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TMI Blog2006 (12) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... holly baseless and vexatious criminal proceedings, they are also expected to discharge the burden of not possessing the criminal intent and proving it beyond reasonable doubt. According to the petitioners, the impugned provision violates Article 21 of the Constitution of India and their right to pray for discharge from the criminal proceedings has been negated merely on the basis of the impugned provision. According to the petitioners, the guarantee against self-incrimination protected by Article 20(3) of the Constitution has also been taken away from them. 3. The following grounds are raised by the petitioners : (1) The procedure established by law must be just, fair and reasonable and not arbitrary, fanciful or oppressive. By shifting the burden of proving absence of culpable mental state on to the accused and requiring the same to be established beyond reasonable doubt, the rights guaranteed by the Constitution under Article 21 are violated. (2) The impugned provision runs counter to the well recognised principles of accusatorial system which requires the prosecution to establish the culpable mental state beyond reasonable doubt. (3) The provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es under the Act, whereas the Statement of Objects and Reasons shows that it was intended to apply only to cases of evasion of tax. (12) The impugned provision offends the constitutionally guaranteed protection against self-incrimination. (13) The impugned provision also has the effect of rendering statutory remedies available to the accused illusory. (14) One cannot label a statute as one dealing with a grave social evil and from that, to infer strict liability - vide Lim Chin Aik v. Queen [1963 AC 160 (PC) ; that Courts should be slow to infer that Parliament intended to impose an onerous duty on the accused vide R. v. Hunt [1987 1 All ER 1 (HL) ; and that the ultimate test of constitutional validity is whether the device undermines the fact finder's responsibility ___ vide County Court Ulster, New York vs. Samuel Allen [1970] 60 L. Ed. 2d. 777. 4. Briefly stated, the facts of the case are as follows : 5. The petitioner in W.P. No.23581 of 2006 (hereinafter referred to as 'the first petitioner') was required to file return of income for the assessment year 1993-94 under Section 139(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') by August 31, 1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. Other petitions were also filed. The respondents filed petitions before this Court for a direction to the trial court to frame charges against the petitioners. The petitioners filed application under Section 482 of the Code to quash the proceedings. The petitions filed by the respondents were dismissed by this Court. Against this, the department filed Special Leave Petitions, which were disposed of by the Supreme Court, directing the trial court to consider the matter regarding framing of charge, after hearing the parties on the petition for discharge, within a period of two months. Thereafter, the trial Magistrate dismissed the discharge petitions and fixed the date for commencement of hearing as per the directions of the Supreme Court. The Magistrate directed the accused to be present in Court on August 25, 2006. The first petitioner has filed criminal revisions against the dismissal of the discharge petition and has also filed the present writ petition challenging the constitutional validity of Section 278E of the Act. 7. Mr. Guru Krishnakumar, learned counsel appearing for the petitioners and Mr. Gopal Subramaniam, learned Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Constitution. For this purpose, he relied on State of Bombay v. Kathi Kalu Oghad AIR 1961 SC 1808 the Supreme Court held as follows : "In view of these considerations, we have come to the following conclusions :-. . . 'To be a witness' means imparting knowledge in respect of relevant facts by an oral statement or a statement in writing, made or given in Court or otherwise." 12. Learned counsel pointed out that section 4 of the Indian Evidence Act, 1872 defines the word "proved", and for an accused to prove the existence of the exception given under Section 105 of the Act, he is only expected to prove it on a preponderance of probabilities, i.e., it is sufficient if the accused proves the existence of those circumstances as so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that they did exist. To support this Dahyabhali Chhaganbhai Thakker v. State of Gujarat [1964] 7 SCC 361 K.M. Nanavathi v. State of Maharashtra [1962] Supp. 1 SCR 567 were relied on. 13. Learned counsel submitted that there is no willfulness on the part of the petitioners for non-filing of the accounts, and as observed by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 722 ; Pyarali K. Tejani v. Mahadeo Ramachandra Dange [1974] 1 SCC 167 ; Dahyabhali Chhaganbhai Thakker v. State of Gujarat[1964] 7 SCC 361 ; AIR 1964 SC 1563 ; State of U.P. vs. Ram Swarup [1974] 4 SCC 764 ; Periasami v. State of Tamil Nadu [1996] 6 SCC 457 ; A. Raghavamma v. A. Chenchamma AIR [1964] SC 136 ; Sucha Singh v. State of Punjab [2001] 4 SCC 375 ; Sanjay Dutt v. State through CBI, Bombay II [1994] 5 SCC 410 ; Uttam Chand v. Income Tax Officer [1982] 133 ITR 909 (SC) ; Asst. CIT v. BELCO Engineers P. Ltd. [1991] 54 Taxman 152 ; Smt. Pushpa Maini v. ITO [1993] (68) Taxman 300 ; Shastri Sales Corporation v. ITO [1996] Crl. L.J. 449 ; ITO v. Inderjit Chopra [1997] 224 ITR 691 (P & H) ; Mahadeo Lal Agarwala v. State of Bihar [1997] 224 ITR 119 (Patna) ; G.L. Didwania v. ITO [1997] 224 ITR 687 (SC) ; Sureshchand Gupta v. Union of India [1998] 233 ITR 783 (MP) ; Sheo Shankar Sah v. CIT [1999] (106) Taxman 536 ; CIT v. Bhupen Champak Lal Dalal [2001] 248 ITR 830 (SC); [2001] 3 SCC 459 ; Bhupen Champak Lal Dalal v. Sandeep Kapoor [2001] 248 ITR 827 (Bom) ; Ram Gulam Shah and Sons v. CIT [2002] 242 ITR 418 (Patna) ; [2002] (123) Taxman 891 ; Satyanara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayasena v. Reginam [1970] 1 All ER 219 (PC) : R. v. Hunt [1987] 1 All ER 1 (HL) ; County Court Ulster, New York v. Samuel Allen [1970] 60 L. Ed. 2d. 777 Salabiaku v. France [1988] 13 E. H. R. R. 379 ; Mancini v. Director of Public Prosecution [1941] 3 All ER 272 (HL) ; George Morrison v. People of State of California [1933] 78 L. Ed. 664 ; Lim Chin Aik v. Queen [1963] AC 160 (PC) ; He Kaw Teh [1985] 157 CLR 527 ; Rex v. Wamfler [1987] 11 N. S. W. L. R. 541 ; Rex v. Hingi [1996] 3 SCR 1128 ; Jacob Bruhn v. The King on the Prosecution of the Opium Farmer [1909] AC 317 (PC) ; Brend v. Wood [1946] 175 Law Times Reports 306 ; Rex v. Greenberg [1942] 28 Crim. App. Rep. 160 ; Porter v. Honey [1988] 3 All ER 1045 (HL) ; Vane v. Yiannopoullos [1964] 3 All ER 820 (HL) ; X v. United Kingdom [1972] 42 Collection of Decisions 135 ; Sheldrake v. Director of Public Prosecutions [2004] 3 WLR 976 (HL) ; [2005] 1 All ER 237 ; Pearks, Gunston and Tee Ltd. v. Ward [1902] 2 KB 1 ; W. D. Manley v. State of Georgia [1928] 73 L. Ed. 575 ; Charles Ferguson v. Queen [1979] 1 WLR 94 (PC) ; McFarland v. American Sugar Ref. Co. (60 L. Ed. 899) ; Bailey v. Alabama [1910] 55 L. Ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again and again, wherever the question of burden of proof arises. 21. In V.D. Jhingan v. State of Uttar Pradesh [1966] 3 SCC 736; AIR 1966 SC 1762, which arose out of the Prevention of Corruption Act, 1947, it was contended that (page 1763) "... mere receipt of money did not justify the raising of the presumption and that something more than the mere receipt of the money had to be proved." This argument was rejected and it was held that the mere receipt of the money was sufficient to raise a presumption. In this case, the Supreme Court again, on a construction of that particular provision, held that it was sufficient if the accused person proves the preponderance of probability for discharging the burden. Woolmington's [1935] AC 462 case is again quoted by the Supreme Court. 22. In Dr. S.L. Goswami v. State of Madhya Pradesh [1972] 3 SCC 22, the Supreme Court held that it is no part of the prosecution's duty to somehow hook the crook and that even in cases where the defence of the accused does not appear to be credible or is palpably false, the burden on the prosecution does not become any less and where the onus shifts to the accused, he will be entitled to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of criminal law that a person may [not] be convicted of a crime unless the prosecution have proved beyond reasonable doubt both (a) that he caused a certain event or that responsibility is to be attributed to him for the existence of a certain state of affairs, which is forbiden by criminal law, and (b) that he had a defined state of mind in relation to the causing of the event or the existence of the state of affairs. The event, or state of affairs, is called the actus reus and the state of mind the mens rea of the crime." 25. Ravula Hariprasada Rao v. State [1951] SCR 322 ; Isak Solomon Macmull v. Emperor AIR 1948 Bom 364 and Nathulal v. State of M.P. A.I.R. 1966 SC 43 also deal with the requirement of mens rea. 26. In Lim Chin Aik v. Queen [1963] AC 160 (PC), the Privy Council reviewed the entire law on the question in an illuminating judgment and approached the question, and the following extract is relevant (page 174) : "But it is not enough in their Lordships' opinion merely to label the statute as one dealing with a grave social evil and from that to infer that strict liability was intended. It is pertinent also to inquire whether putting the defendant u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the administrative order, as the case may be. Under the principle, the court will see that the legislature and the administrative authority 'maintain a proper balance between the adverse effects which the legislation or the administrative order may have on the rights, liberties or interests of persons keeping in mind the purpose which they were intended to serve'. The legislature and the administrative authority are, however, given an area of discretion or a range of choices but as to whether the choice made infringes the rights excessively or not is for the court. That is what is meant by proportionality." "Patanjali Sastri, C.J. in State of Madras v. V.G. Row AIR 1952 SC 196, observed that the Court must keep in mind the 'nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time'. This principle of proportionality vis-a-vis legislation was referred to by Jeevan Reddy, J. in State of A.P. v. McDowell & Co. [1996] 3 SCC 709 recently. This level of scrutiny has been a common feature in the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights to silence and against self-incrimination. . . . In order to maintain the balance between the individual and the society as a whole, rigid and flexible standards should not be imposed on the legislature's attempts to resolve the difficult and intransigent problems with which society is faced when seeking to deal with serious crime. The court will reach a different conclusion from the legislature only when it is apparent the legislature has attached insufficient importance to the fundamental right of an individual to be presumed innocent until proved guilty." 33. Repelling the arguments advanced on the side of the petitioners, learned Additional Solicitor General of India Mr. Gopal Subramaniam submitted that both the grounds of attack on the constitutionality of the offending Section are without merit. It was submitted that while conceding that there was a shift with regard to the burden of proof, it should be seen that the offences under the Income-tax Act are quite different from the offences under the Penal Code or like legislations. The Income Tax Act imposes on the petitioners a mandatory obligation to discharge certain duties or to respond to notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2002] 1 SCC 465 ; State of Orissa v. Debendra Nath Padhi [2005] 1 SCC 568 ; Maya Rani Punj v. CIT [1986] 157 ITR 330 (SC) [1986] 1 SCC 445 ; Mahant Abhey Dass v. S. Gurdial Singh AIR 1971 SC 834 ; Mohd. Iqbal Ahmad v. State of A. P. [1979] 4 SCC 172 ; Mansukhlal Vithaldas Chauhan v. State of Gujarat [1997] 7 SCC 622 ; Standard Chartered Bank v. Directorate of Enforcement [2006] 130 Comp Cas 341 (SC) ; [2006] 4 SCC 278 ; K.C. Builders v. CIT [2004] 265 ITR 562 (SC) 2 SCC 731 ; Asst. Customs Collector v. L.R. Melwani AIR 1970 SC 962 ; State of Madras v. A. Vaidyanatha Iyer AIR 1958 SC 61 ; Izhar Ahmad v. Union of India AIR 1962 SC 1052 ; Sodhi Transport Co. v. State of U.P.[1986] 62 STC 381 (SC) ; [1986] 2 SCC 486 ; State of A.P. v. Vasudeva Rao (V.) [2004] 9 SCC 319 ; Dhanvantrai Balwantrai v. State of Maharashtra AIR 1964 SC 575 ; Ramakant Rai v. Madan Rai [2003] 12 SCC 395 ; State of Maharashtra v. Natwarlal Damodardas Soni AIR 1980 SC 593 ; Sajjan Singh v. State of Punjab AIR 1964 SC 464 ; Limbaji v. State of Maharashtra [2001] 10 SCC 340 ; Bhanabhai Khalpabhai v. Collector of Customs 1994 Supp. (2) SCC 143 ; T. Shankar Prasad v. State of A.P. [2004] 3 SCC 753 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the High Court on the ground that where there is a presumption of law, it is obligatory on the court to raise this presumption, which in that case was the presumption under Section 4 of the Prevention of Corruption Act, because unlike a case of presumption of fact, presumption of law constitutes a branch of jurisprudence and this special rule of burden of proof cannot be disregarded. The Supreme Court held that the approach of the High Court in that case had been on erroneous lines since the special rule of the burden of proof had been disregarded. 37. Izhar Ahmad v. UOI A.I.R. 1962 S.C. 1052 arose under the Citizenship Act. In this judgment, there is reference to various texts with regard to presumption. The Supreme Court in this case observed as follows (page 1062) : "It is conceded, and we think rightly that a rule prescribing rebuttable presumption is a rule of evidence. It is necessary to analyse what the rule about the rebuttable presumption really means. A fact which 'A' has relevance in the proof of fact 'B' and inherently has some degree of probative or persuasive value in that behalf may be weighed by a judicial mind after it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pathu Chetty AIR 1962 SC 316, in which it was contended that the rule of evidence casts the burden of proof upon a person from whom specific goods have been seized, to establish that they are not smuggled. Various decisions of other courts were also cited in this case. The following observations are relevant : "These facts which justified the seizing officer to reasonably believe that the goods were smuggled would certainly impart a rational connection between the facts on which the presumption is raised and the fact to be proved, so that whatever other constitutional infirmity might attach to the impugned provision, the lack of rational connection is not one of them. It appears to us therefore that the argument regarding the lack of rational connection has no substance. It is derived wholly on a literal reading of Section 178A and would not be available if the provisions were read in the manner we have just now indicated." "The only prerequisite for the application of the section is the subjectivity of the Customs Officer in having a reasonable belief that the goods are smuggled." "But still the adjudicating officer would have to satisfy himself th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agricultural Officer [1999] Crl. L.J. 1252 which is a decision of this Court, wherein it has been held as follows : "Section 10C(2) made it clear that the Parliament made a significant departure from the usual approach by introduction of Section 10C of the Act in order to make the burden on the accused rigorous. In other words, the concept of mens rea in the commission of the offence under this Act is safeguarded again. The idea is to plug up possible loopholes through which economic offenders used to escape from the clutches of law." 42. Hence, it was contended that the impugned provision did not offend the principle of proportionality. It was submitted that, therefore, there was no merit in the challenge to the constitutionality of the impugned provision. 43. The relevant provisions of the Income Tax Act, 1961 are extracted hereunder : 44. Section 139 of the Income Tax Act reads thus : "139.Return of income.____ (a) being a company or a firm; or (b) being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to furnish under sub-section (1) of section 139 or by notice given under clause (i) of sub-section (1) of section 142 or section 148 or section 153A, he shall be punishable,__ (i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return of fringe benefits under sub-section (1) of section 115WD or return of income under sub-section (1) of section 139___ (i) for any assessment year commencing prior to the 1st day of April, 1975; or (ii) for any assessment year commencing on or after the 1st day of April, 1975, if ___ (a) the return is furnished by him before the expiry of the assessment year; or (b) the tax payable by him on the total income deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to answer queries, under section 272AA for failure to comply with the provisions of section 133B, under section 272B for non-compliance of the provisions of section 139A, under section 273(1)(b) for failure to furnish a statement of advance tax, under section 273(2)(b) for failure to furnish estimate of advance tax and under section 273(2)(c) of the Act for failure to furnish earlier estimate of advance tax. Originally, penalty was leviable under these provisions if the above defaults were committed without reasonable cause or excuse, as the case may be. But, by the amendment, the words "without reasonable cause" or "without reasonable excuse" were deleted and thereby, the default itself would render the assessee liable to penalty section 273B was inserted, which provided that no penalty was imposable on the person of the assessee for the defaults referred to in the above provisions, if he proves that there was reasonable cause or excuse for the said failure. Therefore, the amendent casts the onus of proving the existence of reasonable cause or excuse for the defaults referred to on the tax payer. So, by the amendments, certain acts or omissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. In the words of Lord Dunedin in Whitney v. IRC [1925] 10 TC 88, 110 (HL) "My Lords, I shall now permit myself a general observation. Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective. A statute is designed to be workable and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable." 54. Once a liability is fixed, it is highly improbable that the statute should not go on to make that liability effective. 55. The judgment in Prakash Nath Khanna v. CIT [2004] 9 SCC 686 answers a lot of questions raised by the petitioners herein, though in that case, the constitutionality of the provisions was not challenged. It was observed therein that while interpreting a provision, the Court can only interpret the law and cannot legislate it, and if a provision of law is misused and subjected to abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. The words "in due time" occurring in Section 276CC of the Income Tax Act were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng observations in Sheldrake's case [2004] 3 WLR 976, 983 (supra) : "But it is of course the ordinary duty of the courts to give effect to what Parliament has by clear words or necessary implication enacted, and it is not hard to find instances in which Parliament has clearly intended to attach criminal consequences to proof of defined facts, irrespective of an individual's state of mind or moral blameworthiness. Many such instances are found in legislation regulating the conduct of economic and social life." 58. The argument that mens rea, which is an element of the offence, has been well nigh dispensed with, thus rendering the word "willfully" in Section 276CC of the Act, is answered thus, and I quote Jacob Bruhn v. The King on the Prosecution of the Opium Farmer [1909] AC 317, 324 (PC) : "..... By this Ordinance, every person other than the opium farmer is prohibited from importing or exporting chandu. If any other person does so, he prima facie commits a crime under the provisions of the Ordinance. If it be provided in the Ordinance, as it is, that certain facts, if established, justify or excuse what is prima facie a crime, then the burden of proving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very relevant - "To oblige the prosecution to obtain direct evidence of living on immoral earnings would, in most cases, make its task impossible". The following extract from the above judgment is relevant : "From this body of authority, certain principles may be derived. The overriding concern is that a trial should be fair, and the presumption of innocence is a fundamental right directed to that end. The convention does not outlaw presumptions of fact or law but requires that these should be kept within reasonable limits and should not be arbitrary. It is open to states to define the constituent elements of a criminal offence, excluding the requirement of mens rea. But the substance and effect of any presumption adverse to a defendant must be examined, and must be reasonable. Relevant to any judgment on reasonableness or proportionality will be the opportunity given to the defendant to rebut the presumption, maintenance of the rights of the defence, flexibility in application of the presumption, retention by the court of a power to assess the evidence, the importance of what is at stake and the difficulty which a prosecutor may fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there are three matters to be considered while deciding whether presumption has been displaced and Parliament intended the offence created by legislation to have no mental ingredient. These are : (i) the words of the statute creating the offence; (ii) the subject matter of the statute; and (iii) whether imposing absolute liability will assist in enforcing the statute. In Rex v. Wamfler [1987] 11 N.S.W.L.R. 541, the statutory offences were divided into three categories for the purpose of determining whether mens rea is required to establish liability : (i) those in which there is an original obligation on the prosecutions to prove mens rea; (ii) those in which mens rea will be presumed to be present unless and until material is advanced by the defence as to the existence of honest and reasonable belief that the conduct in question is not criminal, in which case the prosecution must undertake the burden of negativing of such belief of reasonable doubt; and (iii) those in which mens rea plays no part and guilt is established by proof of the objective ingredients of the offence. This case dealt with a suppression order and the court observed, "In recent ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmines that commercial activities which can be so described are to be suppressed in public interest, their lordships saw no reason why Parliament should not make them crimes. It is accepted that the (statute) is to be interpreted in the widest sense, "but that breadth of scope contemplates neither a static catalogue of offences nor of sanctions. Evolving and transforming types and patterns of social and economic activities are constantly calling for new penal controls and limitations and new modes of enforcement and punishment adapted to the changing conditions are not to be taken as being equally within the ambit of parliamentary power is, in my opinion, not seriously argued". Most scholars and jurists agree that leaving aside offences where the actus reus is negligence or inadvertance and offences of absolute liability, the test for mens rea is subjective. "In applying the subjective test, the Court looks to the accused's intention and the facts as the accused believe them to be". G. Williams in the Textbook of Criminal Law, II Edition, 1983 writes : "The Crown need not in every case show precisely what though was in the accused's mind at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amended Act" . The Supreme Court held that the liberty of the individual must be controlled in the interest of society and it cannot stand alone, but must be compared with the companion virtue liberty and morality, liberty and law, liberty and justice, liberty and common good, liberty and responsibility which are concomitants for orderly progress and social stability and that the concept of individual liberty in harmony with social order is in consonance with the universal declaration of human rights and other International Covenants. The Supreme Court held that it was no doubt true that the golden rule that runs through the web of all civilized criminal jurisprudence that the accused is presumed to be innocent unless he is found guilty of the charged offence is indisputable and the burden to prove all the facts undoubtedly rests on the prosecution and if there is any reasonable doubt, the accused would get the benefit of acquittal, but "the rule gets modulated with the march of time". To the question whether the legislature could step in and provide exceptions, create offences and also place a part of the burden of proof on the accused, where the facts are w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have proved enough to make it just for the defendant to be required to repel what has been proved with excuse or explanation, or at least that upon a balancing of convenience or of the opportunities for knowledge the shifting of the burden will be found to be an aid to the accuser without subjecting the accused to hardship or oppression. Special reasons are at hand to make the change permissible. The legislature may go a good way in raising a presumption or in changing the burden of proof, but there are limits. What is proved must be so related to what is inferred in the case of a true presumption as to be at least a warning signal according to the teachings of experience. Presumptions that are not evidence in a proper sense but simply regulations of the burden of proof. Accordingly it was held that placing the burden on the accused to prove lack of guilty knowledge was held to be not violative of due process of Fourteenth Amendment. It was also held that it is not within the province of a legislature to declare an individual guilty or presumptively guilty of a crime. The judgment in McFarland v. American Sugar Ref. Co. (60 L. Ed. 899) is to a similar effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows : "Nothing more than the actus reus is needed where regulation of private activity in vulnerable likes public health is intended. In the words of Lord Wright in Mc Leod v. Buchanan [1940] 2 All ER 179, 186 (HL), 'intention to commit a breach of statute need not be shown. The breach in fact is enough.' Social defence reasonably overpowers individual freedom to injure, in special situations of strict liability." 75. In the above case, the constitutionality of the rules banning use of Saccharine and Cyclamate was challenged. The Supreme Court further observed thus : "Constitutionality not chemistry, abuse not error, is our concern and the Executive has not transgressed limits at all here. Within the wide judge-proof areas of policy and judgment open to the government, if they make mistakes, correction is not in Court but elsewhere. That is the comity of constitutional jurisdictions in our jurisprudence." We are not unmindful of the possibilities of village victuallers and tiny grocers being victimised by dubious enforcement officials which may exacerbate when punishments become harsher, and the marginal hardships caused by st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Section 278E, this inference is made a presumption as to the existence of the culpable mental state on the part of the assessee. This does not mean that the Court accepts the culpable mental state as an irrebuttable fact. All that the law requires is for the person or the assessee to prove that there were circumstances which prevented him from discharging his statutory duty. 80. What is reasonable doubt has been explained in Ramakant Rai v. Madan Rai [2003] 12 SCC 395 in the following words (page 405) : "Doubts would be called reasonable if they are free from a zest for abstract speculation. Law cannot afford any favourite other than the truth. To constitute reasonable doubt, it must be free from an overemotional response. Doubts must be actual and substantial doubts as to the guilt of the accused persons arising from the evidence, or from the lack of it, as opposed to mere vague apprehensions. A reasonable doubt is not an imaginary, trivial or a merely possible doubt; but a fair doubt based upon reason and common sense. It must grow out of the evidence in the case." 81. In Limbaji v. State of Maharashtra, [2001] 10 SCC 340 the Supreme Court holds a pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission of the offence under the Act by direct evidence. The whole process of smuggling, for evading payment of custom duty consists of different links. The links aid and abate each other, sometimes through a remote control. That is why, Parliament has introduced Section 138-A in the Act. . . . . It can be said that the provision aforesaid is an exception to the general criminal jurisprudence that onus never shifts on the accused and he has only to raise a doubt in the mind of the court, in respect of the correctness of the prosecution version. It is different from Sections 106 and 114 of the Evidence Act. In view of Section 138-A, once a presumption is raised about a culpable mental state on the part of the accused, that he had stored the silver ingots, to export them outside the country evading payment of custom duties, the accused has to prove as a defence that no such mental state with respect to the act charged, did exist." 84. M. Nagaraj v. UOI [2006] 10 Scale 301 was relied on to show that the impugned provision is violative of the basic structure of the Constitution. In this judgment, the Supreme Court has approached the question from the following perspectives -St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within these parameters. Violations of the provisions of law either by doing what is forbidden or by not doing what is mandated, is the offence and the statute may also insist upon the mens rea element or it may not. When the element of mens rea is part of the statutory offence, then what follows is that the particular act of omission or commission should be done with the intention, with "knowledge", "deliberately", 'without reasonable cause" or as in the case of the impugned provision, "willfully". The prosecution cannot indiscriminately launch proceedings as was alleged on behalf of the petitioners herein without proving or without establishing that the particular act was done or a particular duty was not done. In the instant case, the alleged act is - wilful failure to furnish in due time the return of income which they are required to furnish either - (a) under sub-section (1) of Section 139 or (b) by notice given under Section 142(1)(i) or section 148 or section 153A. Therefore, the prosecution will have to show that the assessee or the person has not furnished the return as above in due time. The prosecution will have to prove that notice w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat nothing prevented the assessee from filing his return in accordance with law and in response to the notices and therefore, the failure is wilful. If there were such compelling circumstances, it is always open to the assessee to prove them in accordance with law. That does not seem to be and cannot be a difficult thing to do. In fact, obviously, the Parliament found that it was well nigh impossible for the prosecution to prove the absence of compelling circumstances which prevented the assessee from what in law the assessees were bound to, i.e., prove the negative, so in its wisdom, decided that it would be easier and more practicable, and in the context of the objects sought to be achieved, require the assessee to show those facts which would lead the Court to infer that act "A", namely filing the return in due time was not possible. If the assessee proves it, then the prosecution will fail. Can it be said that this is arbitrary or unreasonable? I think not. 88. The impugned provision has been introduced to remove the weaknesses in the provisions in the direct tax laws in respect of penalties and prosecutions so as to shift the burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities will administer the law "with an evil eye and an unequal hand". This has been so held in several cases where the constitutionality of a legal provision was attacked. The observations of the Supreme Court in Krishna Lal's [1995] Supp 2 SCC 187, case where the Kerala Abkari Act was challenged, are squarely applicable to the present case. Merely because the Act requires the assessee to prove that there were circumstances which prevented the assessee from filing the return, it would not amount to violation of Article 20(3) of the Constitution. 92. In Thangal Kunju Musaliar v. M. Venkatachalam Potti, ITO [1956] 29 ITR 349 (SC) ; AIR 1956 SC 246, which dealt with evasion of tax during war times, when Section 5(1) of the Travancore Act XIV/1124 was attacked as unconstitutional, the Supreme Court tried to ascertain the scope and purpose of the impugned Section by analysing its Preamble and then at the impugned section itself. The condition in Section 5(1) provided that the Government must have prima facie reasons for believing that a person, to a substantial extent, evaded payment of tax. The powers conferred on the Commission by Section 6 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislature to make stringent and harsh provisions to plug loopholes, which in the case on hand, was not possible if the usual procedure under the Tax Law was applied. 95. Are the words "beyond reasonable doubt" not definite and therefore impossible for the assessee to know what exactly the words define? This question deserves to be answers in the negative outright. There is no ambiguity with regard to what the assessee has to prove - the assessee has to prove that there were reasons for not filing the return in due time. If he proves that, then the prosecution fails, and the manner in which the words "beyond reasonable doubt" should be construed has also been explained in various decisions; so, the non-usage of "preponderance of possibilities" cannot be a vitiating factor. It is not the doubt of a vacillating mind or a timorous mind, but if from the circumstances which are proved by the assessee that he was prevented from filing the return, then the assessee would have rebutted the presumption of culpable mental state. 96. It was also submitted on behalf of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to plug the loopholes in order to prevent violations, if the earlier procedure was not effective. Presumptions are really regulations of the burden of proof and not presumptions of guilt. If there are certain facts, if when established would justify excuse what is prima facie an offence, then the onus of proving those facts obviously rests on the party accused. Reasonableness can be tested against the opportunity given to the defendant to rebut the presumption; retention by the Court of the power to assess the evidence; and the difficulties and the near impossibility of obtaining direct evidence by the prosecution as to the mental state of the accused in the particular context. There is no vagueness with regard to the words 'reasonable doubt' and the standard of reasonableness has been explained in the decisions referred to above. "Reasonable" means exactly that it should be reasonable and not farfetched. When a statute creates a duty or a liability and a failure in this regard as an offence, then it is reasonable not to ask the prosecution to prove as part of its case, that the defendant was aware of his duty or liability. Proportionality should be read in the context of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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