1990 (8) TMI 11 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the finding of acquittal for the offence punishable u/s 275A of the Income-tax Act.
2. Requirement of prior sanction u/s 279 of the Income-tax Act.
3. Legality of the prohibitory order issued u/s 132(3) of the Income-tax Act.
4. Evidence and merits of the prosecution case.
5. Sentencing of the accused.

Summary:

1. Validity of the Finding of Acquittal u/s 275A of the Income-tax Act:
The appellant and revisionist questioned the acquittal of the accused for the offence punishable u/s 275A of the Income-tax Act, read with sections 406 and 461 of the Penal Code, 1860. The trial court acquitted the accused based on the absence of prior sanction from the Commissioner u/s 279 of the Act, the authorized officer not concluding that the pawned articles were undisclosed property, and the non-production of the almirah and supratnama in court.

2. Requirement of Prior Sanction u/s 279 of the Income-tax Act:
The court clarified that u/s 279, a person cannot be prosecuted for an offence u/s 275A except at the instance of the Chief Commissioner or Commissioner. In this case, the prosecution was initiated by the State, not by the Income-tax Department, making section 279 inapplicable. The trial court's reasoning was deemed erroneous.

3. Legality of the Prohibitory Order Issued u/s 132(3) of the Income-tax Act:
The court discussed that the authorized officer must conclude that the property is undisclosed before issuing a prohibitory order u/s 132(3). The search was incomplete due to late hours, making it impracticable to continue. The court held that the reasons for impracticability under sub-section (3) pertain to physical or mental incapability due to over-strain, validating the prohibitory order issued by P.W.-3, Prasad.

4. Evidence and Merits of the Prosecution Case:
The court found the testimonies of P.W.-2, Krishnamachari, P.W.-3, Prasad, and P.W.-6, Tiwari, along with exhibits 16, 21, and 23, credible. The evidence established that the almirah was intact before the search and was found cut open the next day, indicating removal of articles. The substantive testimony and documentary evidence supported the prosecution's case, and the trial court's conclusion was found to be erroneous.

5. Sentencing of the Accused:
The court convicted the accused for offences punishable u/s 275A of the Income-tax Act, and sections 406 and 461 of the Penal Code. The accused was sentenced to rigorous imprisonment for six months and a fine of Rs. 5,000 for each offence, with additional imprisonment in case of default. The substantive sentences were directed to run concurrently, but the default sentences were not.

Conclusion:
The High Court set aside the trial court's acquittal, convicted the accused, and imposed sentences for the offences under the Income-tax Act and the Penal Code. The judgment emphasized the legal requirements for prosecution and the validity of the prohibitory order, supported by credible evidence.