Arms dealer Bhandari flouted Black Money Act, says tribunal

The July 5 ruling of appellate tribunal for forfeited property comes as a boost for the Enforcement Directorate in its probe against the businessman, who is currently in the UK

An appellate tribunal in Delhi has ruled that fugitive arms dealer Sanjay Bhandari created assets in London and Dubai, which he didn’t disclose to the income tax authorities to evade tax, violating the black money act of 2015.

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Instead, after taxmen launched proceedings against him in 2016, Bhandari tried to exit from all positions he held in several companies abroad by creating accommodation entries through shell companies and transfer those assets to a trust in Dubai. Accommodation entries entail breaking up large amounts of money into smaller, less suspicious amounts.

The July 5 ruling of appellate tribunal for forfeited property (ATFP) comes as a boost for the Enforcement Directorate (ED) in its probe against the businessman, who is currently in the UK. A Westminster court in London in November ordered his extradition to India. UK home secretary Suella Braverman approved it in January, but Bhandari challenged it in the high court there. The proceedings are pending in the UK high court.

“The fact available on record show that Sanjay Bhandari was in possession of foreign assets and income, and he was in the process of transfer of those properties. The respondent (Bhandari) was in the process of transfer of the foreign assets to overcome from the offence of evasion of tax under the (black money) act of 2015. The decision or an attempt to transfer the foreign assets to a trust in Dubai was initiated after service of notice by the income tax department in regard to undisclosed foreign assets and income,” the ATFP said in its judgement, reviewed by HT.

The tribunal was hearing an appeal by the ED challenging cancellation of its 2017 attachment of Bhandari’s assets worth over ₹21 crore by a PMLA adjudicating authority. The agency had attached Bhandari’s assets in 2017. ATFP hears appeals under central acts including prevention of money laundering act (PMLA), foreign exchange management act (FEMA), the prohibition benami property transactions act (PBPTA), etc.

Investigations had revealed that even though he was questioned in April 2016 and later a lookout circular was issued against him in June 2016, Bhandari escaped to London. There he met his associate Sanjeev Kapoor and tried to alienate his assets, including his foreign assets and entities to evade proceedings in India.

In fact, in a statement recorded in April 2016, Bhandari admitted to owning these assets abroad.

Some of the properties and companies owned by Bhandari included Flat 6, Grosvenor Hill Court, Bourdon Street, London (bought in 2013 and owned by Shamlan Gros-1 Inc, incorporated in Panama), Flat C-303, Maurya Grandeur Residences, Palm Jumeirah, Dubai (2014), 12, Ellerton House, Bryanston Sqaure, London, Santech International FZC, and Offset India Solutions FZC and Petro Global Technologies Ltd in the United Arab Emirates (created over a period of time).

“In the instant case, Bhandari indulged in evasion of tax under Section 3 and 4 of the (black money) act of 2015,” the judgement said, adding that he was required to pay tax at the rate of 30% on the foreign assets and income, and “in absence, the amount of tax became proceeds of crime”.

The ED had recorded the statement of chartered accountant Ajay Kumar Agarwal, in which he disclosed that he had received ₹22 crore from Bhandari for arranging accommodation entries. “The record further shows that after initiation of the action by the Income Tax department and service of notice to Bhandari, he had attempted to transfer foreign assets to a trust in Dubai. All those facts were sufficient to show an offence under Section 51 of the black money act of 2015,” the tribunal noted.

Bhandari is under investigation by multiple agencies, including the ED, Central Bureau of Investigation, income-tax department and Delhi police for money laundering, violation of the foreign exchange act, black money act, and the official secrets act for having access to sensitive defence documents.