INDIA Law and Practice Contributed by: Vijayendra Pratap Singh, Asif Ahmed, Bhanu Jindal and Khushi Mittal, AZB & Partners
Criminal Banking Law In addition to the BNS, there are certain special stat - utes like the Reserve Bank of India Act, 1934 (“RBI Act”). This Act provides for penalties in case of wil - fully making or omitting to make material statements under any application, return or statement related to public deposits. Failure to produce books of accounts entails a fine of up to INR2,000 for each offence with an additional fine if the offence persists. Also, any per - son other than an RBI entity, or as permitted by the government, who draws, accepts, makes, or issues any bill of exchange or promissory note, is punishable with a fine. The RBI also regulates the affairs of NBFCs and can issue directions in case of non-compliance with direc - tions or provisions of the RBI Act. The RBI is also the regulatory authority for payment systems under the Payment and Settlement Systems Act, 2007 (“PSS Act”). The PSS Act provides that any person responsible for violation of the PSS Act is pun - ishable with imprisonment for a term of between one month and ten years, a fine of up to INR10 million, or both. Upon a repeat offence or failure to comply, the RBI can impose a further fine of up to INR100,000 for every day the contravention continues. Those in charge and responsible for the company’s business at the time of the contravention, along with the company, shall be guilty of the contravention. Under both the RBI Act and the PSS Act, it is only the RBI that can file a complaint with the court. Separately, there are certain pieces of local legislation that regulate money lending at a state level. 3.5 Tax Fraud Tax fraud comprises several principal offences, includ - ing fraudulently removing, concealing, transferring, or delivering property or any interest with the intent to prevent tax recovery, as well as parting with a com - pany’s property in contravention of the IT Act. It fur - ther includes the failure to deposit tax deducted or collected at source, wilful attempts to evade tax, and non-filing of returns where the tax liability exceeds INR10,000.
Additional offences include failure to produce accounts and documents when required by the IT authorities, non-compliance with auditing directives, failure to furnish returns in search cases, abetment to filing false returns/accounts/declarations, and making false statements to evade taxes, penalties, or interest. Punishments include fines, or imprisonment of between two months and seven years along with a fine, depending on the nature of the offence. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“Black Mon - ey Act”) prohibits non-disclosure of foreign income or assets. Offences under this legislation are punishable with fines and imprisonment for between six months and seven years. In case of prosecution, culpable mental state is presumed, unless the defendant proves otherwise. Culpable mental state includes intention, motive or knowledge of a fact or belief in such, or reason to believe a fact. 3.6 Financial Record-Keeping The Companies Act mandates a company to maintain its books of accounts for a period of up to eight pre - ceding financial years. If there is an enquiry or investi - gation pending against the company under the Com - panies Act, the company may be required to maintain its books of accounts for a longer period of time. The managing director, the whole-time director in charge of finance, the CFO, or any other person charged with the duty of complying with the require - ments of maintaining the books of account and financial statement of the company is punishable with imprisonment for a term of up to one year, fines between INR50,000 and INR500,000, or both. If the concerned officer is found to maintain false books of accounts, they may, depending on the facts and allegations, be subject to the various offences mentioned in 3.1 Criminal Company Law and Cor- porate Fraud . The PMLA also mandates that every person or entity that falls under the definition of “reporting entity” shall
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