2017 (8) TMI 664 - HC - Income Tax

Concealment of income - mens rea - Commission of offence under section 181 IPC - accused had made statement having glaring contradiction with regard to existence of locker No.152 with State Bank of Indore, Rewari held in the joint name of the accused and his wife - order of acquittal - Held that - No ground is made out to grant special leave to appeal. The judgment passed by the trial Court is well reasoned one and does not suffer from any illegality or infirmity. It comes out to be a result of due application of mind and there is no defect apparent on the face of it. The trial Court came to the conclusion that 1. No offence against the accused stood proved since provisions of Oath Act, 1969 have not been complied with inasmuch statement of accused was recorded in parts after taking breaks and oath was not administered to him by Deputy Director of Income Tax regarding his statement after every break. 2. The sanction to prosecute the accused as required under Section 181 IPC has not been properly proved. 3. It has been established on record that accused was hypertensive and undergoing regular treatment at the time of search and seizure and he could be perplexed at that time in view of his medical condition and as admitted by PW1 in his cross-examination that accused was in nervous state of mind while making statement, as such it cannot be said that it was a deliberate case of falsehood on a matter of substance. 4. There was no mens rea on the part of the accused to commit an offence. 5. There is no material on record to show that due application of mind on the part of complainant to conclude that it was in the interest of justice to file a complaint. Furthermore, it has been contended on behalf of the accused and not refuted by counsel for the complainant that Income Tax Appellate Tribunal vide order dated 16.1.2013 has come to the conclusion that addition of ₹ 15.5 lacs was not sustainable in the hands of the assessee and he has explained the sources. Accordingly, the appeal of assessee (Dr.Kaushal Goyal) was allowed and addition was deleted. Thus it comes out that it was not a case of concealment of income.

Issues:
- Compliance with Oath Act, 1969 in recording the accused's statement
- Proper proof of sanction to prosecute the accused under Section 181 IPC
- Accused's medical condition and state of mind during statement
- Mens rea on the part of the accused
- Application of mind by the complainant in filing the complaint
- Conclusion drawn by the trial court
- Contention regarding concealment of income
- Reference to relevant legal citations by both parties

Compliance with Oath Act, 1969:
The High Court analyzed the recording of the accused's statement under the Oath Act, 1969. It was noted that the statement was recorded in parts with breaks, and the oath was not administered by the Deputy Director of Income Tax after each break. The court found that this non-compliance raised doubts about the validity of the statement and its admissibility as evidence.

Proof of Sanction under Section 181 IPC:
Another issue examined was the proper proof of sanction to prosecute the accused under Section 181 IPC. The court observed that the prosecution failed to establish the required sanction adequately, which was a crucial element for proceeding with the case against the accused.

Accused's Medical Condition and State of Mind:
The court considered the accused's medical condition and state of mind during the search and seizure operation. It was highlighted that the accused was hypertensive and undergoing regular treatment at the time, which could have affected his mental state. The court noted that the accused's nervousness and medical condition might have contributed to any inconsistencies in his statement.

Mens Rea and Application of Mind:
The judgment discussed the absence of mens rea on the part of the accused to commit an offense. Additionally, the court evaluated whether there was due application of mind by the complainant in deciding to file the complaint against the accused. The court emphasized the importance of establishing intent and proper consideration before initiating legal proceedings.

Conclusion of the Trial Court:
The High Court reviewed the conclusions reached by the trial court. It was noted that the trial court found no offense proved against the accused based on various factors, including procedural lapses and lack of evidence establishing guilt beyond a reasonable doubt.

Contention Regarding Concealment of Income:
A significant aspect addressed was the contention that the accused did not conceal income, as evidenced by a decision from the Income Tax Appellate Tribunal. The Tribunal had ruled in favor of the accused, indicating that the addition of income was not sustainable, and the accused had provided explanations regarding the income sources.

Reference to Legal Citations:
Both parties referenced various legal citations to support their arguments. The court examined these citations but found them not directly applicable to the current case due to differing factual contexts. The judgment highlighted the importance of considering the specific circumstances of each case when applying legal precedents.

In conclusion, the High Court dismissed the application seeking special leave to appeal, affirming the trial court's decision. The judgment emphasized the need for proper legal procedures, evidence, intent, and application of mind in criminal cases, while also considering the individual circumstances and defenses presented by the accused.

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