My foreign company was struck off and the bank account closed years before the Black Money Act commenced. Can they still prosecute me for it?
Not on this authority. The Karnataka High Court quashed eight complaints under ss.50 and 52 of the Black Money Act where the foreign company had been struck off and the Singapore account closed in 2010, holding that the deeming fiction in s.72(c) cannot be stretched to found criminal liability for conduct that preceded the Act. Article 20(1) bars conviction under a law not actually in force when the act was done, and a statutory deeming that the asset was acquired in the year of the s.10 notice does not supply that.
Decided by the High Court (M. Nagaprasanna J) on 2024-06-07, reported as Criminal Petitions Nos. 101368-101375 of 2019 (High Court of Karnataka, Dharwad Bench); no reporter citation printed on the pages read. It bears on section BMA s.50, section BMA s.52, section BMA s.72(c), section BMA s.59, section BMA s.10(1), section BMA s.8, section Constitution Art. 20(1), section CrPC s.482 of the Income Tax Act 1961, in Prosecution matters.
This is the High Court authority to put against a s.50 or s.52 complaint founded on a foreign holding that was gone before 2015. The Department's standing answer is s.72(c); the judgment meets it head-on and says a legal fiction cannot be extended beyond its purpose to make a man a criminal.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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Two British Virgin Islands companies were incorporated - Gleaming Snow Worldwide Limited on 17 March 2008, later struck off, and Oriental Success Universal Corporation on 12 May 2009. An account with UBS in Singapore was opened on 12 June 2009 and received deposits of USD 16,000 on 8 January 2010 and USD 40,000 on 16 March 2010. The account was closed on 27 May 2010 and the corporation struck off on 2 November 2010. The petitioners, members of one family, were directors of the entities. Long afterwards the Assessing Officer issued summons on 26 March 2018 under s.8, followed by a notice under s.10(1) on 25 June 2018, and then two show-cause notices as to why prosecution under ss.50 and 52 should not be launched. The petitioners replied on 21 February 2019 and 14 March 2019. Sanction was accorded and eight complaints were registered before the IV Additional Judicial Magistrate First Class, Belagavi, numbered C.C. Nos. 239 to 246 of 2019. The petitioners moved the High Court under s.482 CrPC. Their case was that the companies were closed before the Act was enacted, that they were directors and not shareholders, and that Article 20 permits prosecution only for a violation of a law in force at the time of the act. The Revenue contended that s.72 operates retrospectively and that proceedings under s.72(c) are permissible for pre-Act conduct.
All eight criminal petitions were allowed and the proceedings in C.C. Nos. 242, 243, 246, 239, 241, 245, 244 and 240 of 2019 pending before the IV Additional Judicial Magistrate First Class, Belagavi were quashed, with pending applications disposed of. The Court held at para 15 that the prosecution 'did not and cannot pass constitutional muster under Article 20 of the Constitution of India', that non-disclosure referable to assessment years 2007-08 or 2009-10 cannot be used to prosecute for an Act that came into force in 2015, and that criminal law could not be set in motion on these facts. The Court added an express caveat in the same paragraph that it was considering the criminal liability fastened on the petitioners 'including under Section 72(c) of the Act' and that this too falls foul of Article 20 - the reasoning being that the Constitution is the fountain head of all statutes including a special statute, so the rigour of any provision of the Act must pass the test of Article 20, and its failure to do so obliterates the crime.
On the deeming provision, the Court took Kumaran v. State of Kerala (2017) 7 SCC 471 for the rule that a legal fiction is not to be extended beyond the purpose for which it is created or beyond the language of the section creating it, and set out the passage from East End Dwellings Co. Ltd. v. Finsbury Borough Council on imagining the consequences of a statutory fiction (para 12). On ex post facto law it worked through the Constitution Bench decision in Rao Shiv Bahadur Singh v. State of Vindhya Pradesh, where the prohibition in Article 20 was held to extend to the conviction and the sentence and to be founded on the character of the law as ex post facto, and to require a law actually in force at the time of the act rather than one deemed to be in force; to give credence to a deeming section and affirm criminal liability on it would defeat the tenor of Article 20 because every post facto law could then be made retrospective (para 13). The Court dealt with Union of India v. Gautam Khaitan (2019) 10 SCC 108, noting the Supreme Court's observation there that ss.50 and 51 come into play only where an assessee has not taken the benefit of s.59 and has neither disclosed the assets nor paid tax and penalty, but held that Khaitan 'would not become completely applicable' because the question of retrospective applicability under Article 20(1) was not in issue in that case (para 14).
the prosecution so initiated against these petitioners did not and cannot pass constitutional muster under Article 20
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Handle my notice → Ask a CA on WhatsAppNot on this authority. The Karnataka High Court quashed eight complaints under ss.50 and 52 of the Black Money Act where the foreign company had been struck off and the Singapore account closed in 2010, holding that the deeming fiction in s.72(c) cannot be stretched to found criminal liability for conduct that preceded the Act. Article 20(1) bars conviction under a law not actually in force when the act was done, and a statutory deeming that the asset was acquired in the year of the s.10 notice does not supply that. This was decided by the High Court (M. Nagaprasanna J) and bears on section BMA s.50, section BMA s.52, section BMA s.72(c), section BMA s.59, section BMA s.10(1), section BMA s.8, section Constitution Art. 20(1), section CrPC s.482 of the Income Tax Act 1961. It is reported as Criminal Petitions Nos. 101368-101375 of 2019 (High Court of Karnataka, Dharwad Bench); no reporter citation printed on the pages read. This is the High Court authority to put against a s.50 or s.52 complaint founded on a foreign holding that was gone before 2015. The Department's standing answer is s.72(c); the judgment meets it head-on and says a legal fiction cannot be extended beyond its purpose to make a man a criminal. If it applies to you, the first step is this: Fix the dates first: when the entity was incorporated and struck off, when the account was opened, funded and closed, and when the Act commenced. The argument only works if the conduct complained of is wholly pre-commencement.
Two British Virgin Islands companies were incorporated - Gleaming Snow Worldwide Limited on 17 March 2008, later struck off, and Oriental Success Universal Corporation on 12 May 2009. An account with UBS in Singapore was opened on 12 June 2009 and received deposits of USD 16,000 on 8 January 2010 and USD 40,000 on 16 March 2010. The account was closed on 27 May 2010 and the corporation struck off on 2 November 2010. The petitioners, members of one family, were directors of the entities. Long afterwards the Assessing Officer issued summons on 26 March 2018 under s.8, followed by a notice under s.10(1) on 25 June 2018, and then two show-cause notices as to why prosecution under ss.50 and 52 should not be launched. The petitioners replied on 21 February 2019 and 14 March 2019. Sanction was accorded and eight complaints were registered before the IV Additional Judicial Magistrate First Class, Belagavi, numbered C.C. Nos. 239 to 246 of 2019. The petitioners moved the High Court under s.482 CrPC. Their case was that the companies were closed before the Act was enacted, that they were directors and not shareholders, and that Article 20 permits prosecution only for a violation of a law in force at the time of the act. The Revenue contended that s.72 operates retrospectively and that proceedings under s.72(c) are permissible for pre-Act conduct. The matter was decided on 2024-06-07 by the High Court (M. Nagaprasanna J). On those facts the High Court held as follows. All eight criminal petitions were allowed and the proceedings in C.C. Nos. 242, 243, 246, 239, 241, 245, 244 and 240 of 2019 pending before the IV Additional Judicial Magistrate First Class, Belagavi were quashed, with pending applications disposed of. The Court held at para 15 that the prosecution 'did not and cannot pass constitutional muster under Article 20 of the Constitution of India', that non-disclosure referable to assessment years 2007-08 or 2009-10 cannot be used to prosecute for an Act that came into force in 2015, and that criminal law could not be set in motion on these facts. The Court added an express caveat in the same paragraph that it was considering the criminal liability fastened on the petitioners 'including under Section 72(c) of the Act' and that this too falls foul of Article 20 - the reasoning being that the Constitution is the fountain head of all statutes including a special statute, so the rigour of any provision of the Act must pass the test of Article 20, and its failure to do so obliterates the crime.
On the deeming provision, the Court took Kumaran v. State of Kerala (2017) 7 SCC 471 for the rule that a legal fiction is not to be extended beyond the purpose for which it is created or beyond the language of the section creating it, and set out the passage from East End Dwellings Co. Ltd. v. Finsbury Borough Council on imagining the consequences of a statutory fiction (para 12). On ex post facto law it worked through the Constitution Bench decision in Rao Shiv Bahadur Singh v. State of Vindhya Pradesh, where the prohibition in Article 20 was held to extend to the conviction and the sentence and to be founded on the character of the law as ex post facto, and to require a law actually in force at the time of the act rather than one deemed to be in force; to give credence to a deeming section and affirm criminal liability on it would defeat the tenor of Article 20 because every post facto law could then be made retrospective (para 13). The Court dealt with Union of India v. Gautam Khaitan (2019) 10 SCC 108, noting the Supreme Court's observation there that ss.50 and 51 come into play only where an assessee has not taken the benefit of s.59 and has neither disclosed the assets nor paid tax and penalty, but held that Khaitan 'would not become completely applicable' because the question of retrospective applicability under Article 20(1) was not in issue in that case (para 14). In the words reproduced by the source cited on this page: "the prosecution so initiated against these petitioners did not and cannot pass constitutional muster under Article 20" The decision followed or applied Rao Shiv Bahadur Singh v. State of Vindhya Pradesh (1953) 2 SCC 111 (Constitution Bench) - followed on the scope of Article 20 and on the requirement that the law be actually in force; Kumaran v. State of Kerala (2017) 7 SCC 471 - applied, on the limits of a legal fiction; East End Dwellings Co. Ltd. v. Finsbury Borough Council - quoted, on the consequences of a statutory fiction; Union of India v. Gautam Khaitan (2019) 10 SCC 108 - considered and held not completely applicable, the Article 20(1) question not having been in issue there.
It was decided by the High Court on 2024-06-07 and is reported as Criminal Petitions Nos. 101368-101375 of 2019 (High Court of Karnataka, Dharwad Bench); no reporter citation printed on the pages read. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section BMA s.50, section BMA s.52, section BMA s.72(c), section BMA s.59, section BMA s.10(1), section BMA s.8, section Constitution Art. 20(1), section CrPC s.482, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. All eight criminal petitions were allowed and the proceedings in C.C. Nos. 242, 243, 246, 239, 241, 245, 244 and 240 of 2019 pending before the IV Additional Judicial Magistrate First Class, Belagavi were quashed, with pending applications disposed of. The Court held at para 15 that the prosecution 'did not and cannot pass constitutional muster under Article 20 of the Constitution of India', that non-disclosure referable to assessment years 2007-08 or 2009-10 cannot be used to prosecute for an Act that came into force in 2015, and that criminal law could not be set in motion on these facts. The Court added an express caveat in the same paragraph that it was considering the criminal liability fastened on the petitioners 'including under Section 72(c) of the Act' and that this too falls foul of Article 20 - the reasoning being that the Constitution is the fountain head of all statutes including a special statute, so the rigour of any provision of the Act must pass the test of Article 20, and its failure to do so obliterates the crime. It arises in Prosecution matters, on section BMA s.50, section BMA s.52, section BMA s.72(c), section BMA s.59, section BMA s.10(1), section BMA s.8, section Constitution Art. 20(1), section CrPC s.482 of the Income Tax Act 1961, and was decided by M. Nagaprasanna J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Identify the exact section charged. This judgment deals with ss.50 and 52; a s.51 charge based on post-commencement conduct is a different case and Sanjay Bhandari is against you there. Plead Article 20(1) directly and rely on Rao Shiv Bahadur Singh for the proposition that the law must have been actually in force, not deemed to be in force. Meet s.72(c) by arguing the limits of a deeming fiction, as the Court did through Kumaran v State of Kerala and East End Dwellings. Keep the tax side separate. The petitions here were under s.482 CrPC against the criminal complaints; nothing in this judgment sets aside an assessment or a penalty.
Searched for later treatment; none was found. That is not the same as a source affirming it. No decision applying, following, distinguishing or doubting this judgment was located, and nothing was found to show whether the Revenue has carried it further. Searches returned only commentary on the judgment itself. There is a real tension with Rashesh Manhar Bhansali v. Addl. CIT, which this library holds: the Mumbai Tribunal there used s.72(c) to sustain a tax charge on foreign accounts closed before the Act commenced, while this Court holds the same deeming provision cannot be stretched to found criminal liability. The two are reconcilable on their operative holdings - Article 20(1) speaks only to conviction and penalty for an offence, the relief here was confined to quashing complaints under ss.50 and 52, and no assessment or penalty order was before the Court. But the judgment is worded more widely than that at para 15, saying the rigour of any provision of the Act must pass the test of Article 20, and it does not refer to Bhansali. Treat it as decisive on the prosecution and as an argument, not an answer, on the tax charge. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The discovery note that led to this entry listed ss.50, 51, 52 and 55 as the sections in play. The judgment records the show-cause notices and the complaints as being under ss.50 and 52 only; s.51 was not the charge here. That matters, because Sanjay Bhandari v. Income Tax Office (Delhi High Court, 8 November 2024) upholds a s.51 prosecution launched before assessment, and the two judgments do not meet on the same section. indiankanoon carries this single judgment under two document numbers with different lead petitioners - /doc/19993749/ as Arvind Balkrishna Gogte and /doc/118832306/ as Madhav Arvind Gogte - with identical petition numbers 101368-101375 of 2019 and the identical operative order quashing C.C. Nos. 239 to 246 of 2019; both were opened and they are the same judgment. The narrative in the judgment recites the Act's commencement inconsistently - at one point 1 April 2016, while para 15 speaks of 'an act that has come into force in the year 2015'. The Act was brought into force by notification with effect from 1 July 2015, which Gautam Khaitan explains; the inconsistency does not affect the reasoning, which turns on all the conduct predating 2015 either way. The caveat as to s.72(c) in para 15 is expressly directed at criminal liability; the judgment does not decide, and was not asked to decide, whether s.72(c) supports the charge of tax under s.3. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
All eight criminal petitions were allowed and the proceedings in C.C. Nos. 242, 243, 246, 239, 241, 245, 244 and 240 of 2019 pending before the IV Additional Judicial Magistrate First Class, Belagavi were quashed, with pending applications disposed of. The Court held at para 15 that the prosecution 'did not and cannot pass constitutional muster under Article 20 of the Constitution of India', that non-disclosure referable to assessment years 2007-08 or 2009-10 cannot be used to prosecute for an Act that came into force in 2015, and that criminal law could not be set in motion on these facts. The Court added an express caveat in the same paragraph that it was considering the criminal liability fastened on the petitioners 'including under Section 72(c) of the Act' and that this too falls foul of Article 20 - the reasoning being that the Constitution is the fountain head of all statutes including a special statute, so the rigour of any provision of the Act must pass the test of Article 20, and its failure to do so obliterates the crime.
TaxSphere, “Arvind Balkrishna Gogte v Income Tax Department”, https://taxnotice.vittsphere.com/caselaw/case/arvind-balkrishna-gogte-v-income-tax-department-bma-article-20/ (validity last checked 2026-09-16)
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There is a look-out circular against me while my Black Money Act appeal is pending. Can I get it lifted, and does the appeal need money deposited first?
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The department says the Black Money Act applies to my foreign account from July 2015. Is that retrospective?
