1993 (4) TMI 39 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Income-tax Officer is a court within the meaning of section 195 of the Code of Criminal Procedure.
2. Whether the accused wilfully attempted to evade tax and made a false statement in the verification.
3. Whether the accused attempted to mislead the Income-tax Officer and dishonestly induced him to deliver the assessment orders computing the total income at considerably lower figures than to which it is properly assessable.
4. Whether the sentence awarded is in accordance with the provisions of the Act and is proper and legal.

Issue-wise Detailed Analysis:

1. Whether the Income-tax Officer is a court within the meaning of section 195 of the Code of Criminal Procedure:
The trial judge held that the Income-tax Officer is not a court within the meaning of section 195, Criminal Procedure Code, and consequently, the complaint under sections 193 to 196 of the Indian Penal Code has to fail. The learned Special Public Prosecutor for Income-tax Cases argued that section 195(b)(iii) had been complied with and a complaint by a public servant in writing had been made. The trial court relied on the decision in Associated Industries v. First ITO [1982] 134 ITR 565 (Mad), which was not considered in light of the Supreme Court's decision in Lalji Haridas v. State of Maharashtra [1964] 52 ITR 423 (SC). The court should have followed the decisions in Balwant Singh v. L. C. Bharupal, ITO [1968] 70 ITR 89 (SC) and M. R. Pratap v. V. M. Muthukrishnan, ITO [1977] 110 ITR 655 (Mad). The amendment of section 136 of the Income-tax Act by the Finance Act, 1985, with retrospective effect from April 1, 1974, was not considered. The amendment deems any proceeding under the Income-tax Act before an income-tax authority as a judicial proceeding, and every income-tax authority as a civil court for the purposes of section 195 of the Criminal Procedure Code. The trial magistrate's finding that the Income-tax Officer is not a court was thus not sustainable.

2. Whether the accused wilfully attempted to evade tax and made a false statement in the verification:
The trial judge held that the charges under sections 276C and 277 of the Income-tax Act had been proved. The accused intentionally fabricated his account books and deliberately delivered false returns of income and false statements of accounts for the assessment years 1976-77 and 1978-79. The accused admitted the transaction and receipt of Rs. 1,05,000 but claimed the returns were prepared by the auditor, and he merely signed them routinely.

3. Whether the accused attempted to mislead the Income-tax Officer and dishonestly induced him to deliver the assessment orders computing the total income at considerably lower figures than to which it is properly assessable:
The trial judge found that the accused had attempted to mislead the Income-tax Officer and dishonestly induced him to deliver the assessment orders. The accused showed the commission receipt of Rs. 1,05,000 for the assessment year 1978-79, which was actually received in June 1975, thus attempting to evade tax.

4. Whether the sentence awarded is in accordance with the provisions of the Act and is proper and legal:
The trial judge sentenced the accused to imprisonment till the rising of the court and fines, which was not in accordance with the minimum sentence prescribed under sections 276C and 277 of the Income-tax Act. The learned Special Public Prosecutor argued that the trial court cannot dilute the provisions of a statute prescribing a minimum sentence. However, considering the offense was committed in 1976-77, the conviction was in 1984, and more than ten years had elapsed, the court felt it would not be proper to order a re-trial. Additionally, the appeal for enhancement of sentence was not filed by the Central Government but by the Income-tax Officer, making it not maintainable under section 377(2), Criminal Procedure Code. The court cited several decisions, including Eknath Shankarrao Mukkawar v. State of Maharashtra, AIR 1977 SC 1177, and Banwari v. ITO [1992] 195 ITR 651 (SC), emphasizing that no useful purpose would be served by proceeding with the complaint after such a long time. Consequently, both appeals were dismissed.