Criminal prosecution for tax evasion under the Prevention of Money Laundering Act (PMLA) and income tax act in India: A critical analysis
Keywords:
PMLA, Tax Evasion, Predicate Offence, Enforcement Directorate, BNS, BNSS, BSA, Money Laundering, Income Tax Act, Scheduled Offence, Reverse Burden of ProofAbstract
Tax evasion constitutes one of the gravest fiscal offences in India, striking at the core of the nation's revenue architecture and undermining the constitutional mandate of equitable resource distribution. This paper critically examines the criminal prosecution framework for tax evasion under two principal statutes the Prevention of Money Laundering Act, 2002 (PMLA) and the Income Tax Act, 1961 in the light of India's new criminal justice framework comprising the Bharatiya Nyaya Sanhita, 2023 (BNS), the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), and the Bharatiya Sakshya Adhiniyam, 2023 (BSA). The paper analyses the conceptual tension between tax evasion as a fiscal wrong and money laundering as a criminal offence, examines the contested doctrine of predicate offences under the PMLA, evaluates prosecutorial powers of the Enforcement Directorate (ED) and the Income Tax Department, critiques landmark judicial pronouncements including Vijay Madanlal Choudhary v. Union of India (2022) and subsequent decisions, and identifies the structural challenges posed by dual prosecution, reverse burden of proof, and bail conditions. The paper concludes by offering a calibrated analytical framework for reconciling fiscal enforcement with individual liberty under India's transformed criminal jurisprudence.
Downloads
References
1. Prevention of Money Laundering Act, 2002, No. 15 of 2003, Acts of Parliament, 2003 (India), Sections 2, 3, 4, 5, 17, 18, 19, 24, 43, 44, 45, 50.
2. Income Tax Act, 1961, No. 43 of 1961, Acts of Parliament, 1961 (India), Sections 276C, 276CC, 277, 277A, 278, 278B, 279.
3. Bharatiya Nyaya Sanhita, 2023, No. 45 of 2023, Acts of Parliament, 2023 (India) (came into force July 1, 2024), Sections 61, 111, 316.
4. Bharatiya Nagarik Suraksha Sanhita, 2023, No. 46 of 2023, Acts of Parliament, 2023 (India) (came into force July 1, 2024), Sections 223, 283-288.
5. Bharatiya Sakshya Adhiniyam, 2023, No. 47 of 2023, Acts of Parliament, 2023 (India) (came into force July 1, 2024), Sections 2, 23, 57, 61, 62.
6. Vijay Madanlal Choudhary v. Union of India, (2022) 5 SCC 1 (Supreme Court of India, July 27, 2022).
7. Sasi Enterprises v. Assistant Commissioner of Income Tax, (2014) 5 SCC 139 (Supreme Court of India).
8. Yash Tuteja v. Union of India, Supreme Court of India, 2024 (holding that proceeds of crime require the existence of a scheduled offence under PMLA).
9. Pavana Dibbur v. Directorate of Enforcement, Supreme Court of India (reiterating that without a scheduled offence, PMLA proceedings cannot be sustained).
10. Mahanivesh Oils & Foods Pvt. Ltd. v. Directorate of Enforcement, Delhi High Court, 2016 (holding that if scheduled offence charges are dropped or quashed, PMLA proceedings must fail).
11. Rohit Tandon v. Enforcement Directorate, Delhi High Court, 2018 (prosecution must establish clear connection between predicate offence and money laundering activities).
12. Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1 (striking down twin bail conditions as they then stood; subsequently nullified by 2018 amendment upheld in Vijay Madanlal).
13. Karti P. Chidambaram v. Enforcement Directorate, Review Petition, Supreme Court of India (challenging upholding of Section 45 PMLA in Vijay Madanlal, as reported 2025).
14. Lakshya Vij v. Enforcement Directorate, CRL.M.C. 246/2025, Delhi High Court (Section 223(1) BNSS applies to PMLA complaints filed after July 1, 2024, entitling accused to pre-cognizance hearing).
15. Botta Bhavya, Prof. (Dr.) K. Sita Manikyam, Prof. (Dr.) D. Surya Prakasa Rao, "Revisiting the PMLA Framework: Understanding the Exclusion of Tax Evasion as a Predicate Offence in India", International Journal of Drug Delivery Technology (IJDDT), Volume 16, Issue 25s, 2026, p. 263.
16. Government of India, Ministry of Finance, Notification dated July 7, 2023 bringing Goods and Services Tax Network (GSTN) under the Prevention of Money Laundering Act, 2002.
17. Enforcement Directorate v. [various respondents], Oral observations of the Supreme Court of India (Bench of Justices Sanjay Kishan Kaul, Sanjiv Khanna, and Bela M. Trivedi), November 2023, holding that PMLA cannot be invoked in tax evasion cases by simply alleging criminal conspiracy (reported in Bar and Bench, November 21, 2023).
18. Delhi High Court, Order in [Petitioner] v. Enforcement Directorate, January 24, 2023 (reported in Live Law, Jan. 24, 2023): "Enforcement Directorate Can Only Investigate Money Laundering Offence, Can't Assume Commission of Predicate Offence."
19. PRS Legislative Research, "The Bharatiya Nyaya Sanhita, 2023," available at https://prsindia.org/billtrack/the-bharatiya-nyaya-sanhita-2023 (last visited May 2026).
20. Mohd. Mahfooz Qureshi, "Technology Law and the Credibility of Electronic Records: A Study Under the Bharatiya Sakshya Adhiniyam, 2023," Zenodo, April 2025.
21. Income Tax Department, Government of India, "Penalties and Prosecutions," available at https://www.incometaxindia.gov.in/w/penalties-and-prosecutions (last visited May 2026).
22. NUJSS Academic and Commercial Journal (NUJSSACJ), "Double Jeopardy in India's Fight Against Organized and Financial Crime: Section 111 BNS and PMLA," December 18, 2025.
23. Cyril Amarchand Mangaldas Dispute Resolution Blog, "Shifting Paradigms in PMLA Jurisprudence," November 25, 2024.
24. Supreme Court Observer, "Challenges to the Prevention of Money Laundering Act (PMLA) Judgment Summary," August 6, 2024.
25. SCC Online Blog, "PMLA Landmark Judgments 2024 (Part II)," December 19, 2025.
26. IJLLR, "Economic Offences Under the Bharatiya Nyaya Sanhita," November 15, 2025.
27. iPleaders Blog, "Identifying Predicate Offences under the PMLA," November 5, 2024.
28. Casemine Commentary, "Vijay Madanlal Choudhary v. Union of India: The Supreme Court's Charter for PMLA," July 27, 2022.
29. Drishti Judiciary, "Multiple FIRs Alone Not Sufficient to Invoke Organised Crime," May 11, 2026.
30. JSA Law, "Anti-Corruption, White Collar Crimes and Investigations Compendium 2023," February 2024.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 The International tax journal
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
