- 1 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF MARCH, 2026 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ CRIMINAL PETITION NO. 6036 OF 2017 BETWEEN: H.J. SIWANI AGED 57 YEARS S/O J.K. SIWANI RESIDING AT NO.15/01 BENSON CROSS ROAD BENSON TOWN BANGALORE-560 046 …PETITIONER (BY SRI. KIRAN S. JAVALI, SENIOR ADVOCATE FOR SRI. CHANDRASHEKARA K., ADVOCATE) AND: THE INCOME-TAX DEPARTMENT BY DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) UNIT 1(3), 3RD FLOOR, C.R. BUILDING ANNEXE, QUEENS ROAD BENGALURU-560 001 REPRESENTED BY SHRI SHIVANANDA H KALAKERI …RESPONDENT (BY SRI. SUSHAL TIWARI, ADVOCATE) THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE SANCTION DATED 29.03.2016 AND CONSEQUENT THERETO THE PROCEEDINGS IN C.C.NO.93/2016 ON THE FILE OF SPECIAL COURT FOR ECONOMIC OFFENCES, BANGALORE INITIATED AGAINST THE PETITIONER AND SET ASIDE THE ORDER DATED 05.04.2016 IN C.C.NO.93/2016 ON THE FILE OF SPL. COURT FOR ECONOMIC OFFENCES, BANGALORE Digitally signed by HEMALATHA J Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 OF TAKING COGNIZANCE AND ISSUING OF SUMMONS TO THE ACCUSED. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER The petitioner has challenged the prosecution launched against him by the respondent in C.C No.93/2016 on the file of the Court of the Special Court for Economic Offences, Bengaluru and to quash the sanction dated 29.03.2016 granted by the Principal Director of Income Tax (Investigation), Bengaluru and to set aside the order dated 05.04.2016 in C.C No.93/2016 passed by the Special Court for Economic Offences, Bengaluru taking cognizance of offences punishable under Sections 276C(1) and 277 of the Income Tax Act, 1961 (for short ' IT Act, 1961). 2. (i) The facts that can be gathered from the petition are that, the respondent addressed a communication dated 04.02.2016 to the petitioner calling for certain details of investment made during the assessment year 2009-2010 to - 3 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 2015-2016. The petitioner was informed that the same was done in view of Section 133 (6) of the IT Act, 1961 and failure to furnish the information would render him liable for penalty under Section 272A of the IT Act, 1961. (ii) The petitioner claims that even before the information could be submitted, the respondent issued a summons on 16.02.2016 seeking his appearance on 19.02.2016. Even before the petitioner could appear, the respondent issued another summons on 18.02.2016 directing him to appear on 18.02.2016. The petitioner further contended that the summons dated 18.02.2016 was served in person at his office and simultaneously the statement of the petitioner was recorded. (iii) Thereafter, on 19.02.2016, a show cause notice was issued for a proposed prosecution under Sections 276C(1) and 277 of the IT Act, 1961 and called upon the petitioner to appear in person on 29.02.2016 to show cause why prosecution should not be initiated. Petitioner claims that he had addressed a letter dated 22.02.2016 in reply to the - 4 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 summons dated 16.02.2016. He had also furnished the bank statement and sought time to submit other details. (iv) He further contends that, on 23.02.2016, a letter was received from the respondent seeking answers to questionnaire forwarded on an earlier date. In response to the show cause notice dated 19.02.2016, the petitioner sent a reply dated 26.02.2016 furnishing details for the assessment year 2008-2009 and also indicated that the assessment was concluded and a Block Assessment Return was filed for the year 2008-2009. Thereafter, an appeal was preferred against the Block Assessment Order, which is pending. (v) He also contended that, on 26.02.2016, he submitted another letter and drew the attention of the respondent to the fact that his statement was recorded and that no investments were made by him in any foreign country and in the absence of details, he was not able to submit his reply. Therefore, he sought for documents for verification. He further contended that, the respondent by a letter dated 14.03.2016 provided certain documents purportedly relating to incorporation of a company in British Virgin Islands. Later, the - 5 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 respondent by letter dated 22.03.2016 sought for a reply as to why prosecution should not be sanctioned. The petitioner sent his reply on 29.03.2016 informing the respondent that the investment made in British Virgin Islands in the name of the company was not within his knowledge and he was shocked to know about it. (vi) Thereafter, on 29.03.2016, the Principal Director of Income Tax (Investigation), Bengaluru granted sanction to prosecute the petitioner under Section 279(1) of the IT Act, 1961. Consequent thereto, the respondent initiated prosecution by filing a private complaint under Section 200 of Cr.P.C before the Special Court for Economic Offences. The Special Court took cognizance of the offences punishable under Sections 276C(1) and 277 of the IT Act, 1961 and issued process. Being aggrieved by the sanction granted under Section 279(1) of the IT Act, as well as the orders taking cognizance and issuing process, the petitioner is before this Court. 3. (i) The learned Senior Counsel for the petitioner submitted that the petitioner is unaware of the investment - 6 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 made in a company incorporated in British Virgin Islands and the same was informed to the respondent. However, the respondent without furnishing adequate material had proceeded to prosecute the petitioner. He therefore, contends that the impugned prosecution has no basis and warrants interference. (ii) He also submitted that the petitioner is sought to be prosecuted for an offence under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (for short 'Act, 2015'), without there being a sanction as provided under Section 55 of the Act, 2015. He therefore, contends that the impugned prosecution of the petitioner for an offence under the Act, 2015 is faulty and deserves to be halted. (iii) Besides this, he contends that the provisions of the Act, 2015 cannot be invoked in so far as the petitioner is concerned, as the assessment in question is of the year 2008- 2009 at which point of time, the Act, 2015 was not in force. Therefore, the petitioner cannot be hauled up for committing an offence under the Act, 2015. He submitted that what was - 7 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 not an offence in the year 2008-2009, the petitioner cannot be penalised for that in the year 2015. In support of his contention, he relied upon Article 20(3) of the Constitution of India. He therefore, contends that the impugned prosecution being defective is liable to be set at naught. 4. (i) Per contra, the learned Standing counsel for the income tax representing the respondent submitted that the records procured by the respondent indicated that the petitioner had made investment of Rs.10,00,000/- by subscribing to 25,000 shares of a company incorporated in the British Virgin Islands but it was not declared in the returns filed for the assessment year 2008-2009. He therefore contends that, the respondent after taking necessary steps by seeking information from the petitioner and also after issuing appropriate show cause notices as to why a sanction to prosecute him should not be granted, passed an order granting sanction under Section 279 of the IT Act, 1961. He therefore, contends that the procedure to prosecute the petitioner is just and proper and is in line with Section 279 of the IT Act, 1961. - 8 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 (ii) In support of his contention, he invited attention to a notification dated 13.11.2014 issued by the Central Board of Direct Taxes (for short 'CBDT') which indicates that in respect of the powers conferred upon the Directors General of Income Tax or the Principal Director/Director of Income Tax under the provisions contained in Chapter XIII and Chapter XXII and other provisions incidental thereto is delegated to the Principal Director/Director of Income Tax (Investigation). He therefore contends that, the sanction granted by the Principal Director of Income Tax (Investigation), Bengaluru dated 29.03.2016 is in order and is in line with the notification of the CBDT dated 13.11.2014. He further contends that, the question whether the sanction is in accordance with law or not is a matter for trial before the Special Court for Economic Offences. (iii) Besides this, he contends that the question, whether the Act, 2015 has retrospective effect or not, is pending consideration before the Hon'ble Apex Court. He therefore submits that the issues raised by the petitioner that he had not made any investment in a company incorporated in British Virgin Islands and therefore, he is not guilty of the - 9 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 offences, are all matters of trial and therefore, this Court may not exercise jurisdiction under Section 482 of Cr.P.C. 5. I have considered the submissions of the learned Senior Counsel for the petitioner and learned Standing Counsel for the respondent. 6. The prosecution of the petitioner was on the alleged ground that he failed to make appropriate declarations regarding his investment in a Company incorporated in a foreign country during the assessment year 2008-2009. The respondent seems to have collected some information about the petitioner investing Rs.10,00,000/- in Habitat Holdings Enterprises Inc., which is a company incorporated in the British Virgin Islands. The respondent had called upon the petitioner to disclose about the investment so made and the petitioner had feigned ignorance about such investment made in his name. The respondent had thereafter taken steps and issued a questionnaire soliciting the answers of the petitioner. The petitioner in response to one of the questions, stated that he had made certain investments in HIS Majesty Holding - 10 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 Limited, Dubai and he has no other investment made in any foreign country. 7. To a specific question, namely, "Do you hold any other foreign assets other than what is mentioned in your reply to Question No.5 of the statement?" he stated, "I do not hold any other foreign assets except what is stated in my reply in Question No.5 of the statement". Therefore, the respondent having been satisfied that the petitioner had failed to make a declaration of his investment in a foreign company in a tax haven, has thought it fit to prosecute the petitioner for offences punishable under Sections 276C(1) and 277 of the IT Act, 1961. Section 279 of the IT Act, 1961 mandates that for a prosecution under Sections 276 or 277 of the IT Act, 1961, a prior sanction has to be obtained. 8. As rightly contended by the learned counsel for the respondent, the CBDT had issued a notification dated 13.11.2014 authorising the Principal Director/Director of Income Tax (Investigation) to perform powers conferred on Directors General of Income Tax and Principal - 11 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 Director/Director of Income Tax under Chapter XIII and Chapter XXII of the Income Tax Act, 1961. 9. The order of sanction granted by the Principal Director of Income Tax (Investigation), Bengaluru dated 29.03.2016 shows that he had exercised power under Section 279(1) of the IT Act, 1961 granting sanction for prosecution of the petitioner under Sections 276C(1), 277 of the IT Act, 1961, Section 191 of the IPC and Section 50 of the Act, 2015. The trial Court after being satisfied took cognizance of the offences punishable under Sections 276C(1) and 277 of IT Act, 2016 but did not take cognizance of an offence punishable under Section 50 of the Act, 2015. Therefore, the contention of the learned Senior counsel for the petitioner that the petitioner cannot be prosecuted for an offence under Section 50 of the Act, 2015 and that it cannot be done without sanction under Section 55 of the Act, 2015 is academic and is not a ground to upset the prosecution of the petitioner. 10. Therefore, as rightly contented by learned Standing counsel for the respondent, the question whether the sanction is in accordance with law or not is a matter that has to be - 12 - HC-KAR NC: 2026:KHC:14552 CRL.P No. 6036 of 2017 established before the Special Court for Economic Offences, Bengaluru and not in a proceeding under Section 482 of Cr.P.C. Likewise, the contention whether the petitioner was complicit in not declaring the investment made in a foreign country in a company incorporated in a tax haven, is a question of fact which has to be thrashed out in trial and certainly not in a petition under Section 482 of Cr.P.C. In that view of the matter, this petition lacks merit and is accordingly dismissed. Sd/- (R. NATARAJ) JUDGE UN List No.: 1 Sl No.: 1