Facts of the Case

  • The petitioner, Bhavya Bishnoi, was accused of failing to disclose his alleged financial interest in a foreign bank account maintained with Investec Bank (Jersey Branch) for Assessment Year 2016–17.
  • A complaint was filed under Section 50 of the BMI Act, and cognizance was taken by the ACMM, leading to issuance of summons.
  • The petitioner contended that:
    • He was merely a discretionary beneficiary of a trust and had no ownership or control over the account.
    • The account was opened when he was a minor/non-resident and thus not required to disclose.
    • No income or benefit was ever derived from the alleged foreign asset.

Issues Involved

  1. Whether non-disclosure of a foreign asset by a discretionary beneficiary attracts liability under Section 50 of the BMI Act.
  2. Whether prosecution can be initiated before completion of assessment proceedings under the BMI Act.
  3. Whether sanction under Section 55 of the BMI Act was validly granted.
  4. Whether continuation of criminal proceedings amounts to abuse of process of law.

Petitioner’s Arguments

  • The petitioner argued that:
    • He had no beneficial ownership, only a contingent interest as a discretionary beneficiary.
    • No income was received; hence disclosure obligation did not arise.
    • Assessment proceedings were still pending; thus prosecution was premature.
    • Sanction under Section 55 was invalid as it was granted by an incompetent authority and relied on outdated provisions.
    • Relied on precedents including:
      • Karti P. Chidambaram vs Principal Chief Commissioner of Income Tax
      • Commissioner of Wealth Tax vs Estate of Late HMM Vikram Sinhji of Gondal (2015) 5 SCC 666 (on discretionary trusts).

Respondent’s Arguments

  • The Income Tax Department contended that:
    • The petitioner failed to disclose foreign bank account details in ITR for AY 2016–17.
    • Proceedings were validly initiated under Section 50 of the BMI Act.
    • The issue of sanction validity would be addressed in the reply.

Court’s Findings / Order

  • The Court observed that:
    • Ingredients of Section 50 BMI Act require willful failure to disclose foreign assets.
    • The petitioner’s contention regarding lack of benefit and discretionary trust nature appeared to have merit, subject to reply.
  • Order:
    • The Court did not stay the trial proceedings at this stage.
    • Proceedings before trial court were made subject to final outcome of the petition.
    • Respondent was directed to file reply.
    • Trial court may consider granting exemption from personal appearance of petitioner studying abroad.

Important Clarifications by Court

  • Mere inclusion as a beneficiary in a discretionary trust does not automatically imply ownership or income.
  • For prosecution under Section 50 BMI Act:
    • There must be willful non-disclosure
    • The person must qualify as beneficial owner or beneficiary deriving benefit.
  • Criminal proceedings may continue even if assessment proceedings are pending, but are subject to judicial scrutiny.

Sections Involved

  • Section 50 – Black Money Act, 2015 (Punishment for non-disclosure of foreign assets)
  • Section 55 – Black Money Act, 2015 (Sanction for prosecution)
  • Section 482 – Code of Criminal Procedure, 1973
  • Section 139, 131, 132 – Income Tax Act, 1961

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1475/AKA25042022CRLMM17082022_124555.pdf


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