It is generally believed by practitioners as well as law enforcement agencies that offences related to tax evasion are civil offences. As a result, such offences are not considered cognizable offences and power to arrest without a warrant has not been bestowed with tax officers under the Income Tax Act. Authority to arrest without a warrant has been provided for economic offences under Section 45 of the Prohibition of Money Laundering Act, 2002 (PMLA) and Section 104 of the Customs Act, 1962.

However, the Income Tax Act specifically mentions that offences under the Act are non-cognizable. Section 279A of Income Tax Act, 1961 clearly states that:

Notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence punishable under section 276B or section 276C or section 276CC or section 277 or section 278 [of the Income Tax Act, 1961] shall be deemed to be non- cognizable within the meaning of that Code.

Hence, offences under the Income Tax Act are non-cognizable and income tax authorities do not have the power to arrest a person without warrant for committing an offence under the Income Tax Act. Other than the Income Tax Act, the Income Tax Department administers and enforces two special acts, namely the Benami Transaction (Prohibition) Amendment Act, 2016 and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Section 61 of the Benami Transaction (Prohibition) Amendment Act, 2016 states that:

Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence under this Act shall be non-cognizable.

Hence, both Income Tax Act and Benami Transaction Act explicitly mention that offences under these Acts are non-cognizable. However, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (henceforth the 'Black Money Act') is silent on whether offences under the said Act are cognizable or non-cognizable. When a special act is silent on whether an offence under the act is cognizable or non-cognizable, then the Code of Criminal Procedure, 1973 (i.e. CrPC) has to be referred to for clarification.

Part II of Schedule 1 of CrPC presents a classification of offences under 'other laws'. 'Other laws' are laws not covered by IPC.

The classification of offences under Other Laws provided in Part II of Schedule I of CrPC is as under:

Since the Black Money Act does not explicitly mention whether offences under that Act are cognizable or not, such offences have to be classified as per the CrPC. Now, the punishment under various sections of the Black Money Act are as under:

A person punishable under Section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is punishable with imprisonment for a term not less than 3 years but upto 7 years. Hence, such an offence is cognizable and non-bailable as per the classification given by CrPC. Thus, u/s. 51 of the said Act, competent authorities have legitimate authority to make arrest without a warrant.

It also makes sense to grant the authority to arrest without a warrant under the Black Money Act. Once a person is detected with undisclosed foreign assets or income, the process of investigation is long drawn. The investigators may have to make a 'FT&TR reference' to other countries' tax departments to collect more evidence - and this exercise is time consuming. Third party verifications are also required to collect evidence. The suspect can use the intervening period to destroy evidence or influence key persons. In some tax havens, a motivated person can change shareholding retrospectively. Documents can be prepared (registered on a back date) to demonstrate that the suspect was holding properties abroad in the capacity of a trustee or representative or employee of some non-resident. It may become necessary, in national interest, to prevent a person from tampering evidence once detection of offence is made under the Black Money Act. No doubt, the legislature provides legitimate power to authorities to arrest without a warrant for offences under Section 51 of the Black Money Act.

The author is an officer of the Indian Revenue Service. Views are personal.