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2019 (12) TMI 1245 - DSC - Income TaxFraudulent income tax refunds - charge of conspiracy / connivance against the person claiming the refund and ITO - income tax officer, who is responsible for verification and process of Income tax returns came - competent authority having power to remove the public servant accused No.9 at the time of commission of offence. The sanction was accorded in the year 2000. At that time accused was under his control. The competent authority is not working at any point of time or during the relevant period as competent authority of the office of ITO - forgery, cheating and criminal conspiracy - offence punishable under Section 120 B of Indian Penal Code,1860, 420, 467, 468 and 471 r/w 120 B of Indian Penal Code, 1860 - It is to the noted that in his oral testimony he has not made any whisper that he is the authority having power to remove the public servant from his services at the time, when offence was alleged to have been committed? HELD THAT - The evidence of two prosecution witnesses out of one is hostile, is not wholly reliable to prove the guilt against accused No.9 to connect him that he obtained income tax returns from accused No.2 directly. As the crucial link is missing then how the income tax officer, who is responsible for verification and process of Income tax returns came in the possession of those unauthenticate accepted Income tax returns. When the assignment of acceptance of income tax returns was not with accused No.9. So in these circumstances, there is no satisfactory evidence on record to prove the charges against accused No.9 for the offence punishable under Section 120 B, 420, 467, 468 and 471 r/w 120 B of IPC. The prosecution has satisfactorily proved the circumstances by satisfactory evidence that the TDS certificates on the basis of which ITR forms and documents were prepared by accused No.1 are forged one. Further though we assume that TDS certificates are genuine one but the proprietor of firms cited in the TDS Certificates are the fictitious persons. The role played by accused No.1 is that accused No.1 has prepared forged balance sheet and documents and cited false information thereto. The substantial amount of crime proceeds is credited to the account of accused No.2, who is the assistant of accused No.1. Furthermore, an amount of ₹ 1,000/ is credited to the account of accused No.1 from the account of accused No.3. Further one circumstance is forthcoming on record that accused No.3 has credited ₹ 50,000/ in the bank account of accused No.1 and his wife on 04.11.1997. On perusal of the ingredients of offence punishable under Section 420, the prosecution has proved that the Income Tax Department complainant parted with his property i.e. refund amount acting on a representation, which was false to the knowledge of accused. The accused had dishonest intention from the outset that the refund amount in the hands of Income Tax office must have passed on them. Thus, there is a satisfactory evidence on record to prove that accused No.1 to 4 and 6 to 8 cheated Income Tax Department by dishonestly inducing the said department to deliver the refund orders to the tune of ₹ 3,00,000/ -. The evidence on record clear cut indicates that the TDS certificates attached to the ITR are forged by the accused with dishonest intention to cheat the Income Tax Department. The evidence further indicates that accused No.1, 2 and 4 did the act of forgery in respect of TDS Certificates as well as Income Statement, Balance Sheet attached to the ITR Forms. The Income Tax Returns were prepared and submitted in the name of accused No.3, 6 to 8 and Haresh Dhameja. The income tax refund amount is credited in the account of accused. TDS Certificates and documents attached to Income Tax Returns are forged one, used for the purpose of cheating and used those documents as a genuine, which they knew that at the time when used by them to be a forged documents - the ingredients to constitute offence punishable under Section 120 B of IPC, 420, 467, 468, 471 r/w 120 B of IPC are made out against accused No.1 to 4 and 6 to 8. The evidence led on behalf of prosecution is consistent and sufficient to prove the ingredients of offence punishable under Section 120 B of IPC, 420, 467, 498 and 471 r/w 120 B of IPC against accused No.1 to 4 and 6 to 8. So they are liable to be convicted for the said offences. The prosecution failed to prove the guilt of the accused No.9, so he is liable to be acquitted. At this stage, it is required to take pause and proposed to give hearing against accused on the point of sentence. In the instant case, accused No.1 being the chartered accountant with the aid and assistance of accused No.2 committed the offence in league with accused No.3, 4, 6 to 8 as an instrumental and thereby cheated to the Income Tax Department. It is also to be mentioned that accused No.3, 4, and 6 to 8 having minimal beneficiary of the fraud amount, but the fact remains that the entire conspiracy hatched by accused No.1 and accused No.2 and they are the ultimate beneficiary of crime proceeds. The substantive sentences of accused be run concurrently.
Issues Involved:
1. Criminal Conspiracy 2. Cheating 3. Forgery of Valuable Security 4. Use of Forged Documents 5. Criminal Misconduct by a Public Servant 6. Validity of Sanction under the Prevention of Corruption Act Issue-wise Detailed Analysis: 1. Criminal Conspiracy: The prosecution proved that during 1996-1998, accused No.1 to 4 and 6 to 8 conspired to submit false Income Tax Returns with forged TDS certificates to claim refunds. The conspiracy was established through the submission of forged documents and the subsequent processing of these documents by the Income Tax Department, leading to wrongful refunds. The court found that the accused had knowledge of the conspiracy's main objective and actively participated in it. 2. Cheating: The prosecution demonstrated that accused No.1 to 4 and 6 to 8 cheated the Income Tax Department by dishonestly inducing it to issue refunds based on forged documents. The evidence showed that the accused submitted false TDS certificates and forged documents, leading to the wrongful issuance of refunds. The court found that the accused had a dishonest intention from the outset to deceive the Income Tax Department. 3. Forgery of Valuable Security: The prosecution established that the accused forged TDS certificates and balance sheets, which are considered valuable security. The evidence included the testimony of handwriting experts and the comparison of specimen signatures with disputed documents. The court concluded that the accused committed forgery with the intention of using these documents to cheat the Income Tax Department. 4. Use of Forged Documents: The prosecution proved that the accused used forged TDS certificates and other documents as genuine, knowing them to be forged. The evidence showed that these documents were used to claim refunds, and the accused benefitted from the proceeds. The court found that the accused knowingly used forged documents to achieve their fraudulent objectives. 5. Criminal Misconduct by a Public Servant: The prosecution failed to prove that accused No.9, a public servant, committed criminal misconduct by abusing his official position. The court found that the sanction accorded under Section 19 of the Prevention of Corruption Act was invalid. Additionally, the evidence did not satisfactorily establish that accused No.9 directly accepted and processed the fraudulent Income Tax Returns. 6. Validity of Sanction under the Prevention of Corruption Act: The court determined that the sanction accorded against accused No.9 under the Prevention of Corruption Act was invalid. The sanction was based on documents from the Income Tax Vigilance Cell rather than the investigation papers from the CBI. The competent authority at the time of the alleged offence was not the one who accorded the sanction, rendering it invalid. Final Order: 1. Conviction and Sentencing: - Accused No.1 Devendra Chaturvedi: 3 years rigorous imprisonment and a fine of ?1,50,000 for each offence. - Accused No.2 Hoor C. Jhurani: 2 years rigorous imprisonment and a fine of ?40,000 for each offence. - Accused No.3 Sayaji L. Sangle, No.4 G. Chokkalingam, No.6 Ajit Meghnath Chachad, No.7 Ashok Patel, and No.8 John R. Soares: 6 months rigorous imprisonment and a fine of ?8,000 for each offence. 2. Acquittal: - Accused No.9 Sharad Kumar Shrinivas Gambhir was acquitted of charges under the Prevention of Corruption Act and related IPC sections due to the invalid sanction and lack of sufficient evidence. 3. Other Orders: - The substantive sentences shall run concurrently. - The period of detention already undergone by accused No.1 and 2 shall be set off against the sentence. - Personal and surety bonds of the accused were canceled, and cash sureties were ordered to be refunded. - Accused No.9 was directed to comply with Section 437-A of Cr.P.C by furnishing a personal bond and cash surety. The court emphasized the need for a sentence that reflects the seriousness of the economic offence and its impact on society, while also considering the individual circumstances of each accused.
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