1977 (3) TMI 6 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction and applicability of old vs. new Cr. PC.
2. Mandatory adjournment for transfer application under old Cr. PC.
3. Sufficiency of evidence to frame a charge under Section 277 of the I.T. Act.
4. Consideration of subsequent conduct of the accused in framing the charge.

Detailed Analysis:

1. Jurisdiction and Applicability of Old vs. New Cr. PC:
The main issue was whether the trial should proceed under the old Cr. PC or the new Cr. PC, given that the complaint and cognizance occurred before the new Cr. PC came into force. The court concluded that the trial had to proceed under the old Cr. PC as per Section 484(2)(a) of the new Cr. PC. This section states that any trial pending before the new Code's commencement should be disposed of under the old Code. The court emphasized that the application for time to move for transfer, filed after the new Code came into force, had to be disposed of under the new Code, as there was no corresponding provision to Section 526(8) of the old Cr. PC in the new Code.

2. Mandatory Adjournment for Transfer Application under Old Cr. PC:
The prosecution argued that the trial court was required to stay proceedings to allow them to move for a transfer under Section 526(8) of the old Cr. PC. The court held that since the application for adjournment was filed after the new Code came into force, it had to be disposed of under the new Code, which does not mandate such an adjournment. The trial court's dismissal of the application for time was within its jurisdiction and not a nullity.

3. Sufficiency of Evidence to Frame a Charge under Section 277 of the I.T. Act:
The court examined whether there were enough materials on record to frame a charge against the accused under Section 277 of the I.T. Act. The prosecution contended that the accused had intentionally omitted income from house property and salary as an MLA in his return. The defense argued that these omissions were inadvertent mistakes, as evidenced by an application (Ex. A-1) submitted to the assessing authority before the assessment order was passed. The court found that the prosecution failed to prove that the false statements were made knowingly or with the belief that they were false, which is a necessary ingredient for the offense under Section 277.

4. Consideration of Subsequent Conduct of the Accused in Framing the Charge:
The Additional Sessions judge held that the trial court should not have considered the accused's subsequent conduct, specifically the application (Ex. A-1) admitting the omission as inadvertent, when deciding whether to frame a charge. The High Court disagreed, stating that all evidence, including cross-examination and any subsequent conduct, should be considered when framing a charge. The court emphasized that the mere submission of a false statement in a verified return does not constitute an offense unless it is shown to be made knowingly or with the belief that it is false.

Conclusion:
The High Court allowed the revision, set aside the order of the Additional Sessions judge, and restored the trial court's order of discharge. The trial court had acted within its jurisdiction and correctly applied the law in dismissing the prosecution's applications and considering all relevant evidence, including the accused's subsequent conduct, in deciding not to frame a charge.