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 CNR No. : DLCT11-000029-2020 Page 1 of 100 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 CNR No. : DLCT11-000029-2020 Page 2 of 100 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 CNR No. : DLCT11-000029-2020 Page 3 of 100 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 CNR No. : DLCT11-000029-2020 Page 4 of 100 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.
CNR No. : DLCT11-000029-2020 Page 5 of 100Directorate 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 CNR No. : DLCT11-000029-2020 Page 6 of 100 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.CNR No. : DLCT11-000029-2020 Page 7 of 100
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.
CNR No. : DLCT11-000029-2020 Page 8 of 100Directorate 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 CNR No. : DLCT11-000029-2020 Page 9 of 100 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 CNR No. : DLCT11-000029-2020 Page 10 of 100 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 attachment CNR 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'ble CNR 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 CNR No. : DLCT11-000029-2020 Page 13 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 14 of 100 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 CNR No. : DLCT11-000029-2020 Page 15 of 100 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 CNR No. : DLCT11-000029-2020 Page 16 of 100 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.
CNR No. : DLCT11-000029-2020 Page 17 of 100Directorate of Enforcement Vs. Sanjay Bhandari
(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 CNR No. : DLCT11-000029-2020 Page 18 of 100 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 CNR No. : DLCT11-000029-2020 Page 19 of 100 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 CNR No. : DLCT11-000029-2020 Page 20 of 100 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 CNR No. : DLCT11-000029-2020 Page 21 of 100 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 CNR No. : DLCT11-000029-2020 Page 22 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 23 of 100 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 CNR No. : DLCT11-000029-2020 Page 24 of 100 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 a CNR 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 CNR No. : DLCT11-000029-2020 Page 26 of 100 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 CNR No. : DLCT11-000029-2020 Page 27 of 100 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 CNR No. : DLCT11-000029-2020 Page 28 of 100 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.CNR No. : DLCT11-000029-2020 Page 29 of 100
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 CNR No. : DLCT11-000029-2020 Page 30 of 100 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 CNR No. : DLCT11-000029-2020 Page 31 of 100 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.
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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 CNR No. : DLCT11-000029-2020 Page 32 of 100 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 CNR No. : DLCT11-000029-2020 Page 33 of 100 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 CNR No. : DLCT11-000029-2020 Page 34 of 100 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 CNR No. : DLCT11-000029-2020 Page 35 of 100 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 CNR No. : DLCT11-000029-2020 Page 36 of 100 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 CNR No. : DLCT11-000029-2020 Page 37 of 100 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 CNR No. : DLCT11-000029-2020 Page 38 of 100 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.
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44. In response to paras 11 and 12, it is submitted that the Directorate of Enforcement has failed to provide CNR No. : DLCT11-000029-2020 Page 39 of 100 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 CNR No. : DLCT11-000029-2020 Page 40 of 100 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.
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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 CNR No. : DLCT11-000029-2020 Page 41 of 100 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;
b) Dr. Manik Bhattacharya VS. Ramesh Malik & Ors.
2022 Live Law (SC) 867;
c) Lakshmi Narayan Guin and Others Vs. Nirajnan Modak (1985) 1 SCC 270;
CNR No. : DLCT11-000029-2020 Page 42 of 100Directorate 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;
CNR No. : DLCT11-000029-2020 Page 43 of 100Directorate 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 CNR No. : DLCT11-000029-2020 Page 44 of 100 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 CNR No. : DLCT11-000029-2020 Page 45 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 46 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 47 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 48 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 49 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 50 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 51 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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.
CNR No. : DLCT11-000029-2020 Page 52 of 100Directorate of Enforcement Vs. Sanjay Bhandari (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 in section 4, and computed in the manner laid down in CNR No. : DLCT11-000029-2020 Page 53 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 54 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 56 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 57 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 58 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 59 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 61 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 62 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 64 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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?
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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.
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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.
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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 CNR No. : DLCT11-000029-2020 Page 65 of 100 Directorate of Enforcement Vs. Sanjay Bhandari (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.
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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 :
CNR No. : DLCT11-000029-2020 Page 67 of 100Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 68 of 100 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 CNR No. : DLCT11-000029-2020 Page 69 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 70 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 71 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 the CNR 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 CNR No. : DLCT11-000029-2020 Page 73 of 100 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 CNR No. : DLCT11-000029-2020 Page 74 of 100 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 CNR No. : DLCT11-000029-2020 Page 75 of 100 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.
CNR No. : DLCT11-000029-2020 Page 76 of 100Directorate 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.CNR No. : DLCT11-000029-2020 Page 77 of 100
Directorate of Enforcement Vs. Sanjay Bhandari
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 CNR No. : DLCT11-000029-2020 Page 78 of 100 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 CNR No. : DLCT11-000029-2020 Page 79 of 100 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 CNR No. : DLCT11-000029-2020 Page 80 of 100 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 CNR No. : DLCT11-000029-2020 Page 81 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 82 of 100 Directorate of Enforcement Vs. Sanjay Bhandari 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 CNR No. : DLCT11-000029-2020 Page 83 of 100 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 different CNR 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 CNR No. : DLCT11-000029-2020 Page 85 of 100 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 Tax CNR 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 to CNR 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
Directorate of Enforcement Vs. Sanjay Bhandari
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 the CNR 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
Directorate of Enforcement Vs. Sanjay Bhandari
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 CNR No. : DLCT11-000029-2020 Page 92 of 100 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 CNR No. : DLCT11-000029-2020 Page 95 of 100 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.
CNR No. : DLCT11-000029-2020 Page 96 of 100Directorate 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 CNR No. : DLCT11-000029-2020 Page 97 of 100 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.
CNR No. : DLCT11-000029-2020 Page 98 of 100Directorate 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) CNR No. : DLCT11-000029-2020 Page 99 of 100 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 CNR No. : DLCT11-000029-2020 Page 100 of 100 Directorate of Enforcement Vs. Sanjay Bhandari