1968 (5) TMI 1 - SC - Income Tax

If the cheating employed by the accused resulted in inducing the ITO to make a wrong assessment order, it would amount to inducing the ITO to make a valuable security - framing of a charge for an offence under section 420 of the Indian Penal Code is correct

Summary

Issues:
- Framing of charge under section 420 of the Indian Penal Code
- Validity of assessment order as "property" and "valuable security"
- Whether the accused dishonestly induced the Income-tax Officer
- Interpretation of "valuable security" under section 30 of the Indian Penal Code

Analysis:
The judgment pertains to an appeal challenging the framing of a charge under section 420 of the Indian Penal Code in a case involving a conspiracy to cheat income-tax authorities. The appellant argued that the charge should have been under section 417 instead of section 420, contending that the assessment order was not "property" or a "valuable security." The Special Judge and the High Court upheld the charge under section 420, considering the assessment order as both "property" and a "valuable security."

The appellant raised objections regarding the lack of sanction under section 196A of the Code of Criminal Procedure and the artificial fixing of the conspiracy period, which were overruled. The High Court affirmed the lower court's decision, emphasizing that the assessment order constituted "property" and a "valuable security." The court found the allegations disclosed an offense under section 420. The appellant's objections were reiterated, focusing on the charge under section 420, with the court clarifying that other objections could be raised during the trial.

The court analyzed the essential elements of section 420, emphasizing that inducing the delivery of property or a valuable security through dishonest means is crucial. It discussed the significance of the assessment order in income-tax proceedings and concluded that it qualifies as "property" and a "valuable security" under the Indian Penal Code. The court rejected arguments that the delivery of the assessment order was routine, emphasizing the importance of the order to the assessee.

The judgment delved into the concept of "valuable security" under section 30 of the Indian Penal Code, asserting that an assessment order creates rights for the assessee and restricts tax liability. The court reasoned that inducing the Income-tax Officer to issue a wrong assessment order constitutes dishonest inducement to create a valuable security. Ultimately, the court upheld the charge under section 420, dismissing the appeal based on the assessment order's legal significance and the accused's alleged dishonest inducement.

In conclusion, the court affirmed the correctness of framing a charge under section 420, emphasizing the assessment order's status as "property" and a "valuable security." The appeal was dismissed, underscoring the legality of the charge and the interpretation of relevant legal provisions.