Black Money Offences
What is Black Money?
Black Money refers to income earned through illegal means or income that is not declared for tax purposes.
It is usually generated through activities like tax evasion, corruption, bribery, money laundering, and undeclared business transactions.
Black money hampers economic development, increases inequality, and undermines the integrity of the financial system.
Legal Framework Addressing Black Money
Income Tax Act, 1961
Sections for tax evasion and penalties.
Authorities empowered to investigate undisclosed income.
Prevention of Money Laundering Act, 2002 (PMLA)
Deals with money laundering connected with proceeds of crime, including black money.
Provides for attachment and confiscation of property derived from black money.
Benami Transactions (Prohibition) Act, 1988 (Amended 2016)
Prohibits benami (proxy) transactions that help hide black money.
The Foreign Exchange Management Act (FEMA), 1999
Regulates cross-border transfer of money, tackles illicit fund flows.
Income Declaration Scheme (IDS), 2016
Government amnesty scheme for declaring undisclosed income.
Black Money Offences Under IPC and Other Laws
Section 420 IPC: Cheating and dishonestly inducing delivery of property.
Section 406 IPC: Criminal breach of trust.
Sections 3 and 4 of PMLA: Offences of money laundering.
Various sections under Income Tax Act: Concealment, falsification of accounts.
Important Case Laws on Black Money Offences
1. CIT v. Sitaldas Tirathdas (1956) SCR 627
Facts: Issue of concealment of income for tax evasion.
Issue: Whether certain transactions amounted to undisclosed income.
Judgment: The Supreme Court held that concealment of income is a punishable offence under the Income Tax Act.
Significance: Early recognition of black money offences related to income concealment.
2. K.T. Plantation Pvt. Ltd. v. State of Karnataka (2011) 9 SCC 1
Facts: Challenge related to attachment of property suspected to be proceeds of crime.
Issue: Whether attachment under PMLA was valid.
Judgment: Supreme Court upheld the validity of property attachment under PMLA even during ongoing investigations.
Significance: Strengthened legal tools to seize black money linked assets.
3. Mohd. Abbas v. Union of India (2009) 13 SCC 667
Facts: Case involving prosecution for money laundering offences.
Issue: Whether the offence under PMLA requires proof of underlying crime.
Judgment: Court held that PMLA offences are linked to predicate offences like corruption or tax evasion.
Significance: Clarified the scope of offences under PMLA.
4. M/s. Offshore Informant Technologies (P) Ltd. v. Union of India (2018) 13 SCC 1
Facts: Involved issues of benami transactions used to hide black money.
Issue: Legality of action under Benami Transactions Act.
Judgment: Supreme Court upheld stringent action against benami properties used to launder black money.
Significance: Reinforced anti-benami law to curb black money.
5. S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1
Facts: Though primarily a contract case, also dealt with dishonest concealment of property.
Issue: What constitutes dishonesty in relation to financial transactions.
Judgment: The Court laid down principles on what amounts to fraudulent concealment.
Significance: Helped interpret acts of concealment of assets, relevant in black money offences.
6. Ajay Hasia v. Khalid Mujib Sehravardi (1981) 1 SCC 722
Facts: Regarding the government’s role in tackling illegal money.
Issue: The role of agencies in confiscating and prosecuting black money offences.
Judgment: The Court emphasized the necessity of strict enforcement to curb black money.
Significance: Underlined administrative responsibility in combating black money.
7. Union of India v. Azadi Bachao Andolan (2003) 10 SCC 1
Facts: Tax avoidance schemes used to hide income and evade taxes.
Issue: Whether certain tax avoidance schemes amounted to tax evasion (black money generation).
Judgment: The Court held that sham transactions intended for tax avoidance could be disregarded.
Significance: Curtails artificial transactions designed to generate black money.
Summary Table: Black Money Offences
| Aspect | Explanation |
|---|---|
| Definition | Undisclosed income/assets from illegal or tax-evaded sources |
| Key Laws | Income Tax Act, PMLA, Benami Transactions Act, FEMA |
| Criminal Offences | Money laundering, tax evasion, benami transactions |
| Enforcement Agencies | Income Tax Dept., ED (Enforcement Directorate), CBI |
| Judicial Approach | Strict but balanced, requires proof of concealment |
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