THE POLICY LAB-36
JANUARY 03, 2024

By J B Mohapatra

OWING to the operation of section 280B of the Income Tax Act (ITA) making the offences under the ITA triable only by the Special Courts established for this purpose under section 280A, and the mandatory provision in section 280D requiring the prosecution in Special Courts to be conducted as provided in the Code of Criminal Procedure, 1973, that the changes in the criminal law provisions recently enacted through the 3 new Acts-(a) Bharatiya Nyaya Sanhita, 2023 (BNS) replacing Indian Penal Code (IPC), 1860 (b) Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) replacing Code of Criminal Procedure, 1973, and (c) Bharatiya Sakshya Bill, 2023 (BSB) replacing Indian Evidence Act, 1872 - would have impact on the administration of criminal justice as provided under the ITA (apart from its impact on other central and state Acts, which draw upon and rely on the erstwhile Acts), and since corresponding to section 280D of ITA, section 4(2) of BNS having made administration of criminal justice and prosecution of offences under any other law regulated through the provisions of BNS.

Of particular significance to initiation and conduction of criminal prosecution under the ITA, the 6 chapters / sub-chapters of IPC commonly relied on in prosecution complaints under ITA are:

(a) Chapter V-A under 'Criminal Conspiracy' under sections 120A and 120B of IPC, which is now contained in one section: section 61 of BNS; definition of criminal conspiracy in section 120A of IPC figuring in section 61(1) of BNS with some modification, not materially significant to the overall intent, and punishment in section 120B of IPC figuring in section 61(2) of BNS with no alteration either in wording or in terms of context qua the provisions of IPC.

(b) Chapter X under 'Of Contempt of the Lawful Authority of Public Servants' under sections 172 to 190 of IPC is now configured under chapter XIII from sections 206 to 226 of BNS with no alteration in the wordings of the IPC provisions or in the context they have been expressed, except the introduction of a new criminal offence via section 226 of BNS, which makes any attempt to commit suicide to compel or restrain exercise of lawful power liable to imprisonment for a term extending up to 1 year.

(c) Chapter XVII under 'Of Offences against Property-Of Criminal Breach of Trust' spanning from section 191 to section 229A of IPC is now at chapter XIV from sections 227 to 269 of BNS. Except re-numbering the erstwhile sections in IPC, there are neither changes in the text or context in which substantive and explanatory parts have been expressed nor the length or quantum of punishment for any of the offences except under section 241, 243 and 248, corresponding to sections 204,206 and 211 of the IPC.

(d) Chapter XVII under 'Of Offences against Property-Of Criminal Breach of Trust' from sections 405 to 409 of IPC is now contained in section 316 of BNS, each of the sections from 405 to 409 being made sub-sections under section 316 of BNS, the only notable departure being punishment for criminal breach of trust increased to 5 years of imprisonment from the earlier 3 years.

(e) Chapter XVII (Of Offences against Property-Of Cheating) from sections 415 to 420 of IPC is now contained in 2 sections- 318 and 319 of BNS. Barring the severity of punishment for cheating earlier up to 1 years of imprisonment in terms of section 317 of IPC now increased to 3 years under section 318(2) of BNS, and punishment for cheating by impersonation earlier up to 3 years under section 419 of IPC increased to 5 years under section 319(2) of BNS, other components on definitional and punishment aspects in respect of offences of cheating under the IPC provisions have only been restructured without disturbing the core essence of the erstwhile provisions under the IPC.

(f) Chapter XVIII (Of Offences relating to Documents and Property Marks) from sections 463 to 477A of IPC is now re-arranged from section 335 to 344 of BNS, the only significant addition in BNS being in section 337 (corresponding to section 466 of IPC), which intends to punish forgery of records of the court or of public register. Section 337 of BNS now includes forgery of a Voter I card or an Aadhar card and invites imprisonment for a term extending up to 7 years.

Changes in criminal law provisions once they come into force will ipso facto catalyze some inevitable changes in the ITA, for example, to sections 280A to 280D, which made references to CrPC, 1974 for conduction of prosecution proceedings under the ITA.

Some changes would be required to arrive at some synergy with the new law as well. For example, section 276 of ITA (punishment for removal, concealment, transfer or delivery of property to thwart tax recovery) making that offence punishable with imprisonment for a term extending up to 2 years and drawing upon section 206 of IPC, would now require a re-look, since the new section 243 of BNS extends the punishment for that offence to 3 years. Section 276C of ITA (willful attempt to evade tax) in sub-section (1)(ii) thereof providing for a term of imprisonment for a period from 3 months to 2 years for suppression of income lesser than Rs 25 lakhs, or section 277 (ii) of ITA (false statement in verification) similarly providing for imprisonment for a term between 3 months and 2 years on account of submission of a false account or statement, which very often have linked in prosecution complaints to section 415 and 417 of IPC may also be subject to re-appraisal owing to the new section 318(2) of BNS (corresponding to section 417 of IPC) providing for 3 years of imprisonment for all infraction in the nature of cheating. Synergy and calibration in severity of punishment between what is prescribed in another statute and under the IPC is owing to section 72 of the IPC and now re-numbered to section 10 of BNS, which reads as follows:

"In all cases in which judgment is given that a person is guilty of one of several offences specified in the judgment, but that it is doubtful of which of these offences he is guilty, the offender shall be punished for the offence for which the lowest punishment is provided if the same punishment is not provided for all."

One new area opened up for the tax department in BNS is under 'organised crime' in section 111 within Chapter VI 'Of Offences affecting Human Body' and possibility of crafting a provision in ITA to prosecute offenders under organised crime relating to those who come specifically within tax department's purview. The section reads as follows:

"111. (1) Any continuing unlawful activity including kidnapping, robbery, vehicle

theft, extortion, land grabbing, contract killing, economic offence, cyber-crimes, trafficking of persons, drugs, weapons or illicit goods or services, human trafficking for prostitution or ransom, by any person or a group of persons acting in concert, singly or jointly, either as a member of an organised crime syndicate or on behalf of such syndicate, by use of violence, threat of violence, intimidation, coercion, or by any other unlawful means to obtain direct or indirect material benefit including a financial benefit, shall constitute organised crime.

Explanation- For the purposes of this sub-section-

(i) "organised crime syndicate" means a group of two or more persons who, acting either singly or jointly, as a syndicate or gang indulge in any continuing unlawful activity;

(ii) "continuing unlawful activity" means an activity prohibited by law which is a cognizable offence punishable with imprisonment of three years or more, undertaken by any person, either singly or jointly, as a member of an organised crime syndicate or on behalf of such syndicate in respect of which more than one charge-sheets have been filed before a competent Court within the preceding period of ten years and that Court has taken cognizance of such offence, and includes economic offence;

(iii) "economic offence" includes criminal breach of trust, forgery, counterfeiting

of currency-notes, bank-notes and Government stamps, hawala transaction, mass-marketing fraud or running any scheme to defraud several persons or doing any act in any manner with a view to defraud any bank or financial institution or any other institution or organisation for obtaining monetary benefits in any form.

(2) Whoever commits organised crime shall-

(a) if such offence has resulted in the death of any person, be punished with death or imprisonment for life, and shall also be liable to fine which shall not be less than ten lakh rupees;

(b) in any other case, be punished with imprisonment for a term which shall not be less than five years but which may extend to imprisonment for life, and shall also be liable to fine which shall not be less than five lakh rupees.

(3) Whoever abets, attempts, conspires or knowingly facilitates the commission of an organised crime, or otherwise engages in any act preparatory to an organised crime, shall be punished with imprisonment for a term which shall not be less than five years but which may extend to imprisonment for life, and shall also be liable to fine which shall not be less than five lakh rupees.

(4) Any person who is a member of an organised crime syndicate shall be punished with imprisonment for a term which shall not be less than five years but which may extend to imprisonment for life, and shall also be liable to fine which shall not be less than five lakh rupees.

(5) Whoever, intentionally, harbours or conceals any person who has committed the offence of an organised crime shall be punished with imprisonment for a term which shall not be less than three years but which may extend to imprisonment for life, and shall also be liable to fine which shall not be less than five lakh rupees:

Provided that this sub-section shall not apply to any case in which the harbour or

concealment is by the spouse of the offender.

(6) Whoever possesses any property derived or obtained from the commission of an organised crime or proceeds of any organised crime or which has been acquired through the organised crime, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to imprisonment for life and shall also be liable to fine which shall not be less than two lakh rupees.

(7) If any person on behalf of a member of an organised crime syndicate is, or at any time has been in possession of movable or immovable property which he cannot satisfactorily account for, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to imprisonment for ten years and shall also be liable to fine which shall not be less than one lakh rupees.

Terms such as organised crime syndicate and continuing unlawful activity have been defined in the section itself. Economic offence as per definition in this section includes hawala transactions, and running of schemes to defraud persons, or banks, or financial institutions or other institutions or organisations. Most times, tax department is the first responder to detect and report on the above instances of organised crime. In fact when the issue of monetary ceiling impeded filing of fresh appeals against adverse orders in bogus long term capital gains cases, it was the CBDT in circular no 23 of 2019 dated 6-9-2019 being cognizant of an organised scam in large number of cases relaxed the rigours of section 268A and directed that fresh appeals notwithstanding the monetary ceiling be filed on the merits of the cases.

No matter section 111 of BNS on a later date will stand included in the list of scheduled offences under the PMLA, 2002, an opportunity for sure lies and a case exists for devising a provision in the ITA to address impunity and prosecute proven offenders of organised crime referred to in section 111 of BNS not just in cases of hawala transactions, but other instances of organised forgery, identity theft, land grab, forced proselytization, wire fraud, debit and credit card fraud, that come to the department's notice. While devising a special rate of tax for the category of income tax payers who are proven to be pursuing organised crime as their sole or principal business and as a source of income will need a greater degree of research and deliberation, there possibly is no administrative or legislative hindrance in making an effort to include organised crime as prosecutable offences under the ITA and targeting those cases, which now stands recognised as offence under the BNS.