1995 (3) TMI 60 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the charges under sections 34, 37, 114, 120B, 177, 193, 196, 199, and 200 of the Indian Penal Code.
2. Applicability of sections 276C(1), 277, and 278 of the Income-tax Act, 1961.
3. Whether the registration of the document before the Sub-Registrar constitutes a judicial proceeding.
4. Prima facie evidence for framing charges.

Issue-wise Detailed Analysis:

1. Validity of the charges under sections 34, 37, 114, 120B, 177, 193, 196, 199, and 200 of the Indian Penal Code:
The learned Principal Sessions Judge reversed the discharge order by the Additional Chief Metropolitan Magistrate, who had found no prima facie case against the petitioners. The petitioners were accused of undervaluing a sale deed to evade taxes, and the learned Principal Sessions Judge found reasons to frame charges under various sections of the Indian Penal Code and the Income-tax Act. The prosecution's evidence suggested that the petitioners suppressed the real sale consideration, which led to the charges under sections 193, 196, and 199 of the IPC for fabricating false evidence and making false statements. The court also found prima facie evidence for sections 34, 37, 114, and 120B IPC, related to joint action and conspiracy, as the second petitioner had influenced the execution of the sale deed in favor of the first petitioner.

2. Applicability of sections 276C(1), 277, and 278 of the Income-tax Act, 1961:
The learned Additional Chief Metropolitan Magistrate initially held that sections 276C, 277, and 278 of the Income-tax Act were not attracted because the petitioners had time until June 30, 1985, to submit their tax returns. However, the Principal Sessions Judge found that the deliberate false statement in Form No. 37G, which undervalued the property, constituted an attempt to evade tax under section 276C. The court also found that the verification in exhibit P-9 (Form No. 37G) related to the false statement about the sale consideration, thus attracting section 277. For section 278, the court found prima facie evidence of abetment by the second petitioner, who influenced the execution of the sale deed in favor of the first petitioner.

3. Whether the registration of the document before the Sub-Registrar constitutes a judicial proceeding:
The learned Additional Chief Metropolitan Magistrate had agreed with the petitioners that registration before the Sub-Registrar is not a judicial proceeding, thus section 192 IPC was not attracted. However, the Principal Sessions Judge found that Form No. 37G, submitted to the Income-tax Department, related to judicial proceedings under section 136 of the Income-tax Act. Therefore, fabricating false evidence in this context constituted an offense under section 193 IPC. The court cited Mahabir Prasad Saraogi v. State of Bihar to support that fabricating false evidence for any judicial proceeding is an offense even if the proceeding has not commenced.

4. Prima facie evidence for framing charges:
The court concluded that there was prima facie evidence for framing charges against the petitioners. It held that the deliberate false statement in Form No. 37G, intended to be used by the Income-tax Department, amounted to an attempt to evade tax, thus attracting sections 276C, 277, and 278 of the Income-tax Act. The court also found prima facie evidence for sections 193, 196, and 199 IPC, related to making false statements and fabricating evidence. The joint action and conspiracy charges under sections 34, 37, 114, and 120B IPC were also supported by evidence that the second petitioner influenced the sale deed execution in favor of the first petitioner.

Conclusion:
The revision was dismissed, and the case was remanded to the learned Additional Chief Metropolitan Magistrate for framing charges. The court emphasized that the observations would not prejudice the petitioners' defense in the trial.