2000 (2) TMI 35 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the sale consideration declared by the revision petitioner.
2. Alleged false declaration and evasion of income tax by the revision petitioner.
3. Prosecution of the revision petitioner under various sections of the Indian Penal Code (IPC) and Income-tax Act.
4. Jurisdiction and procedural aspects of the prosecution.

Issue-wise Detailed Analysis:

1. Validity of the Sale Consideration Declared by the Revision Petitioner:
The revision petitioner claimed to have purchased a property for Rs. 2,40,000, but evidence suggested the actual sale price was Rs. 5,70,000. This discrepancy was supported by various documents and statements, including a receipt found during a search of the chartered accountant's office, and statements from the seller, P.W.3, and her husband, P.W.4. The court concluded that the property was indeed sold for Rs. 5,70,000, not Rs. 2,40,000 as declared by the revision petitioner.

2. Alleged False Declaration and Evasion of Income Tax:
The revision petitioner filed an application under section 230A(1) of the Income-tax Act, declaring the sale consideration as Rs. 2,40,000. This was found to be false, and the court held that the revision petitioner attempted to evade tax on the balance amount of Rs. 3,30,000. However, subsequent developments showed that the revision petitioner invested only Rs. 1,56,000, while her sister, Kumari Jayapratha, invested Rs. 5,19,000. The court noted that protective assessment was made, and penalties could not be levied under protective assessment, making the prosecution for tax evasion questionable.

3. Prosecution under IPC and Income-tax Act:
The revision petitioner was initially convicted under sections 420 read with 511 IPC, 193 IPC read with section 136 of the Income-tax Act, and sections 276C(1) and 277 of the Income-tax Act. The court upheld the convictions under sections 420 read with 511 IPC and 193 IPC read with section 136 of the Income-tax Act, citing the intentional false declaration as evidence of an attempt to deceive the Income-tax Department. However, the convictions under sections 276C(1) and 277 of the Income-tax Act were set aside due to the protective nature of the assessment and the subsequent developments in the case.

4. Jurisdiction and Procedural Aspects:
The revision petitioner argued that the prosecution was invalid due to a lack of opportunity for compounding the offense and jurisdictional issues. The court rejected these arguments, referencing the Supreme Court's decision in Union of India v. Banwari Lal Agarwal, which held that there is no requirement for a show-cause notice or opportunity to compound before prosecution. The court also dismissed the jurisdictional challenge, noting that the Commissioner of Income-tax (Investigation) directed the complaint to be filed, making the prosecution valid.

Conclusion:
The court confirmed the conviction and sentence under sections 420 read with 511 IPC and 193 IPC read with section 136 of the Income-tax Act, while setting aside the convictions under sections 276C(1) and 277 of the Income-tax Act. The revision petition was allowed in part, and the trial court was directed to apprehend the revision petitioner to serve the remaining sentence.