The Allahabad High Court (Lucknow Bench) has stayed the criminal proceedings and the summoning order issued against an applicant under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The Court observed that the matter regarding the date of acquisition of the foreign asset and the corresponding reporting requirement “requires consideration on facts and law both.”
Background of the Case
The applicant, Rakesh Srivastava, approached the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), seeking the quashing of the cognizance and summoning order dated June 20, 2025, and the Criminal Complaint No. 65915 of 2025 pending before the Special Chief Judicial Magistrate (Custom), Lucknow. The complaint was filed under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (‘Act 2015’).
The prosecution’s case stemmed from a search operation carried out on March 5, 2024, at the premises of the Quantum Group, including the applicant’s residence. During the search, an agreement dated June 29, 2021, regarding an investment in an immovable property situated at “Paramount Tower Hotel & Residence Dubai” was seized.
The complaint alleged that the applicant, in his statement under Section 132(4) of the Income Tax Act, 1961, admitted that the property (PTR/35/3503) was purchased by him and his brother for a consideration of AED 16,80,210 (INR 3,97,66,370.17), with the title deed executed on March 1, 2023. The department alleged that the applicant failed to disclose this foreign asset in Schedule FA (Foreign Assets) of his Income Tax Return (ITR) for the Assessment Year (AY) 2023-24.
Arguments of the Parties
Applicant’s Submissions: Senior Advocate Sri Purnendu Chakravarty assisted by Advocates Shivanshu Goswami and Prerna Jalan, appearing for the applicant, argued that the offence under Section 50 of the Act 2015 was not made out due to the timing of the asset acquisition.
- Reporting Period: The counsel submitted that for the Assessment Year 2023-24 (Financial Year 2022-23), the reporting requirement under Schedule FA pertains to assets held as of December 31, 2022. He argued that since the property was registered on March 1, 2023, the asset was not owned on or before the cut-off date of December 31, 2022. Therefore, there was no statutory requirement to disclose it in the return for AY 2023-24.
- Legal Status of Agreement: Relying on the Supreme Court judgment in Indian Overseas Bank v. M.A.S. Subramanian & ors., the counsel argued that an agreement for sale does not create any interest in the property. A sale is valid only via a registered sale deed. Thus, the agreement dated June 29, 2021, did not constitute ownership requiring disclosure.
- Procedural Lapses: The applicant contended that no notice under Section 10 or penalty notice under Section 46 of the Act 2015 was issued before filing the complaint. It was further argued that penalty proceedings for the Financial Year 2016-17 were time-barred under Section 46(2)(b) of the Act.
- Non-Speaking Order: The counsel challenged the summoning order dated June 20, 2025, describing it as “cryptic” and a “non-speaking order” passed without recording satisfaction or reasons.
Opposite Party’s Submissions: Sri Kushagra Dikshit and Sri Neerav Chitravanshi, appearing for the Union of India, opposed the plea.
- Independent Prosecution: Relying on Sections 48 and 50 of the Act 2015, the counsel argued that the provisions of Chapter V (Offences and Prosecutions) are “in addition to and not in derogation of the provisions of any other law.”
- No Bar on Defence: They submitted that prosecution under this chapter is independent of any order made or not made under the Act, and a defence based on the absence of an order due to limitation is not valid.
- Willful Failure: The counsel emphasized that willful failure to furnish information relating to an asset located outside India warrants punishment with rigorous imprisonment which shall not be less than six months.
Court’s Observations and Decision
Justice Brij Raj Singh considered the rival contentions, specifically the applicant’s argument regarding the non-speaking nature of the summoning order and the factual dispute concerning the reporting period.
The Court observed:
“After going through the rival contentions of the parties, their legal and factual submissions and the argument that the impugned summoning order is a non-speaking order, without recording any reason or satisfaction of the court below, I am of the opinion that matter requires consideration on facts and law both.”
Outcome: The High Court granted interim relief to the applicant. The Court ordered:
“Till the next date of listing, proceedings of the cognizance and summoning Order dated 20.06.2025 and the Criminal Complaint under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015… pending before the Learned Court of Special Chief Judicial Magistrate (Custom), Lucknow, in so far as the Applicant herein, are hereby stayed.”
The Court directed the counsel for the complainant to file a counter-affidavit within two weeks and allowed one week thereafter for a rejoinder-affidavit. The case is listed for the last week of December 2025.
Case Details:
- Case Title: Rakesh Srivastava v. U.O.I. Thru. Assistant Director Income Tax (Inv.)
- Case Number: Application U/S 528 BNSS No. 1936 of 2025
- Bench: Justice Brij Raj Singh
