCC OnLine SC 449;
i) The Commissioner of Income Tax, Punjab etc. Vs.
Shree Jagan Nath Maheshwary, Amritsar (Civil Income
tax Reference 24 of 1953),
j) Radheshvam Kejriwal Vs. State of West Bengal &
Anr. Crl. Appl. No. 1097 of 2003;
k) P. Jayappan Vs. S.K. Perumal 1984 (Supp) SCC 437
l) Assistant Collector of Customs, Bombay and anotehr
Vs. L.R. Melwani and another AIR 1970 SC 962;
m) Standard Chartered Bank and others Vs. Directorate
of Enforcement and others (2006) 4 SCC 278;
n) Sasi Enterprises Vs. ACIT (2014) 5 SCC 139;
o) PNB Finance & Industries Ltd. Vs. Gita Kriplani
1984 SCC Online Del 191;
p) Union of India and Others Vs. Gautam Khaitan
(2019) 10 SCC 108;
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Directorate of Enforcement Vs. Sanjay Bhandari
q) Union of India and Others Vs. Gautam Khaitan, SLP
(Crl.) 4911 of 2019, dated 21.05.2019.
11. On the other hand, Ld. Senior Counsel for the
accused / respondent has relied upon the following judgments in
support of his contentions :
a) Mohinder Singh Gill and Another Vs. The Chief
Election Commissioner, New Delhi and Others (1978)
1 Supreme Court Cases 405;
b) Anirudhsinhji Karanshinghji Jadeja and Another VS.
State of Gujarat (1995) 5 Supreme Court Cases 302;
c) Oriental Insurance Company Vs. Commissioner of
Income Tax, MANU/DE/2677/2015;
d) Sanjay Bhandari Vs. Income Tax Office Crl.M.C.
805/2020 and Crl.M.A. No. 3314/2020.
12. The Fugitive Economic Offenders Act 2018
(hereinafter referred to as FEO Act ) was enacted, the object(s) and
reasons for enacting the said Act has been given in the statement
of objects and reasons, which reads as under :
There have been several instances of economic
offenders fleeing the jurisdiction of Indian Courts
anticipating the commencement of criminal
proceedings or sometimes during the pendency of such
proceedings. The absence of such offenders from Indian
Courts has several deleterious consequences, such as, it
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Directorate of Enforcement Vs. Sanjay Bhandari
obstructs investigation in criminal cases, it wastes
precious time of courts and it undermines the rule of
law in India. Further, most of such cases of economic
offences involve non-repayment of bank loans thereby
worsening the financial health of the banking sector in
India. The existing civil and criminal provisions in law
are inadequate to deal with the severity of the problem.
2. In order to address the said problem and lay down
measures to deter economic offenders from evading the
process of Indian law by remaining outside the
jurisdiction of Indian Courts, it is proposed to enact a
legislation, namely, the Fugitive Economic Offenders
Bill, 2018 to ensure that fugitive economic offenders
return to India to face the action in accordance with
law.
Section 2(f) thereof reads as under :
(f) “fugitive economic offender” means any individual
against whom a warrant for arrest in relation to a
Scheduled Offence has been issued by any Court in
India, who –
(I) has left India so as to avoid criminal prosecution; or
(ii) being abroad, refuses to return to India to face
criminal prosecution.
Further Section 2(k) and 2(m) reads as under :
(k) proceeds of crime” means any property derived or
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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;
(m) “Scheduled Offence” means an offence specified in
the Schedule, if the total value involved in such offence
or offences is one hundred crore rupees or more.
Further Section(s), 4, 10, 11, 12 & 16 of the said Act reads
as under :
4. Application for declaration of fugitive economic
offender and procedure therefor.-(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 reasons for such
belief to be recorded in writing), on the basis of material
in his possession, that any individual is à fugitive
economie offender, he may file an application in such
form and manner as may be prescribed in the Special
Court that such individual may be declared as a fugitive
economic offender.
(2) The application referred to in sub-section (1) shall
contain :
(a) reasons for the belief that an individual is a fugitive
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economic offender;
(b) any information available as to the whereabouts of
the fugitive economic offender;
(c) a list of properties or the value of such properties
believed to be the proceeds of crime, including any such
property outside India for which confiscation is sought;
(d) a list of properties or benami properties owned by
the individual in India or abroad for which confiscation
is sought; and
(e) a list of persons who may have an interest in any of
the properties listed under clauses (c) and (d).
(3) The Authorities appointed for the purposes of the
Prevention of Money-laundering Act, 2002 (15 of 2003)
shall be the Authorities for the purposes of this Act.
10. Notice.-(1) Where an application under section 4 has
been duly filed, the Special Court shall issue a notice to
an individual who is alleged to be a fugitive economic
offender.
(2) The notice referred to in sub-section (1), shall also be
issued to any other person who has any interest in the
property mentioned in the application under sub-section
(2) of section 4.
(3) A notice under sub-section (1) shall-
(a) require the individual to appear at a specified place
and time not less than six weeks from the date of issue
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of such notice; and
(b) state that failure to appear on the specified place and
time shall result in a declaration of the individual as a
fugitive economic offender and confiscation of property
under this Act.
(4) A notice under sub-section (1) shall be forwarded to
such authority, as the Central Government may notify,
for effecting service in a contracting State
(5) The authority referred to in sub-section (4) shall
make efforts to serve the notice within a period of two
weeks in such manner as may be prescribed.
(6) A notice under sub-section (1) may also be served to
the individual alleged to be a fugitive economic offender
by electronic means to-
(a) his electronic mail address submitted in connection
with an application for allotment of Permanent Account
Number under section 139-A of the Income-tax Act,
1961 (43 of 1961);
(b) his electronic mail address submitted in connection
with an application for enrolment under section 3 of the
Aadhaar (Targeted Delivery of Financial and Other
Subsidies, Benefits and Services) Act, 2016 (18 of
2016); or
(c) any other electronic account as may be prescribed,
belonging to the individual which is accessed by him
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over the internet, subject to the satisfaction of the
Special Court that such account has been recently
accessed by the individual and constitutes a reasonable
method for communication of the notice to the
individual.
11. Procedure for hearing application.-(1) Where any
individual to whom notice has been issued under sub-
section (1) of section 10 appears in person at the place
and time specified in the notice, the Special Court may
terminate the proceedings under this Act.
(2) Where any individual to whom notice has been
issued under sub-section (1) of section 10 fails to appear
at the place and time specified in the notice, but enters
appearance through counsel, the Special Court may in
its discretion give a period of one week to file a reply to
the application under section 4.
(3) Where any individual to whom notice has been
issued under sub-section (1) of section 10 fails to enter
appearance either in person or through counsel, and the
Special Court is satisfied-
(a) that service of notice has been effected on such
party; or
(b) that notice could not be served in spite of best efforts
because such individual has evaded service of notice, it
may, after recording reasons in writing, proceed to hear
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the application.
(4) The Special Court may also give any person to
whom notice has been issued under sub-section (2) of
section 10 a period of one week to file a reply to the
application under section 4.
12. Declaration of fugitive economic offender. (1) After
hearing the application under section 4, if the Special
Court is satisfied that an individual is a fugitive
economic offender, it may, by an order, declare the
individual as a fugitive economic offender for reasons to
be recorded in writing.
(2) On a declaration under sub-section (1), the Special
Court may order that any of the following properties
stand confiscated to the Central Government-
(a) the proceeds of crime in India or abroad, whether or
not such property is owned by the fugitive economic
offender; and
(b) any other property or benami property in India or
abroad, owned by the fugitive economic offender.
(3) The confiscation order of the Special Court shall, to
the extent possible, identify the properties in India or
abroad that constitute proceeds of crime which are to be
confiscated and in case such properties cannot be
identified, quantify the value of the proceeds of crime.
(4) The confiscation order of the Special Court shall
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separately list any other property owned by the fugitive
economic offender in India which is to be confiscated.
(5) Where the Special Court has made an order for
confiscation of any property under sub-section (2), and
such property is in a contracting State, the Special Court
may issue a letter of request to a Court or authority in
the contracting State for execution of such order.
(6) Every letter of request to be transmitted to a
contracting State under sub-section (5) shall be
transmitted in such form and manner as the Central
Government may, by notification, specify in this behalf.
(7) The Special Court may, while making the
confiscation order, exempt from confiscation any
property which is a proceed of crime in which any other
person, other than the fugitive economic offender, has an
interest if it is satisfied that such interest was acquired
bona fide and without knowledge of the fact that the
property was proceeds of crime.
(8) All the rights and title in the confiscated property
shall, from the date of the confiscation order, vest in the
Central Government, free from all encumbrances.
(9) Where on the conclusion of the proceedings, the
Special Court finds that the individual is not a fugitive
economic offender, the Special Court shall order release
of property or record attached or seized under this Act to
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the person entitled to receive it.
(10) Where an order releasing the property has been
made by the Special Court under sub-section (9), the
Director or any other officer authorised by him in this
behalf may withhold the release of any such property or
record for a period of ninety days from the date of
receipt of such order, if he is of the opinion that such
property is relevant for the appeal proceedings under
this Act.
16. Rules of evidence.-(1) The burden of proof for
establishing-
16(a) that an individual is a fugitive economic offender;
or
(b) that a property is the proceeds of crime or any other
property in which the individual alleged to be a fugitive
economic offender has an interest, shall be on the
Director or the person authorised by the Director to file
the application under section 4.
(2) Notwithstanding anything contained in any other law
for the time being in force, where any person referred to
in sub-section (2) of section 10 claims that any interest
in any property was acquired bona fide and without
knowledge of the fact that, such property constitutes
proceeds of crime, the burden of proving such fact shall
lie upon him.
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(3) The standard of proof applicable to the determination
of facts by the Special Court under this Act shall be
preponderance of probabilities.
Further The Schedule reads as under :
XIII. Offences under the Black Money (Undisclosed
Foreign Income and Assets) and Imposition of Tax
Act, 2015 (22 of 2015)
51. Punishment for willful attempt to evade tax.
13. The relevant provisions of The Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax
Act, 2015 (hereinafter referred to as Black Money Act) reads as
under :
2(11) “undisclosed asset located outside India” means
an asset (including financial interest in any entity)
located outside India, held by the assessee in his name
or in respect of which he is a beneficial owner, and he
has no explanation about the source of investment in
such asset or the explanation given by him is in the
opinion of the Assessing Officer unsatisfactory;
(12) “undisclosed foreign income and asset” means
the total amount of undisclosed income of an assessee
from a source located outside India and the value of
an undisclosed asset located outside India, referred to
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section 5;
3. Charge of tax.–(1) There shall be charged on
every assessee for every assessment year commencing
on or after the 1st day of April, 2016, subject to the
provisions of this Act, a tax in respect of his total
undisclosed foreign income and asset of the previous
year at the rate of thirty per cent. of such undisclosed
income and asset:
Provided that an undisclosed asset located outside
India shall be charged to tax on its value in the
previous year in which such asset comes to the notice
of the Assessing Officer.
(2) For the purposes of this section, “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.
10. . Assessment.–(1) For the purposes of making an
assessment or reassessment under this Act, the
Assessing Officer may, on receipt of an information
from an income-tax authority under the Income-tax
Act or any other authority under any law for the time
being in force or on coming of any information to his
notice, serve on any person, a notice requiring him on
a date to be specified to produce or cause to be
produced such accounts or documents or evidence as
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the Assessing Officer may require for the purposes of
this Act and may, from time to time, serve further
notices requiring the production of such other
accounts or documents or evidence as he may require.
(2) The Assessing Officer may make such inquiry, as
he considers necessary, for the purpose of obtaining
full information in respect of undisclosed foreign
income and asset of any person for the relevant
financial year or years.
(3) The Assessing Officer, after considering such
accounts, documents or evidence, as he has obtained
under sub-section (1), and after taking into account
any relevant material which he has gathered under
sub-section (2) and any other evidence produced by
the assessee, shall by an order in writing, assess 1[or
reassess] the undisclosed foreign income and asset
and determine the sum payable by the assessee.
(4) If any person fails to comply with all the terms of
the notice under sub-section (1), the Assessing Officer
shall, after taking into account all the relevant
material which he has gathered and after giving the
assessee an opportunity of being heard, make the
assessment 1[or reassessment] of undisclosed foreign
income and asset to the best of his judgment and
determine the sum payable by the assessee.
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40. Interest for default in furnishing return and
payment or deferment of advance tax.–
(1) Where the assessee has any income from a source
outside India which has not been disclosed in the
return of income furnished under sub-section (1) of
section 139 of the Income-tax Act or the return of
income has not been furnished under the said sub-
section, interest shall be chargeable in accordance
with the provisions of section 234A of the Income-tax
Act.
(2) Where the assessee has any undisclosed income
from a source outside India and the advance tax on
such income has not been paid in accordance with
Part C of Chapter XVII of the Income-tax Act,
interest shall be chargeable in accordance with the
provisions of sections 234B and 234C of the Income-
tax Act.
41. Penalty in relation to undisclosed foreign income
and asset.–The Assessing Officer may direct that in a
case where tax has been computed under section 10 in
respect of undisclosed foreign income and asset, the
assessee shall pay by way of penalty, in addition to
tax, if any, payable by him, a sum equal to three times
the tax computed under that section.
48. Chapter not in derogation of any other law or any
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other provision of this Act.–
(1) The provisions of this Chapter shall be in addition
to, and not in derogation of, the provisions of any
other law providing for prosecution for offences
thereunder.
(2) The provisions of this Chapter shall be
independent of any order under this Act that may be
made, or has not been made, on any person and it
shall be no defence that the order has not been made
on account of time limitation or for any other reason.
50. Punishment for failure to furnish in return of
income, any information about an asset (including
financial interest in any entity) located outside India.
–If any 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, 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
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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 the payment of any tax, penalty
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 wilful attempt to
evade any tax, penalty or interest chargeable or
imposable under this Act or the payment thereof shall
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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) wilfully 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.
14. The Section 51 of the Black Money Act (which is a
schedule offence in this case under FEO Act) entails punishment,
if a person other than not ordinarily resident in India willfully
attempts in any manner whatsoever to evade any tax, penalty or
interest chargeable or imposable under this Act, then he shall be
punished with rigorous punishment for a term which shall not be
less than three years and which may extend to ten years with fine.
15. The above Section 51 can be dismantled into
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following parts as under :
(a) Section 3 of the Black Money Act, which charges on
every assessee for every assessment year after the first day
of April 2018, a tax in respect of his total undisclosed
foreign income and asset @ of 30% of such undisclosed
income and asset.
(b) Section 41 of the Black Money Act, whereby the
assessing officer may direct that in a case where the tax has
been computed u/S. 10 in respect of undisclosed foreign
income and asset, the assessee shall pay by way of penalty
in addition to tax, a sum equal to three times the tax
computed under that section.
(c) That as per Section 40 of the Black Money Act, where
the assessee has any income from any source outside India,
which has not been disclosed in the return of income
punished under Sub Section 1 of 139 of Income Tax Act or
the return of the income has not been furnished under said
sub section, interest shall be chargeable in accordance of
provision of Section 234(a) of Income Tax Act.
Therefore, Section 51 of the Black Money Act
consists of tax imposable or imposed @ 30%, thereafter penalty
three times the tax i.e. 90% i.e. making it a total of 120% of the
evasion of tax chargeable or imposable plus the interest as charged
u/S. 40 r/w. Section 234(A) of the Income Tax Act.
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16. The Section 51 of the Black Money Act does not
require that assessment should be necessary or complete for it to
become applicable, as by virtue of Section 48(2) of the Black
Money Act, reproduced above, the provisions of this Chapter i.e.
the Chapter pertaining to offences and prosecutions shall be
independent of any order under this Act that may be made or has
not been made or any person and it shall be no defence and the
order has not been made on account of time limitation or any
other reason. Therefore, assessment proceedings and the
prosecution can continue simultaneously independent of each
other, since for launching prosecution u/S. 51 of Black Money
Act, assessment u/S. 10 is not a sine qua non, as it has been held
in the judgment P. Jayappan Vs. S. K. Perumal (supra) that
assessment and prosecution are independent proceedings.
17. For the purpose of Section 2(1)(m) of FEO Act i.e.
the schedule offence means an offence, if the total value involved
in such offence or offences is Rs. 100 crores or more, the said total
value of the offence u/S. 51 of the Black Money Act i.e. the
aggregate value of total evaded tax or attempted to be evaded
penalty and interest, which has to be calculated from the sum total
undisclosed foreign assets and income concealed by a person. This
value can only be determined on total undisclosed income and
asset, therefore, the attempted evasion would be sum total of
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evaded tax or sought to be evaded tax, penalty or interest
chargeable on the total undisclosed foreign income and assets of
an individual, which he has concealed from the revenue
authorities. Therefore, the same cannot be said to be the total
asset value of the undisclosed foreign income and assets of an
individual, which he has concealed from the revenue authorities,
but the sum total of evaded tax, or sought to be evaded tax,
penalty and interest on the said undisclosed foreign income and
assets of an individual.
18. Further Section 51 of the Black Money Act makes
even an attempt to willfully evade tax an offence i.e. when some
one intends to commit a crime, takes step towards committing it,
but does not actually complete the crime.
That is to say that even though the evasion of tax
may have not been completed, even the willful attempt to evade
tax u/S. 51 of the Black Money Act, is sufficient to constitute an
offence under the said section, though a willful attempt
necessitates an element of mensrea or a culpable mental state
distinguishing it from mere breaches or failures that results in civil
liability.
19. The willful attempt to evade tax, penalty or interest
may come to the notice of the revenue at the time of survey,
search etc. and as elucidated u/S. 51(3) of the above Act that it
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may include the false entry in the books of account or other
documents pertaining to the proceedings under this Act or willful
omitting the relevant entry in the books of account or other
documents or that person causes any other circumstances to exist
which will have the effect of enabling such person to evade tax,
penalty or interest chargeable or imposable under the Act or the
payment thereof.
It is the deliberate and illegal act of avoiding the
payment of taxes legally owned, tax evasion typically involves
misrepresentations or concealment of income, falsifying financial
records or exaggerating deductions to lower taxable income.
The word “willful” involves the element of mensrea.
20. In the judgment titled as Unique Trading Company
and Ors Vs. Income Tax Officer – 18(3)(5) and Ors.
MANU/MH/0690/2024, it has been held as under :
16. To start with, it may be apposite to note the provisions contained
in Section 276C of the IT Act, 1961. Section 276C is subsumed in
Chapter XXI under caption ‘Penalties Imposable’. It reads as under:
“276C. (1) If a person wilfully attempts in any manner
whatsoever to evade any tax, penalty or interest chargeable or
[imposable, or under reports his income,] 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,-
(i) in a case where the amount sought to be evaded
[or tax on under- reported income] exceeds [twenty-
five] hundred thousand rupees, with rigorous
imprisonment for a term which shall not be less than
six months but which may extend to seven years and
with fine;
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(ii) in any other case, with rigorous imprisonment
for a term which shall not be less than three months
but which may extend to [two] years and with fine.
(2) If a person wilfully attempts in any manner whatsoever
to evade the payment of any tax, penalty 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 [two] years and shall, in the discretion of
the court, also be liable to fine.
Explanation.- For the purposes of this sections, a wilful
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) wilfully omits or causes to be omitted any
relevant entry or statement in such books of account
or other documents; or
(iv) causes any other circumstances 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.].
17. On a plain reading of sub-section (1) and (2) of Section 276C,
the distinction between two sub-sections becomes evidently clear.
While sub-section (1) of Section 276C deals with wilful attempt to
evade any tax penalty or interest chargeable or imposable or under
reporting of income, sub-section (2) of Section 276C punishes
wilful attempt to evade the payment of any tax, penalty or interest.
Evidently, sub-sections (1) and (2) of Section 276C operate in
different spheres. However, the linchpin of the offences covered by
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sub-section (1) as well as sub-section (2) of Section 276 is, “wilful
attempt to evade”. The Explanation to Section 276C by way of
illustration provides the the kinds of acts which may amount to
wilful attempt to evade tax. Undoubtedly, the Explanation is
inclusive and, therefore, there can be a wilful attempt to evade tax
in any other manner not expressly referred to in the Explanation.
Nonetheless, the illustrations adverted to in the Explanation
emphasise a conscious act or omission on the part of the assessee
with a design to evade the tax.
18. The moot question that wrenches to the fore is, “whether a
failure to pay any tax, interest or penalty can be construed as a
wilful attempt to evade tax, interest or penalty, without anything
more?
XXXX XXXX XXXX XXXX
26. If the aforesaid two expressions, “wilful attempt” and “to
evade” are read in conjunction, to fall within the tentacles of
Section 276C(2) the act or omission ought to constitute a wilful
attempt with a design to defeat the liability to pay tax. “Attempt” in
turn, means an act or an instance of making an effort to accomplish
something. In criminal law an attempt connotes an overt act that is
done with the intent to commit a crime but that falls short of
completing the crime. It is an inchoate offense which is distinct
from the attempted crime.
XXXX XXXX XXXX XXXX
29. In the aforesaid factual background, after adverting to
provisions contained in Section 276C(1) and Section 277 (false
statement in verification etc.) of the IT Act, 1961, the Supreme
Court enunciated that wilful attempt to evade any tax, penalty or
interest chargeable or imposable under Section 276C is a positive
act on the part of the accused which is required to bring home the
charge against the accused. Similarly, a statement made by a
person in any clarification under the Act can be an offence under
Section 277 if the person making the same effort knew or believed
the same to be false or does not believe it to be true. Necessary
mens rea, therefore, is required to be established by the
prosecution to attract the provisions of Section 277 of the Act.
XXXX XXXX XXXX XXXX
XXXX XXXX XXXX XXXX
38. From the text of the provisions contained in Section 276C(1)
and the use of the expressions, “wilful attempt” “to evade” it
becomes clear that Section 276C professes to punish an act or
omission on the part of the assessee designed to evade the liability
to pay the tax and not a “mere failure” to pay the tax. There are
provisions in the Income Tax Act, 1961 which take care of interest
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(of the revenue) of recovering the due tax amount alongwith
interest and/or penalty where the tax has not been paid within time.
It is the wilful evasion of tax due which is the crux of the offence
under Section 276C(2) and not a mere failure to pay tax.
XXXX XXXX XXXX XXXX
40. In a given case, if it could be demonstrated that though the
assessee was in a position to pay tax, interest on penalty, the
assessee evaded payment of tax by dishonestly disabling himself
from payment of tax, interest or penalty or fraudulently dealt with
his assets or property with intent to evade the payment of tax,
interest or penalty, different considerations may come into play.
However, mere failure cannot be equated with wilful attempt to
evade.
41. To sum up, on a plain reading the provisions contained in
Section 276C(2) do not indicate that mere failure to pay the tax,
interest or penalty falls within the dragnet of the said provision.
Even otherwise, it is a well settled rule of construction of penal
statutes that if two possible and reasonable constructions can be
put upon a penal provision, the Court must lean towards that
construction which exempts the subject from penalty rather than
the one which imposes penalty. (Tolaram Relumal and another vs.
State of Bombay MANU/SC/0057/1954 : AIR 1956 SC 496).
With regard to the word ‘evade or ‘evasion’, it has been
held in above judgment in para(s) 23, 24 & 25 as under :
23. It would be contextually relevant to note what the term “to
evade” or “evasion” implies.
24. In Black’s Law Dictionary, ‘tax evasion’, is defined as a wilful
attempt to defeat or circumvent the tax law in order to illegally
reduce one’s tax liability. In P. Ramnathan Law Lexicon, the word
“evade” is defined as under:-
“Evade. To avoid by some dexterity; by some device or
stratagem; to elude: to escape (as) to evade a blow; to evade
punishment; to evade the force of an argument.”
25. In the context of the payment of duty as enunciated by the
Supreme Court in the case of Tamil Nadu Housing Board vs. CCE
MANU/SC/0852/1995 : 1995 (Supp.) (1) SCC 50, the word ‘evade’
means defeating the provisions of law of paying duty. In substance,
evasion of tax means illegal nonpayment of tax as due.
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21. In view of the aforesaid judgment of the Hon’ble
Bombay High Court, mensrea appears to be is an important
ingredient of Section 51 of the Black Money Act. Further with
regard to the argument of the Ld. Counsel for the accused that
assessment u/S. 10 of the Black Money Act is sine qua non for the
applicability of the Section 51 of Black Money Act, as without
assessment the revenue authorities cannot determine what is the
tax, which has to be imposed in respect of total undisclosed
foreign income and asset of the previous year and once the same
is determined, then the tax @ 30% is to be paid by the assessee.
The tax can only be paid by the assessee once the assessment
proceedings are done by the assessing officer after consideration
of all the records including the evidence produced by the assessee
including the production of records of books of accounts or other
documents relating to the same.
22. On the other hand, it has been argued by the Ld. SPP
for ED that the liability to pay tax does not depend upon the
assessment, the obligation on the part of the assessee to pay the
tax arises by way of charging sections of the Income Tax Act, the
liabilty to pay the tax has already been fixed the moment the
person earns any income. In this regard, they have relied upon the
judgment The Commissioner of Income Tax, Punjab etc. Vs.
Shree Jagan Nath Maheshwary, Amritsar (supra), where in the
relevant paras, it has been held as under :
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In any case, even on the supposition that the notice was
defective, it does not improve matters for the assessee. The
liability to pay tax does not depend on assessment. The
obligation on the part of the subject to pay income-tax arises by
virtue of charging sections. This liability ex hypothesi has
already been fixed. The assessment order only quantifies, or
deter-mines, the definite amount which becomes payable as
income-tax, in consequence of the operation of the obligations,
created by sections 3 and 4 of the Indian Income-tax Act,
which are the charging sections.
In Whitney v. The Commissioner of Inland Revenue (2), which
went up to the House of Lords, Lord Dunedin made the
following observations:
“My Lords, I shall now permit myself a general observation.
Once that it is fixed that there is liability, it is antecedently
highly improbable that the statute should not go on to make
that liability effective. A statute is designed to be workable, and
the interpretation thereof by a court should be Shree Jagan to
secure that object, unless crucial omis-Nath Mahesh-sion or
clear direction makes that end un- wary, Amrit-attainable. Now,
there are three stages in the imposition of a tax, there is the
declaration of liability, that is the part of the statue which
determines what persons in respect of what property are liable.
Next, there is the assessment. Liability does not depend on
assessment. That, ex hypothesi, has already been fixed. But
assessment parti-cularises the exact sum which a person liable
has to pay. Lastly, come the methods of recovery, if the person
taxed does not voluntarily pay.”
23. In view of the aforesaid judgment, the liability to pay
tax does not depend upon assessment, but the obligation on the
part of the assessee to pay tax has already arisen by way of
charging sections, this liability has already been fixed by way of
charging sections, the assessment order only quantifies the exact
amount which has to be paid by the assessee to the income tax
department i.e. to say the moment a person earns money, then as
per the charging sections of the Income Tax Act, the tax liability
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Directorate of Enforcement Vs. Sanjay Bhandari
has already been incurred by him which he has to pay as per the
charging sections of the Income Tax Act and assessment only
quantifies the exact amount he is liable to pay, that is why
assessee(s) deposit advance tax on the income they earn during
the year or deduct TDS on the income.
24. With regard to the contention of Ld. Senior Counsel
for accused that if such a view is taken, then there will be no
difference between Section 50 & 51 of the Black Money Act, as if
a person who has furnished the return of income tax, does furnish
in the same any information relating to an asset (including
financial interest in any entity) located outside India, then he can
be prosecuted u/S. 50 of Black Money Act, whereas if he attempts
to evade tax, which will mean the same thing, he can be punished
for 10 years.
The difference between Section 50 and 51 of the
Black Money Act is that if a person does not furnish in his income
tax return for the previous year , the information relating to any
asset (including financial interest in any entity) located outside
India, held by him as a beneficial owner or failed to disclose any
income from source outside India, then he is liable to be punished
for a term which may extend upto seven years and with fine.
Whereas, u/S. 51 the punishment has been made upto
10 years and with fine and such punishment shall not be less than
3 years. The difference between Section 50 and 51 would be that
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u/S. 51 mensrea would be an important ingredient, whereas a
simple non-disclosure of foreign assets and income would attract
punishment u/S. 50 of the Black Money Act. Whereas, u/S.
51Any willful attempt to evade any tax, penalty or interest is
punishable, on the other hand, u/S. 50, it is mere omission to
disclose in the income tax return the foreign asset or income,
which is punishable.
25. In a case, it could be demonstrated that though the
assessee was in a position to pay tax, penalty or interest, the
assessee evaded payment of tax by dishonestly disabling himself
from payment of such tax, penalty or interest or fraudulently dealt
with its assets or property with the intention to evade the payment
of tax, penalty or interest. That would be the case, where the
assessee practices some sort of subterfuge by fudging the books of
accounts or other documents by making false entries or statements
or omits such entries altogether. Whereas, u/S. 50 mere failure to
pay tax due to non furnishing of any foreign asset including
foreign bank account may attract the said section, as in that case
there may be no dishonest intention to evade payment of tax,
penalty or interest by subterfuging or fudging of the accounts,
whereas, u/S. 51 the mensrea i.e. the intentional act on the part of
the assessee i.e. willful evasion of tax and not mere failure to pay
tax.
The evasion of any tax, penalty or interest is
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considered more sinister, as it is deleterious to the revenue due to
the government, as the government is run from the taxes payable
or leviable on the subject. Therefore, it is considered as most
serious offence.
26. As discussed above, by virtue of Section 48(2) of the
Black Money Act, the assessment and the prosecution proceedings
can both proceed simultaneously and it is not necessary that
before launching an prosecution u/S. 51 of the Black Money Act,
the assessment has to be complete u/S. 10 of the Black Money
Act. Therefore, both can simultaneously continue, as the
concerned authorities have two options, either they may wait for
the assessment to be completed to launch prosecution u/S. 51 of
the Black Money Act or they may by virtue of Section 48(2) of the
Black Money Act straightaway launch prosecution u/S. 51 of the
Black Money Act in appropriate cases where tax evasion is huge
or the person is absconding and is not submitting to the
jurisdiction of Indian Courts or is acting in prejudice to the
national interest, in those cases due to time taking assessment
proceedings, they may go for prosecution, as it may otherwise
defeat the very purpose of the Black Money Act and may
embolden such persons indulging in such kind of activities.
27. With regard to the provisions of Fugitive Offenders
Act, as discussed above, the main objective of the said Act is to
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deter economic offenders from evading the process of Indian Law
by remaining outside the jurisdiction of Indian Courts and the
purpose of the said Act is to make the fugitive economic offenders
to return to India to face the action in accordance with law. The
purpose of this Act is not to give any punishment, but to force
such fugitive economic offenders to come to India to face the rule
of law.
28. In this regard Section 4 authorizes an officer not
below the rank of Dy. Director, authorized by the Director “having
reasons to believe” to be recorded in writing on the basis of
material in his possession that any individual is a fugitive
economic offender and he may file an application on such form
and manner as prescribed u/S. 4 as per the “The Declaration of
Fugitive Economic Offenders Rules, 2018”. The said Section 4 is
reproduced as under :
4. Application for declaration of fugitive economic
offender and procedure therefor.–(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
reasons for such belief to be recorded in writing), on the
basis of material in his possession, that any individual is
a fugitive economic offender, he may file an application
in such form and manner as may be prescribed in theCNR No. : DLCT11-000029-2020 Page 72 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
Special Court that such individual may be declared as a
fugitive economic offender.
(2) The application referred to in sub-section (1) shall
contain–
(a) reasons for the belief that an individual is a fugitive
economic offender;
(b) any information available as to the whereabouts of
the fugitive economic offender;
(c) a list of properties or the value of such properties
believed to be the proceeds of crime, including any such
property outside India for which confiscation is sought;
(d) a list of properties or benami properties owned by
the individual in India or abroad for which confiscation
is sought; and
(e) a list of persons who may have an interest in any of
the properties listed under clauses (c) and (d).
(3) The Authorities appointed for the purposes of the
Prevention of Money-laundering Act, 2002 (15 of 2003)
shall be the Authorities for the purposes of this Act.
29. In this regard, it has been argued by the Ld. Counsel
for the accused that the present application merely makes a bald
averment in para 3 (page 3) of the application that “the accused is
covered under the definition of Fugitive Economic Offender, as
defined u/S. 2(f) of the Act. The amount involved in the schedule
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Directorate of Enforcement Vs. Sanjay Bhandari
offence is more than Rs. 100 crores. Further in para 8(c) (page 5)
of the application, it is stated “that the proceeds of crime in the
schedule offence are in excess of Rs. 100 crores, the same has
been confirmed by the income tax authorities vide their
confirmation dated 09.07.2019, which has been annexed as
Annexure A-6”, it is therefore, submitted that there is a not a shred
of evidence, whatsoever in the application that at the time of filing
of the present application to show that the schedule offence
involved total value of Rs. 100 crores or more.
30. It is further submitted that the ED has merely relied
upon the communication dated 09.07.2019 from the income tax
department to state that the alleged schedule offence is more than
Rs. 100 crores (Annexure A-6 at page 218). It is stated that the
said communication itself states that the assessment is yet to be
finalized, therefore, in any kind of tax assessment, the quantum of
tax evaded can only be determined after the assessment is done
and before that it is only a guess game, nothing more. Further it is
stated in the said letter that a copy of the prosecution complaint
u/S. 51 filed before Tis Hazari Courts has been supplied to the
ED. No other document has been filed with the complaint or
produced before the Court.
31. It is admitted position that the complaint u/S. 51 of
the Black Money Act does not disclose any monetary value of
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Directorate of Enforcement Vs. Sanjay Bhandari
more than Rs. 100 crores, as there is no whisper with regard to
any value of the tax evaded in the said complaint filed as
Annexure A-4 (from page no. 23 to 296), therefore, a mere letter
from the income tax department to the DOE cannot formed a basis
or reasons to believe that the accused has committed a schedule
offence involving a total value of Rs. 100 crores or more. Since
the declaration of the accused as a Fugitive Economic Offender
entails grave consequences including confiscation of the property
and barring him from defending any civil claim as provided in
Section 14 of the FEO Act, therefore, this requirement of schedule
offence involving a total value of Rs. 100 crores or more is a
jurisdictional fact which has to be mandatorily met, failing which
the ED has wrongly exercised jurisdiction in launching the present
proceedings, therefore, the present complaint is liable to be
dismissed.
32. Further in terms of Section 4 r/w. Section 10 of the
FEO, the reasons to believe cannot be a mere rubber stamp of the
opinion formed by someone else, as the officer who is supposed to
write down his reasons to believe should independently apply his
mind based on material in his possession. Further when a
statutory functionary make an order on certain grounds, its
validity must be tested by the reasons given in that order and
cannot be supplemented by fresh or additional reasons in the
affidavit or otherwise, therefore, the same cannot be supplemented
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Directorate of Enforcement Vs. Sanjay Bhandari
by the rejoinder affidavit. Therefore, the ED cannot act on the
borrowed satisfaction of the income tax department and it has to
apply its own mind.
33. On the other hand, it has been argued by Ld. SPP for
the ED that the reasons to believe used in Section 4 of the FEO
Act means “prima facie” belief and does not imply that such
satisfaction has to be conclusively proved. In this regard he has
relied upon the judgment CIT Vs. Rajesh Jhaveri Stock Brokers
(P) Ltd. (supra), wherein it has been held as under :
“19. Section 147 authorises and permits the assessing officer to
assess or reassess income chargeable to tax if he has reason to
believe that income for any assessment year has escaped
assessment. The word “reason” in the phrase “reason to believe”
would mean cause or justification. If the assessing officer has
cause or justification to know or suppose that income had escaped
assessment, it can be said to have reason to believe that an income
had escaped assessment. The expression cannot be read to mean
that the assessing officer should have finally ascertained the fact
by legal evidence or conclusion. The function of the assessing
officer is to administer the statute with solicitude for the public
exchequer with an inbuilt idea of fairness to taxpayers.
20. As observed by the Delhi High Court (sic the Supreme Court)
in Central Provinces Manganese Ore Co. Ltd. v. ITO [(1991) 4
SCC 166: (1991) 191 ITR 662] for initiation of action under
Section 147(a) (as the provision stood at the relevant time)
fulfilment of the two requisite conditions in that regard is essential.
At that stage, the final outcome of the proceeding is not relevant.
In other words, at the initiation stage, what is required is “reason to
believe”, but not the established fact of escapement of income. At
the stage of issue of notice, the only question is whether there was
relevant material on which a reasonable person could have formed
a requisite belief. Whether the materials would conclusively prove
the escapement is not the concern at that stage. This is so because
the formation of belief by the assessing officer is within the realm
of subjective satisfaction [see ITO v. Selected Dalurband Coal Co.
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Directorate of Enforcement Vs. Sanjay Bhandari
(P) Ltd. ((1997) 10 SCC 68: (1997) 217 ITR 597] : Raymond
Woollen Mills Ltd. v. ITO [(2008) 14 SCC 218: (1999) 236 ITR
34] ].”
34. Further in the recent judgment of Radhika Agarwal
Vs. Union of India (supra), the Hon’ble Supreme Court rejected
the contention that the power to arrest u/S. 132(5) of the GST Act
cannot be exercised unless proceedings u/S. 73 are concluded and
assessment order quantifying the alleged tax evasion is passed.
Further, it has been held as under :
“59. However, relying upon the judgment in the case of
Makemytrip (supra), it has been submitted on behalf of the
petitioners, that the power under sub-section (5) to Section 132
cannot he exercised unless the procedure under Section 73 of the
GST Act is completed and an assessment order is passed
quantifying the tax evaded or erroneously refunded or input tax
credit wrongly availed. According to us, this contention should
not be accepted as a general or broad proposition. We would
accept that normally the assessment proceedings would quantify
the amount of tax evaded, etc. and go on to show whether there
is any violation in terms of clauses (a) to (d) to sub-section (1) of
Section 132 of the GST Acts and that clause (i) to sub-section (1)
is attracted. But there could be cases where even without a
formal order of assessment, the department/Revenue is certain
that it is a case of offence under clauses (a) to (d) to sub-section
(1) of Section 132 and the amount of tax evaded, etc, falls within
clause (i) of sub-section (1) to Section 132 of the GST Acts with
sufficient degree of certainty. In such cases, the Commissioner
may authorise arrest when he is able to ascertain and record
reasons to believe. As indicated above, the reasons to believe
must be explicit and refer to the material and evidence
underlying such opinion. There has to be a degree of certainty to
establish that the offence is committed and that such offence is
non-bailable. The principle of benefit of doubt would equally be
applicable and should not be ignored either by the Commissioner
or by the Magistrate when the accused is produced before the
Magistrate.
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35. On the other hand, Ld. Sr. Counsel for accused /
respondent Sanjay Bhandari has relied upon the judgment Oriental
Insurance Company Vs. Commissioner of Income Tax (supra), in
which it has been held in para 12 as under :
12. The assumption that the Assessee had not credited the profits
in question to the Profit and Loss Account is also, admittedly
factually incorrect. Thus, the reasons which led the AO to form a
belief that income of the Assessee had escaped assessment are
admittedly based on palpably incorrect assumptions. It is well
established that reasons to believe that income had escaped
assessment is a necessary precondition for the AO to assume
jurisdiction. Clearly, it would be difficult to sustain that this pre-
condition is met if such reasons to believe that income of an
Assessee had escaped assessment are based on palpably
erroneous assumptions. The reason to believe must be
predicated on tangible material or information. A reason to
suspect cannot be a reason to believe; the belief must be rational
and bear a direct nexus to the material on which such a belief is
based. In the present case, the very assumption on the basis of
which the AO is stated to have formed his better that the
Assessee’s income had escaped assessment has been found to be
erroneous. There was no basis for the AO to assume that the
Assessee had not credited the profits from the sale of
investments, which are alleged to have escaped assessment in its
Profit and Loss account.
36. On analyzing the rival contentions, no doubt the
letter dated 09.07.2019 written by the income tax department to
the Director of DOE Annexure A-6, (page 298) of the application
u/S. 4 r/w. Section 10 & 12 of the Fugitive Offenders Act against
the accused, the income tax department has used the words “as
desired” as also “as required by you” in the said letter, it is at the
most an example of bad drafting. However, the letter A-6 has to
be read as a whole holistically, mere bad drafting will not take
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Directorate of Enforcement Vs. Sanjay Bhandari
away the spirit or tone or tenor of the said letter. On reading the
said letter as a whole, it appears that the income tax department
apprised the DOE that the evasion of tax, penalty and interest as
contemplated u/S. 51 of the Black Money Act was more than Rs.
100 crores, though the assessment was yet to be done. Therefore,
it was prima facie of the view that such evasion was of more than
100 crores.
37. Further the figure of Rs. 100 crores as mentioned in
the said letter and also written in para 8(c) of the above
application in the heading statement of reasons to believe that the
accused is a fugitive economic offender is not only based on the
said letter, but also on the basis of various properties / benami
properties owned by accused in India including the companies, as
mentioned in para 13 in detail, as also accompanied by Annexure
A-2, which contains list of properties or the value of such
properties believed to be proceeds of crime for which confiscation
is sought.
At serial no. 1 there is foreign properties owned by
Sanjay Bhandari at page 13 & 14 including the foreign bank
accounts and at page 15, there is mention of property situated at
London, UK,which he had allegedly sold, but did not disclose to
the income tax authorities and Annexure A-3 enlists at page 16 to
22 the properties in India owned by Sanjay Bhandari, properties in
India owned by companies in which Sanjay Bhandari has
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Directorate of Enforcement Vs. Sanjay Bhandari
substantial control, properties in India owned by companies in
which shell companies are shareholders on behest of Sanjay
Bhandari, properties in India held by Sanjay Bhandari in the name
of benami holders, therefore, this figure of Rs. 100 crores of more
which is mentioned in Annexure A-6 is not only the basis for
forming this reason to believe of the DOE as per section 4 of the
FEO Act, but also the above umpteen number of undisclosed
foreign assets and bank accounts stated above, on the basis of
which the DOE formed the requisite opinion prima facie for
proceeding against the accused u/S. 4 r/w. Section 10 & 12 of the
FEO Act, therefore, it can be said that at the time of filing the
present application, the concerned authority i.e. the DOE and the
concerned Dy. Director, DOE had sufficient material in his
possession and had reasons to believe prima facie that the foreign
assets / income prima facie concealed or evaded had the value of
more than Rs. 100 crores or more i.e. the net attempted evasion of
tax, penalty and the interest u/S. 51 of the Black Money Act,
which may be imposable or chargeable i.e. the concerned
authority was of the opinion that the net of all these i.e. evasion of
tax, penalty and interest was more than Rs. 100 crores.
38. The said authority in reaching the said conclusion
prima facie was also acting on the statement of witnesses
including the chartered accountant of the accused Mr. Sandeep
Kapoor dated 08.02.2017 recorded under Sec. 132(4) of Income
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Directorate of Enforcement Vs. Sanjay Bhandari
Tax Act, relating to back dating of Alrahma Trust, Dubai, as
accused wanted to change the structure of the said Trust
retrospectively from 12.03.2015, after receipt of notice under
Black Money Act, issued by the JCIT, Central Range 7, New
Delhi dated 22.09.2016 as he wanted to introduce his close
associate Sumit Chadha as sole trustee in his place, he wanted him
to come to London, so that necessary documentation could be
made and his signatures could be obtained on presenting these
documents before tax authorities, he also stated that during search
and seizure operation dated 27.04.2016, many foreign assets of
Mr. Bhandari were detected, which he elaborated in his statement.
39. Not only this, this statement of Sanjay Bhandari was
also recorded u/S. 132(4) of Income Tax Act on 29.04.2016,
30.04.2016 giving him notice about foreign assets and further
show cause notice was also issued to him dated 08.03.2018 for
launching prosecution u/S. 51 of the Black Money Act, in which
details of foreign bank accounts and properties were mentioned in
detail along with the details of income tax returns from
assessment year 2001-02 till 2017-18, in which assets declared in
schedule FA of ITR-4 available from 2012-13 was mentioned as
Nil.
40. Therefore, there was more than sufficient material
available on the record for the concerned Dy. Director, DOE to
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come to the conclusion that there was massive evasion of tax,
penalty and interest imposable by the revenue from the
undisclosed foreign assets / bank accounts enumerated above
whose value was more than Rs. 100 crores as a whole. Therefore,
there was sufficient material with the DOE in their possession i.e.
tangible material on which any reasonable person could form the
belief, as the competent authority was not needed to make a final
assessment or adjudication, which formed the basis for reasons to
believe that the accused was prima facie a fugitive economic
offender, when they filed the present application u/S. 4 of the Act.
41. Though, no doubt the subsequent assessment carried
out by the income tax authorities on 23.03.2020 confirmed that
the total undisclosed foreign income was 655,62,15,670/- crores
and the tax @ 30% on the same as per Section 3 would be
196,68,64,700/-. Therefore, this subsequent confirmation of facts
that the total evasion of tax, penalty and interest was more than
Rs. 100 crores also shows that the earlier reasons to believe of the
concerned Dy. Director was based on cogent, tangible material
data and the said belief can be said to be rational and bearing
direct nexus to the material on which such belief was based.
42. In any case, the rejoinder in the present case will
also be part of record, as it only elucidates the points raised by the
accused / respondent in his detailed reply. As this is not a criminal
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proceedings in strict sense, as the accused / respondent is not
being punished for any criminal infraction of law, rather it is in the
nature of a declaration of rights and status of an individual.
43. Regarding the next argument of the Ld. Counsel for
the accused that u/S. 10 of the FEO, which says that where an
application u/S. 4 has been “duly filed”, then the Special Court
shall issue a notice to the individual who is alleged to be a fugitive
economic offender. He has argued that the word “duly filed” is a
akin to taking cognizance of offences u/S. 190 of CrPC i.e. the
Court has to form on the basis of the material available on the
record, there were sufficient grounds for proceedings against the
accused or that is to say that the accused has something to answer
from the material available on the record before the Court, for
which he may be asked to appear, as declaration of the accused as
fugitive economic offender entails serious consequences including
the confiscation of his properties and power to disallow all his
civil claims and as such individual may be prohibited from putting
forward or defending any civil claim(s) as per Section 14 of the
FEO.
44. The said contention of the Ld. Counsel for the
accused that the words “duly filed” means akin to taking
cognizance is without any merit, as admittedly in the FEO Act, no
punishment has been provided after declaration of the accused as
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Directorate of Enforcement Vs. Sanjay Bhandari
fugitive economic offender, the object is not to impose any
punishment, but to make such a person who is absconding from
the jurisdiction of Indian Courts to submit to the jurisdiction and
uphold the rule of law. Further the said analogy is not applicable,
as the present proceedings are in the nature of declaration qua the
status of a person. Therefore, the word “duly filed” would mean
meeting all the procedural requirements of The Declaration of
Fugitive Economic Offenders (Forms and Manner of Filing
Application) Rules, 2018, which rules are appended with this Act
i.e. meeting all the requirements as per the rules and the procedure
laid down in this Act.
45. Regarding the next substantial arguments of the Ld.
Counsel for the accused that the ED has failed to meet the
mandatory thresh hold of the schedule offence having value of Rs.
100 crores or more as the same is evident from the fact that the
schedule offence has changed at every stage, as different
evaluations have been given at different stages of the present case
highlighted as under :
20. The clear absence of the ED failing to meet the
mandatory threshold of the Scheduled Offence having
the value of Rs. 100 crores or more is evident from the
fact that the value of the Scheduled Offence has
changed at every stage, and even in the course of the
arguments in the present proceedings, a differentCNR No. : DLCT11-000029-2020 Page 84 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
valuation was given. The different valuations of the
alleged Scheduled Offence in various proceedings is as
follows:
a. On 27th February 2020, the Income Tax Department
had filed a tabular chart vide Diary No.313531 in Crl
MC No. 805/2020 wherein the value of the Accused’s
alleged foreign assets was Rs. 220.91 crores. The tax on
the same at 30% would be around Rs. 66 crores.
On 23rd March 2020, the Income Tax Department
passed the assessment order against the accused under
the Black Money Act wherein the value of the
Accused’s alleged foreign assets was Rs. 655 crores.
The tax on the same at 30% would be around Rs. 196
сгогев.
c. On 15th July 2020, the ED filed its Rejoinder
Affidavit in the present proceedings where in Para 8
(Pages 9-10) it has given the value of the Accused’s
alleged foreign assets as Rs. 487.13 crores. The tax on
the same at 30% would be around Rs. 146 crores.
d. In the course of the hearing before the Hon’ble Court,
the ED produced a chart showing the value of the
Accused’s alleged foreign assets as Rs. 191 crores. The
tax on the same at 30% would be around Rs. 57.3
crores.
A bare perusal of the varying valuation given in
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Directorate of Enforcement Vs. Sanjay Bhandari
different proceedings in itself shows the fallacy in the
ED’s case. As stated earlier, the requirement of the
Scheduled Offence being of Rs. 100 crores or more is a
mandatory requirement which has to be satisfied at the
threshold even for initiating the proceedings against the
accused. As evident from the varying figures stated
above, it is evident that the ED, even today, is not
certain of the Scheduled Offence being of Rs. 100
crores or more, and in the absence of the same, the
present case ought to be dismissed on this ground
alone.
21. It is important to note that the accused had filed Cri
MC No. 805/2020 before the Hon’ble Delhi High Court
seeking quashing of the criminal proceedings under
Section 51 of the Black Money Act. Further, the
accused had filed Crl MC No.1002/2020 before the
Hon’ble Delhi High Court seeking quashing of the
present proceedings under the Fugitive Economic
Offenders Act. Both the matters were heard together by
the Hon’ble High Court. Vide the order dated
24.02.2020 in Crl MC No.805/2020, the Hon’ble High
Court had directed the Income Tax Department to show
as to how the offence under Section 51 of the Black
Money Act is more than Rs. 100 crores. Pursuant
thereto, on 27th February 2020, the Income TaxCNR No. : DLCT11-000029-2020 Page 86 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
Department had filed a tabular chart vide Diary No.
313531 in Crl MC No. 805/2020 wherein the value of
the Accused’s alleged foreign assets was shown as Rs.
220.91 crores. Interestingly, the very same officer who
had filed this chart before the Hon’ble High Court, had
ultimately passed the assessment order under the Black
Money Act on 23rd March 2020 wherein the value of
the Accused’s alleged foreign assets was shown as Rs.
655 crores. No explanation has been given by the ED as
to how the value of the alleged foreign assets had
tripled in less than a month (i.e. from 27th February
2020 to 23rd March 2020) on the basis of the same
material.
22. Further, the same alleged offence under Section 51
of the Black Money Act is also the Scheduled Offence
under the Prevention of Money Laundering Act being
investigated by the ED against the Accused herein. In
the PMLA proceedings, the ED had issued a
Provisional Attachment Order No. 03/2017 on
01.06.2017 wherein the Accused’s alleged foreign
assets were valued at around Rs. 153 crores (See Pages
65-66 of the Reply filed by the Accused). The ED has
nowhere asserted that the Accused has created any new
foreign assets after 01.06.2017. It is evident therefore
that varying and arbitrary valuations are being given toCNR No. : DLCT11-000029-2020 Page 87 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
the purported foreign assets of the Accused.
23. It is an admitted position that the application
nowhere provides for any monetary valuation of the
alleged foreign assets. Further, even the Complaint filed
by the Income Tax Department before the Tis Hazari
Court under Section 51 of the Black Money Act does
not disclose any kind of monetary valuation of the
alleged foreign assets. In the absence of this basic
determination, and the consequent determination of the
alleged tax evaded, the application is not maintainable
and ought to be dismissed.
46. The said arguments of the Ld. Counsel for the
accused is correct to some extent, as the valuations of the schedule
offence has changed many times during the course of the present
proceedings, firstly the income tax department had filed a tabular
chart in CrMC No. 805/2020, wherein the total value of the
undisclosed foreign assets of the accused was found to be Rs.
220.91 crores, thereafter on 23.03.2020, the income tax
department passed an assessment order under the Black Money
Act, wherein the value of the accused’s undisclosed foreign assets
was adjudged to be Rs. 655 crores, thereafter on 15.07.2020, ED
filed its rejoinder affidavit wherein in para 8, they gave the value
of the undisclosed foreign assets of the accused as Rs. 487.13
crores.
CNR No. : DLCT11-000029-2020 Page 88 of 100
47. No doubt these figures should not have been changed
during the present proceedings, as it shows the tentative nature of
figure in the mind of income tax authorities qua the total value of
the schedule offence being more than Rs. 100 crores, which kept
on twisting and turning in a constant state of flux, however, this
fact cannot be glossed over that at the time of filing the present
application u/S. 4 r/w Section 10 & 12 of the Fugitive Offender(s)
Act there was sufficient material available with the Dy. Director
concerned which formed the basis for him to believe prima facie
that the accused was a fugitive economic offender and the total
value of the schedule offence was Rs. 100 crores or more i.e.
Section 51 of the Black Money Act, but this tentative figure of Rs.
100 crores, though kept on changing, but finally was put to rest
when the final assessment of the accused was done u/S. 10(4) of
the Black Money Act on 23.03.2020, whereby his total
undisclosed foreign income and assets were assessed to be Rs. 655
crores approximately and tax as per Section 3 of the Black Money
Act was assessed to be Rs. 196 crores.
48. Since as discussed above, the subsequent
confirmation of facts i.e. the assessment shows that the total value
of evasion of the tax, penalty or interest imposable under the
Black Money Act was much more than Rs. 100 crores, as
specified u/S. 2(m) of the FEO Act. This figure got ratified by theCNR No. : DLCT11-000029-2020 Page 89 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
detailed assessment order Annexure A-3 of rejoinder affidavit
from page no. 42 to 106, vide a detailed speaking order. This
oscillating figure which kept on changing during the course of
proceedings finally got fixed at Rs. 196 crores from the total
undisclosed foreign income / assets of Rs. 655 crores.
Further the satisfaction of this Court u/S. 12 of the
FEO Act cannot be confined only to the application frozen in
time, but can be based on material subsequently brought on
record, which includes the final assessment quantifying the
evaded tax as Rs. 196 crores.
49. With regard to the another argument that the
assessment has been wrongly done with regard to the London
property, which was already sold off in the year 2010. Therefore,
the same cannot be considered for the purpose of assessment, as
the said asset does not exist any more. In this regard Section 3
and 72 (c) are reproduced as under:
Sec. 3 Charge of Tax.
XXXX XXXX XXXX XXXX
XXXX XXXX XXXX XXXX
Provided that an undisclosed asset located
outside India shall be charged to tax on its value in the
previous year in which such asset comes to the notice
of the Assessing Officer.
CNR No. : DLCT11-000029-2020 Page 90 of 100
72. Removal of doubts.–For the removal of doubts, it
is hereby declared that–
XXXX XXXX XXXX XXXX
XXXX XXXX XXXX XXXX
(c) where any asset has been acquired or made prior to
commencement of this Act, and no declaration in
respect of such asset is made under this Chapter, such
asset shall be deemed to have been acquired or made
in the year in which a notice under section 10 is issued
by the Assessing Officer and the provisions of this Act
shall apply accordingly.
50. In view of the deeming fictions under Section 3 and
72(c), which presumes the assessment year to be the year in which
the undisclosed foreign assets comes to the notice of the assessing
officer, such asset shall be deemed to have been acquired in the
year in which notice u/S. 10 is issued by the assessing officer.
Therefore, in view of above, this contention of the Ld. Counsel for
the accused has no merits.
51. For declaring a person a fugitive economic offender
u/S. 12 the burden of proof that an individual is an fugitive
economic offender shall be on the Director or the person
authorized by the Director to file an application u/S. 4 of the Act,
which in the present case is Dy. Director, duly authorized by the
CNR No. : DLCT11-000029-2020 Page 91 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
Director vide authorization dated 15.01.2019. The standard of
proof applicable to the determination of facts by the Special Court
under this Act shall be on preponderance of probabilities i.e. the
proceedings under FEO Act are in nature of an declaration,
whether a particular individual is a fugitive economic offender or
not, for that Court has to use probabilistic yardstick of
preponderance of probabilities, which means superiority in
weight, power or numbers and the yardstick applicable is not of
criminal cases, where yardstick is beyond reasonable doubt.
52. On the scale 0 to 1, 0 being the state of total non
happening of an event and 1 being certain happening of an event.
Probability like if you toss a coin of getting a head or tail is ½ i.e.
50% each or .5 on said scale of 0 – 1 i.e. mid way which is 50%
both sides. The preponderance / yardstick which would be
required by the prosecution to succeed will be achieved by the
prosecution even to say if that the said probability is 55% in
favour of the prosecution and 45% in favour of the defence, unlike
in the criminal cases, where it should be touching the point of
certainty i.e. 1 or hovering near the said figure of 1.
53. As per Section 2(1)(f) r/w. Section 2(1)(m), the
necessary ingredients for making out a case that a person is a
fugitive economic offender are as follows :
(a) There must be a warrant of arrest in relation to a
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Directorate of Enforcement Vs. Sanjay Bhandari
schedule offence, which has been issued by any Court in
India;
(b) The said person must have left India to avoid criminal
prosecution or being abroad refuses to return to India to
face criminal prosecution;
(c) The value involved in the schedule offence is Rs. 100
crores or more.
54. The schedule offence, as already discussed in the
preceding paras in this case is Section 51 of the Black Money Act,
which deals with willful attempt to evade tax, penalty or interest.
In the present case, a complaint u/S. 51(1) of The Black Money
Act for the assessment year 2017-18 has been filed for
prosecution of the present accused before the Court of Ld. ACMM
(Special Acts), Tis Hazari Courts, Delhi. The same has not been
disputed by the accused and has rather been admitted in
preliminary submissions IX of the reply filed by the accused that a
criminal complaint bearing no. 2121/2019 dated 22.12.2018 has
been filed against the accused / respondent u/S. 51 of the Black
Money Act.
It is also admitted that non bailable warrants were
issued against the accused, which were challenged in criminal
revision petition no. 444/2019, which was dismissed vide final
order dated 23.10.2019. In any case, the DOE has filed the copy
of the said NBW issued against the accused / respondent Sanjay
CNR No. : DLCT11-000029-2020 Page 93 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
Bhandari dated 31.10.2019, which is Annexure A-5 (page 297) of
the present application u/S. 4 r/w. Section 10, 12 of the FEO Act,
which even otherwise, as discussed above, has not been disputed.
55. Though the Ld. Counsel for the accused / respondent
has argued that the NBW dated 31.10.2019 issued u/S. 51 of the
Black Money Act has been duly executed and there is no live
pending warrant in existence with respect to the schedule offence,
as the said warrant was executed in UK on 08.07.2021, whereafter
the present accused was arrested in UK and was granted bail. The
said warrant formed the basis for the extradition proceedings u/S.
51 of the Black Money Act in which the accused was ultimately
discharged. Hence, the said warrant is no longer live and has been
executed.
56. The said argument of the Ld. Counsel for the
accused / respondent is without any substance, as it may be that
the accused may have been arrested pursuant to the open ended
NBW issued against him dated 31.10.2019 u/S. 51(1) of the Black
Money Act, which formed the basis for launching extradition
proceedings against him, but the same is still valid, as the said
warrant was not issued for launching the extradition proceedings
against the accused / respondent, but was issued for coercing the
accused / respondent Sanjay Bhandari to face inquiry / trial in the
said prosecution complaint filed u/S. 51(1) of the Black Money
CNR No. : DLCT11-000029-2020 Page 94 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
Act, filed before the Court of Ld. ACMM, Tis Hazari Courts,
Delhi.
57. It is not the case of the accused / respondent that he
has submitted to the jurisdiction of said Court in response to the
said NBWs or that the said NBWs have been cancelled by the
concerned Court. As per Section 70(2) CrPC, every warrant of
arrest shall remain in force until it is cancelled by the Court,
which issued it or until it is executed. None of these conditions
exists, as the said NBWs have not been executed, if it would have
been so, then the accused would have been arrested and would
have been produced before the said Court for facing inuqiry / trial,
as per law. Therefore, the said NBWs, which were open ended
NBWs are very much live and in currency and are yet to be
exhausted.
58. It has also been argued that the accused does not
come within the definition of Section 2(1)(f), as the accused can
no longer be said to be a person, who comes under the definition
of Section 2(1)(f), as he has succeeded in his right to not to return
to India, as said section requires that a person being abroad
refuses to return to India to face criminal prosecution, whereas,
the extradition request of Govt. of India was initially allowed by
West Ministers Magistrate Court, but was subsequently reversed
in an appeal before the High Court of UK vide judgment dated
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Directorate of Enforcement Vs. Sanjay Bhandari
28.02.2025 and subsequently a petition to leave to appeal to the
UK Supreme Court was filed, which was also rejected by the High
Court vide order dated 08.04.2025. Therefore, the accused has a
right to reside in UK.
59. The said argument is without any substance, as the
extradition failure will not make any difference, as the extradition
of the accused was one of the means to bring the accused to India
to face trial in the said offence u/S. 51 of the Black Money Act.
Extradition attempt may have failed, but it will not make accused
angel or immune from the prosecution for the violation of Indian
laws. The FEO proceedings are another way of making one come
back to India to face trial by coercing him to return by attachment,
confiscation of the properties of such fugitive economic offender
and proceeds of crime and by dis-entitling the such fugitive
economic offender from putting forward or defending any civil
claim. This is applicable to an individual, who has committed
schedule offence or offence(s) involving an amount of Rs. 100
crores or more and who has absconded or refuses to come back to
India to avoid criminal prosecution in India.
Therefore, the FEO Act is in the nature of coercion,
saying that if you do not come back, the Government will
confiscate and seize all your assets, once you have been shown or
declared as fugitive economic offender, as per the provisions of
FEO Act.
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Directorate of Enforcement Vs. Sanjay Bhandari
60. It is further argued by Ld. Counsel for the accused /
respondent that he had filed SLP (Crl) No. 18348/2024 against the
judgment dated 08.11.2024 of the Hon’ble Delhi High Court,
dismissing the quashing petition for quashing the proceedings u/S.
51 of the Black Money Act. The Hon’ble Supreme Court had
disposed off the said SLP vide final order dated 21.01.2025 in the
Black Money Act case with the directions that the petitioner can
raise all contentions, legal and factual, before the concerned
authority, and the said authority has to decide the same without
being influenced by the impugned order. Further the Hon’ble
Supreme Court condoned the delay in the filing of the statutory
appeal under the Black Money Act against the assessment order.
Consequently, the accused has filed the appeal on 30.01.2025
under Section 15 of the Black Money Act challenging the
assessment order dated 23.03.2020, which is currently pending
adjudication before the Commissioner (Appeals).
61. It is further stated that Section 14 of the FEO Act
effectively amounts to a civil death for an accused as upon
declaration, he may be barred from filing and defending any civil
proceedings. Therefore, if the accused is declared as a fugitive
economic offender, he may be barred from pursuing the civil
appeal filed by him under Section 15 of the Black Money Act
challenging the assessment order dated 23.03.2020. This will be
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Directorate of Enforcement Vs. Sanjay Bhandari
entirely impermissible as the accused has been specifically given
the right by the Hon’ble Supreme court in its order dated
21.01.2025 in SLP (Crl.) No. 18348/2024 to pursue to appeal
before the Commissioner (Appeals) under Section 15 of the Black
Money Act challenging the assessment order dated 23.03.2020.
62. The said argument of the Ld. Counsel for the accused
/ respondent is not tenable, as Section 14 of the FEO Act is only a
legal consequence of a person being declared a fugitive economic
offender, whereby on such declaration by the Special Court, a
fugitive economic offender may be disallowed from putting
forward or defending any civil claim. Even otherwise, the word
used is ‘may and not ‘shall’. The accused / respondent always has
an option to return back to India to get the termination of
proceedings under FEO Act and to avoid adverse consequences
of Section 14 of the FEO Act. Therefore, when the accused /
respondent chooses not to return to India, he cannot take the plea
of avoiding all the legal consequences including that of Section
14 of the FEO Act. In any case those who play with fire should be
known to be aware of its consequences.
63. In any case, any order(s) passed by this Court will
always be subject to the observations and directions passed by the
Hon’ble Supreme Court in SLP (Crl.) No. 18348/2024 titled as
Sanjay Bhandari Vs. Income Tax Office, dated 21.0.2025.
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Directorate of Enforcement Vs. Sanjay Bhandari
64. The net result of the above discussion is that on
preponderance of probabilities, as discussed above, the DOE has
been able to make out a case u/S. 2(f) and 2(m) of the FEO Act
and after hearing and due consideration of the application u/S. 4
filed by the DOE, this Court is satisfied that the individual Sh.
Sanjay Bhandari, against whom an warrant of arrest i.e. NBW has
been issued by a Court of Ld. ACMM, Tis Hazari Courts, Delhi in
a complaint filed u/S. 51 of the Black Money Act, which warrant
is live and pending and the said individual against whom such
warrants are pending has left India to abroad i.e. presently appears
to be residing in UK from the material available on the record and
he has left India so as to avoid criminal prosecution under the said
complaint u/S. 51 of the Black Money Act and despite knowing
the pendency of the NBWs against him and the criminal
complaint u/S. 51 of the Black Money Act, he willfully refuses to
come to India to face such criminal prosecution.
65. Further this Court is satisfied that the total value of
the schedule offence is 100 crores of more i.e. the schedule to the
present FEO Act which is Section 51 of the Black Money Act and
that the total value, as discussed above in detail involved in such
offence or offences is much more than Rs. 100 crores, which is a
requisite condition u/S. 2(m) of the FEO Act. Therefore, the DOE
has met all the requirements, as per Section 2(f) r/w. Section 2(m)
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Directorate of Enforcement Vs. Sanjay Bhandari
r/w. Section 4, as such this Court is satisfied that Sh. Sanjay
Bhandari, S/o. Late Sh. R.K. Bhandari, is a fugitive economic
offender under Section 12(1) of Fugitive Economic Offenders Act,
2018 and is declared as such under the above provision(s) of
Fugitive Economic Offenders Act, 2018.
As a consequence, the matter be put up before the
concerned Court of Ld. Special Judge, CBI (PC Act)-10, RADC,
New Delhi for consequential confiscation proceedings u/S. 12(2)
onwards of Fugitive Economic Offenders Act, 2018 / further
proceedings for 12.07.2025.
Announced in the open Court
today on 05th July 2025
through Video Conferencing Digitally signed
by SANJEEV
mode. SANJEEV AGGARWAL
AGGARWAL Date: 2025.07.05
15:07:45 +0530
(SANJEEV AGGARWAL)
previously posted as Special Judge (CBI)(PC Act)-10,
Rouse Avenue Court Complex, New Delhi
now posted as District Judge (Commercial)-04
West District, Tis Hazari Courts, Delhi
(pursuant to transfer order bearing no.
15/D-3/Gaz.IA/DHC/2025, dated 30.05.2025)
05.07.2025
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Directorate of Enforcement Vs. Sanjay Bhandari
