2005 (12) TMI 50 - SC - Income Tax

Single Bench of the High Court has acquitted the accused - respondent submitted that under section 132(4) of the Income-tax Act the order of the Income-tax Officer has been confirmed in appeal and all money owned by the wife has been assessed against her - that the view taken by the High Court appears to be justified and there are no compelling circumstances to reverse the order of acquittal

Issues Involved:
1. Legality of the acquittal of the accused by the Madras High Court.
2. Determination of whether the unaccounted assets belonged to the accused or his wife.
3. Examination of the burden of proof under the Prevention of Corruption Act, 1988.
4. Evaluation of the evidence provided by the prosecution and the defense.

Detailed Analysis:

1. Legality of the Acquittal by the Madras High Court:
The appeal was directed against the order of the Madras High Court, which acquitted the accused, a senior IAS officer, of charges under section 13(2) read with section 13(1)(e) of the Prevention of Corruption Act, 1988. The High Court found that the unaccounted money and assets recovered during the raid did not belong to the accused but to his wife, who was running various businesses. The High Court's decision was based on the wife's admission and the assessment by the Income-tax Department that the money belonged to her.

2. Determination of Ownership of Unaccounted Assets:
During the raid by the Income-tax authorities, a significant amount of cash, gold biscuits, US dollars, and documents related to immovable properties were recovered from the accused's house. The accused contended that these assets belonged to his wife, who earned them through her businesses. The wife corroborated this claim by admitting that she amassed the wealth by selling goods without bills and had disclosed this to the Income-tax authorities. The High Court accepted this explanation, noting that the wife had made a "clean breast" of the unaccounted money, which was assessed in her hands by the Income-tax Department.

3. Burden of Proof under the Prevention of Corruption Act:
The prosecution's burden was to prove that the accused acquired assets disproportionate to his known sources of income. The court referenced the case of C.S.D. Swami v. State, emphasizing that while section 5(3) of the Prevention of Corruption Act, 1947, allows for a presumption of guilt, the initial burden still lies on the prosecution. The accused must then provide a satisfactory explanation for the assets in question. In this case, the accused and his wife provided a plausible explanation that the assets belonged to the wife, who was not prosecuted, and the Income-tax Department had assessed the money in her name.

4. Evaluation of Evidence:
The prosecution examined 53 witnesses and presented numerous documents to establish that the assets belonged to the accused. However, the defense provided evidence, including testimonies from the accused, his wife, and other witnesses, to support their claim that the assets were owned by the wife. The trial court initially found the accused guilty, but the High Court overturned this decision, noting that the unaccounted money was not in the exclusive possession of the accused. The High Court found the wife's explanation credible and accepted that the money was earned through her businesses.

Conclusion:
The Supreme Court upheld the High Court's decision to acquit the accused, agreeing that the prosecution failed to prove that the assets were in the exclusive possession of the accused. The court emphasized that the wife's admission and the Income-tax assessment in her name provided a satisfactory explanation for the unaccounted assets. Therefore, the appeal was dismissed, and the acquittal was affirmed.

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