2004 (9) TMI 7 - SC - Income Tax

Appellant-accused has been granted a pardon by the Special Judge CBI on the condition that he makes a full and complete disclosure - held that the prosecution u/s 277 and 278 will stand stayed till trial of the cases in which pardon granted is over. If the appellant makes a full and complete disclosure then in our view the prosecution u/s 277 and 278 should not be allowed to proceed. We therefore grant to the appellant liberty to apply for quashing that prosecution at that stage

Summary

Issues:
1. Interpretation of the scope of pardon granted under section 306 of the Criminal Procedure Code.
2. Whether the pardon granted covers prosecution under sections 277 and 278 of the Income-tax Act.
3. Consideration of the impact of the pardon on the appellant's right against self-incrimination.
4. Determining the necessity of continuing the prosecution under sections 277 and 278 of the Income-tax Act.

Analysis:

1. Interpretation of Pardon under Section 306 of the Criminal Procedure Code:
The appellant argued that the pardon granted under section 306 of the Criminal Procedure Code should cover all offences, including those under other statutes, punishable with imprisonment extending to seven years or more. Relying on legal precedents, the appellant contended that the pardon should operate unless revoked under section 308 of the Criminal Procedure Code.

2. Coverage of Pardon for Prosecution under Sections 277 and 278 of the Income-tax Act:
The prosecution argued that the offences for which the appellant was granted pardon were distinct from those under sections 277 and 278 of the Income-tax Act. Legal authorities were cited to support the position that the pardon granted specifically related to the misappropriation of funds and did not extend to offences related to filing false returns or making false statements in income-tax returns.

3. Impact on Right Against Self-Incrimination:
The court considered the appellant's right against self-incrimination under Article 20(2) of the Constitution of India. It was noted that forcing the appellant to give evidence against himself in the prosecution under sections 277 and 278 would violate this constitutional right. The court emphasized the importance of the appellant's full and frank disclosure to maintain the validity of the pardon.

4. Necessity of Continuing Prosecution under Sections 277 and 278:
Despite the limitations of the pardon, the court acknowledged the potential risks of prosecuting the appellant under sections 277 and 278 of the Income-tax Act. Recognizing the interplay between the two cases and the potential loss of valuable evidence, the court directed a stay on the prosecution under sections 277 and 278 until the trial of cases covered by the pardon is completed. The court granted the appellant the liberty to seek quashing of the prosecution under sections 277 and 278 upon making a full and complete disclosure.

In conclusion, the Supreme Court's judgment provided clarity on the scope of the pardon granted under section 306 of the Criminal Procedure Code, its limitations concerning prosecution under specific sections of the Income-tax Act, and the importance of safeguarding the appellant's constitutional rights while balancing the interests of justice and evidence preservation in related cases.