The assessment under the Black Money Act is not complete, and may now be time-barred. Can they still summon me on a s.51 complaint?
Yes. The Delhi High Court refused to quash the summoning order, holding that Chapter V of the Black Money Act stands independent of any order made under the Act, so the initiation of prosecution is not dependent on the completion of assessment provided the ingredients of s.51 are made out. Sections 50 and 51 operate in different realms, and whether the conduct was preparation or a punishable attempt is a matter for trial.
Decided by the High Court (Dinesh Kumar Sharma J) on 2024-11-08, reported as CRL.M.C. 805/2020 with CRL.M.A. 3314/2020, CRL.M.A. 10806/2020 and CRL.M.A. 10808/2020 (High Court of Delhi at New Delhi); reserved 20 September 2024; no reporter citation printed on the page read. It bears on section BMA s.48, section BMA s.50, section BMA s.51, section BMA s.51(1), section BMA s.51(3), section BMA s.10, section BMA s.11, section CrPC s.482 of the Income Tax Act 1961, in Prosecution matters.
The first defence pleaded to almost every Black Money Act prosecution is that no assessment has been completed, or that the time for it has run out. This decision closes that route and forces the defence onto the ingredients of the section actually charged.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A search and seizure operation was carried out on 27 April 2016 at premises in Greater Kailash-I, New Delhi. The Department's case concerned undisclosed foreign bank accounts, foreign immovable property and interests in offshore entities in Dubai and Panama, together with the Alrahma Trust in the UAE, said not to have been disclosed in returns for assessment years 2012-13 to 2016-17. The allegation included fabrication and backdating of documents to show the petitioner as holding assets only as trustee of the Alrahma Trust with effect from February 2006 and as having resigned the trusteeship in March 2015, so as to place himself outside the Act. The Additional Commissioner of Income Tax (Central), New Delhi filed Criminal Complaint No. 2121/2019 under s.51(1) before the ACMM, Tis Hazari Courts, Delhi, and the petitioner was summoned by order dated 10 May 2019. Notice under s.10 had been issued on 22 September 2016 and the assessment was still incomplete when the complaint proceeded; an assessment order followed on 23 March 2020, which the petitioner said was beyond the period in s.11. A separate prosecution under s.50 was already pending. The petitioner moved to quash the summoning order, contending among other things that there was no proof of ownership, that s.51 requires ownership after commencement on 1 July 2015, that assessment must be completed before prosecution, and that the conduct alleged was preparation rather than attempt.
The petition was dismissed along with the pending application (para 51). The Court held that s.48 makes the offences and prosecution in Chapter V independent of any order made under the Act, and that 'The initiation of the prosecution is not dependent on the completion of assessment, if the conditions as required under Section 51 Black Money Act are fulfilled' (para 37). Sections 50 and 51 'function in different realms' - s.50 punishes the failure to furnish information about a foreign asset in the return of income, s.51 punishes a wilful attempt to evade tax (para 39). Section 51 can come into play even before a return of income is filed where the person is found to have done any of the acts described in s.51(3), so prosecution under that provision cannot be dependent on the assessment (para 40). At the summoning stage the complainant need not place material capable of proving guilt; the Magistrate has only to form an opinion that there are sufficient grounds for issuing process (para 44). On the fabricated and backdated trust deeds and resignation letters, whether the petitioner's acts amounted to preparation or to attempt was held to be a matter of trial (para 47).
The Court began from the text of s.48, which places Chapter V outside the assessment machinery and removes as a defence the fact that an order has not been made, whether for limitation or for any other reason. That being the statutory scheme, the incompleteness of the assessment, and the argument that the assessment made on 23 March 2020 was out of time under s.11, could not defeat a complaint whose ingredients lay in s.51 (paras 37 and 40). The separation of s.50 from s.51 was the second plank: because the two sections punish different things, the pendency of a s.50 complaint and the absence of a completed assessment did not touch the s.51 charge (para 39). Third, the Court applied the settled approach to a challenge to summoning, declining to weigh the sufficiency of the material at that stage (para 44), and treated the allegations of backdating and fabrication as overt acts whose characterisation as preparation or attempt belonged to the trial (para 47).
The initiation of the prosecution is not dependent on the completion of assessment
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Handle my notice → Ask a CA on WhatsAppYes. The Delhi High Court refused to quash the summoning order, holding that Chapter V of the Black Money Act stands independent of any order made under the Act, so the initiation of prosecution is not dependent on the completion of assessment provided the ingredients of s.51 are made out. Sections 50 and 51 operate in different realms, and whether the conduct was preparation or a punishable attempt is a matter for trial. This was decided by the High Court (Dinesh Kumar Sharma J) and bears on section BMA s.48, section BMA s.50, section BMA s.51, section BMA s.51(1), section BMA s.51(3), section BMA s.10, section BMA s.11, section CrPC s.482 of the Income Tax Act 1961. It is reported as CRL.M.C. 805/2020 with CRL.M.A. 3314/2020, CRL.M.A. 10806/2020 and CRL.M.A. 10808/2020 (High Court of Delhi at New Delhi); reserved 20 September 2024; no reporter citation printed on the page read. The first defence pleaded to almost every Black Money Act prosecution is that no assessment has been completed, or that the time for it has run out. This decision closes that route and forces the defence onto the ingredients of the section actually charged. If it applies to you, the first step is this: Read s.48 before drafting the quashing petition; the independence of Chapter V from the assessment is the answer you will get.
A search and seizure operation was carried out on 27 April 2016 at premises in Greater Kailash-I, New Delhi. The Department's case concerned undisclosed foreign bank accounts, foreign immovable property and interests in offshore entities in Dubai and Panama, together with the Alrahma Trust in the UAE, said not to have been disclosed in returns for assessment years 2012-13 to 2016-17. The allegation included fabrication and backdating of documents to show the petitioner as holding assets only as trustee of the Alrahma Trust with effect from February 2006 and as having resigned the trusteeship in March 2015, so as to place himself outside the Act. The Additional Commissioner of Income Tax (Central), New Delhi filed Criminal Complaint No. 2121/2019 under s.51(1) before the ACMM, Tis Hazari Courts, Delhi, and the petitioner was summoned by order dated 10 May 2019. Notice under s.10 had been issued on 22 September 2016 and the assessment was still incomplete when the complaint proceeded; an assessment order followed on 23 March 2020, which the petitioner said was beyond the period in s.11. A separate prosecution under s.50 was already pending. The petitioner moved to quash the summoning order, contending among other things that there was no proof of ownership, that s.51 requires ownership after commencement on 1 July 2015, that assessment must be completed before prosecution, and that the conduct alleged was preparation rather than attempt. The matter was decided on 2024-11-08 by the High Court (Dinesh Kumar Sharma J). On those facts the High Court held as follows. The petition was dismissed along with the pending application (para 51). The Court held that s.48 makes the offences and prosecution in Chapter V independent of any order made under the Act, and that 'The initiation of the prosecution is not dependent on the completion of assessment, if the conditions as required under Section 51 Black Money Act are fulfilled' (para 37). Sections 50 and 51 'function in different realms' - s.50 punishes the failure to furnish information about a foreign asset in the return of income, s.51 punishes a wilful attempt to evade tax (para 39). Section 51 can come into play even before a return of income is filed where the person is found to have done any of the acts described in s.51(3), so prosecution under that provision cannot be dependent on the assessment (para 40). At the summoning stage the complainant need not place material capable of proving guilt; the Magistrate has only to form an opinion that there are sufficient grounds for issuing process (para 44). On the fabricated and backdated trust deeds and resignation letters, whether the petitioner's acts amounted to preparation or to attempt was held to be a matter of trial (para 47).
The Court began from the text of s.48, which places Chapter V outside the assessment machinery and removes as a defence the fact that an order has not been made, whether for limitation or for any other reason. That being the statutory scheme, the incompleteness of the assessment, and the argument that the assessment made on 23 March 2020 was out of time under s.11, could not defeat a complaint whose ingredients lay in s.51 (paras 37 and 40). The separation of s.50 from s.51 was the second plank: because the two sections punish different things, the pendency of a s.50 complaint and the absence of a completed assessment did not touch the s.51 charge (para 39). Third, the Court applied the settled approach to a challenge to summoning, declining to weigh the sufficiency of the material at that stage (para 44), and treated the allegations of backdating and fabrication as overt acts whose characterisation as preparation or attempt belonged to the trial (para 47). In the words reproduced by the source cited on this page: "The initiation of the prosecution is not dependent on the completion of assessment"
It was decided by the High Court on 2024-11-08 and is reported as CRL.M.C. 805/2020 with CRL.M.A. 3314/2020, CRL.M.A. 10806/2020 and CRL.M.A. 10808/2020 (High Court of Delhi at New Delhi); reserved 20 September 2024; no reporter citation printed on the page 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.48, section BMA s.50, section BMA s.51, section BMA s.51(1), section BMA s.51(3), section BMA s.10, section BMA s.11, 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The petition was dismissed along with the pending application (para 51). The Court held that s.48 makes the offences and prosecution in Chapter V independent of any order made under the Act, and that 'The initiation of the prosecution is not dependent on the completion of assessment, if the conditions as required under Section 51 Black Money Act are fulfilled' (para 37). Sections 50 and 51 'function in different realms' - s.50 punishes the failure to furnish information about a foreign asset in the return of income, s.51 punishes a wilful attempt to evade tax (para 39). Section 51 can come into play even before a return of income is filed where the person is found to have done any of the acts described in s.51(3), so prosecution under that provision cannot be dependent on the assessment (para 40). At the summoning stage the complainant need not place material capable of proving guilt; the Magistrate has only to form an opinion that there are sufficient grounds for issuing process (para 44). On the fabricated and backdated trust deeds and resignation letters, whether the petitioner's acts amounted to preparation or to attempt was held to be a matter of trial (para 47). It arises in Prosecution matters, on section BMA s.48, section BMA s.50, section BMA s.51, section BMA s.51(1), section BMA s.51(3), section BMA s.10, section BMA s.11, section CrPC s.482 of the Income Tax Act 1961, and was decided by Dinesh Kumar Sharma 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 which section is charged. A s.50 complaint turns on the omission of information about a foreign asset from the return; a s.51 complaint turns on a wilful attempt to evade tax and can bite on conduct before any return is filed. Do not expect the summoning stage to be the place to test the evidence; the Court applied the ordinary rule that the Magistrate needs only sufficient grounds for issuing process. If your real case is that the conduct was mere preparation, plan for it to be tried, not decided on a s.482 petition. Where the conduct complained of is wholly pre-commencement, the argument is a different one - see Arvind Balkrishna Gogte on Article 20(1).
Searched for later treatment; none was found. That is not the same as a source affirming it. No decision applying, following or doubting this judgment was located, and nothing was found to show whether it has been carried to the Supreme Court. Searches returned the judgment itself and reports of it. It does not conflict with Arvind Balkrishna Gogte (Karnataka High Court, 7 June 2024): the charge there was under ss.50 and 52 on conduct that ended in 2010, and the ground was Article 20(1), whereas the charge here is under s.51 on conduct extending past commencement and the ground is the independence of Chapter V from the assessment. 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 judgment was reserved on 20 September 2024 and pronounced on 8 November 2024; the date used here is the date of pronouncement. Only the section numbers actually discussed in the judgment are tagged - s.48 is set out and relied on but the judgment refers to the section as a whole rather than to sub-section (2) alone, so it is recorded as s.48. No neutral citation or reporter citation was printed on the page read; the case numbers are taken from the cause title. The paragraph numbers given are those appearing in the report read. 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.
The petition was dismissed along with the pending application (para 51). The Court held that s.48 makes the offences and prosecution in Chapter V independent of any order made under the Act, and that 'The initiation of the prosecution is not dependent on the completion of assessment, if the conditions as required under Section 51 Black Money Act are fulfilled' (para 37). Sections 50 and 51 'function in different realms' - s.50 punishes the failure to furnish information about a foreign asset in the return of income, s.51 punishes a wilful attempt to evade tax (para 39). Section 51 can come into play even before a return of income is filed where the person is found to have done any of the acts described in s.51(3), so prosecution under that provision cannot be dependent on the assessment (para 40). At the summoning stage the complainant need not place material capable of proving guilt; the Magistrate has only to form an opinion that there are sufficient grounds for issuing process (para 44). On the fabricated and backdated trust deeds and resignation letters, whether the petitioner's acts amounted to preparation or to attempt was held to be a matter of trial (para 47).
TaxSphere, “Sanjay Bhandari v Income Tax Office”, https://taxnotice.vittsphere.com/caselaw/case/sanjay-bhandari-v-ito-bma-prosecution-before-assessment/ (validity last checked 2026-09-16)
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