1933 (7) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Conviction under Section 177 of the Indian Penal Code for providing false information in an income tax return.
2. Nature of the sums received by the appellant and their taxability.
3. Compliance with procedural requirements under Sections 52 and 53(1) of the Income-tax Act and Section 195(1) of the Criminal Procedure Code.
4. Admissibility of statements made by the appellant in other proceedings as evidence.
5. Appropriateness of the sentence imposed.

Issue-wise Detailed Analysis:

1. Conviction under Section 177 of the Indian Penal Code:
The appellant was convicted by the District Magistrate of Rangoon under Section 177, Indian Penal Code, for furnishing false information in the income tax return submitted under Section 22 of the Income-tax Act. The appellant omitted to include Rs. 22,000 received during the accounting year 1927-28 from P.N. Chowdhury and U. Kala, Bassein. The appellant was sentenced to pay a fine of Rs. 1,000 or, in default, to suffer one month's simple imprisonment. The High Court upheld this conviction, stating that the appellant, being a skilled lawyer, must have known that he ought to have included these sums in his return of income under Section 22.

2. Nature of the Sums Received and Their Taxability:
The appellant contended that the sum of Rs. 15,000 received as commission for negotiating a loan was a "casual and non-recurring nature" and not assessable to income tax under Section 4(3)(vii) of the Income-tax Act. The appellant also claimed that Rs. 6,000 was a capital receipt in repayment of a temporary loan, and the sums of Rs. 4,050 and Rs. 1,500 were partly professional expenses and remuneration included in the return. The court found that the appellant was accustomed to negotiating loans for commission and that these sums were received in the ordinary course of business. Therefore, the defence that the Rs. 15,000 was a mere windfall was rejected.

3. Compliance with Procedural Requirements:
The appellant argued that the proceedings were vitiated because the complaint was not made by the "public servant concerned" as required under Sections 52 and 53(1) of the Income-tax Act and Section 195(1) of the Criminal Procedure Code. The court held that the "public servant concerned" was the Income-tax Officer responsible for assessments in the area, who duly made the complaint at the instance of the Assistant Commissioner. The court also noted that Section 18 of the General Clauses Act would provide an answer to this objection.

4. Admissibility of Statements as Evidence:
The appellant contended that statements made in Civil Regular No. 31 of 1930 in the District Court of Bassein were not admissible as evidence. The court held that these statements were admissible under Sections 17, 18, 21, and 80 of the Evidence Act. The court emphasized that admissions are relevant and may be proved against the person who makes them, and the statements made by the appellant in other proceedings were relevant to the issue in the current case.

5. Appropriateness of the Sentence:
The court considered whether the fine of Rs. 1,000 was an adequate punishment. It was argued by the Government Advocate that a fine was not sufficient deterrence for the offence committed. The court noted that the deliberate evasion of income tax by the appellant resulted in a loss of nearly Rs. 3,000 to the Crown. The court emphasized that the primary object of punishment is to deter future offences and that a fine alone might not suffice. The court decided to enhance the sentence by ordering that the appellant be kept in simple imprisonment for one calendar month in addition to the fine of Rs. 1,000.

Separate Judgments:
Both judges, Page (CJ) and Mya Bu, JJ., delivered separate judgments but reached the same conclusions. Mya Bu, J., concurred with the Chief Justice's analysis and conclusions, emphasizing the need for a deterrent and exemplary punishment given the gravity of the offence and the appellant's professional background.

Order:
The appeal was dismissed, and the sentence was enhanced to include one month's simple imprisonment in addition to the fine of Rs. 1,000.