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TMI Blog1998 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act. At the end of the trial, all the accused were convicted as follows : A-1, being a company, was found guilty for the offence punishable under sections 120B, 193 and 420 read with section 511 of the Indian Penal Code, and sentenced to pay a fine of Rs. 1,000 under each count (three counts), A-2 to A-6 were found guilty for the offences punishable under sections 120B, 193 and 420 read with section 511 of the Indian Penal Code and each one of them was sentenced to undergo rigorous imprisonment for three months together with a fine of Rs. 1,000 each carrying a default sentence and A-2 to A-6 were also found guilty of the offence punishable tinder section 277 of the Income-tax Act and each one of them was sentenced to undergo rigorous imprisonment for three months. No separate sentence was awarded against them for the offence punishable under section 193 of the Indian Penal Code. Except the first accused, the other accused filed appeals before the Court of Sessions, Madras, and they were taken on files is follows : C. A. No. 126 of 1991 (A-2 and A-4) ; C. A. No. 127 of 1991 (A-5) ; C. A. No. 129 of 1991 (A-3) ; C. A. No. 128 of 1991 (A-6). The learned appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts disclosed the payment of interest of Rs. 5,802.74, Rs. 2,321.10, Rs. 2321.10, Rs. 2,901.37 and Rs. 4,773.70 to Thirupandia Nadar, Rajendran, Chokalinga Nadar, Jayalakshmi Ammal and Kandasamy, respectively. There were several debit entries on the interest account and the above five entries alone are relevant for the purpose of this case. On July 30, 1976, the premises of the first accused company was searched and several records were seized. Among them the relevant documents are the counterfoils of cheques relating to the payment of interest amounts to the five persons above mentioned, besides payment to one Prabhakaran. The corresponding honoured cheques were seized from Lakshmi Vilas Bank and Indian Bank, both at Villupuram. A scrutiny of those honoured cheques disclosed that the payee's names were different from the names found in the counterfoils of the cheques concerned. In other words, the names as found in the counterfoils of the cheques referred to above disclosed the names of the five persons referred to above towards interest account and one Prabhakaran. Their respective names did not find place in the honoured cheques. Further it came to light that the counter-foils of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who were paid interest as stated above (five persons) and the details about Prabhakaran, to whom payments were made. In the subsequent statement, A-2 would state that A-6 was the man in charge and he alone knew all those persons who were paid interest as well as Prabhakaran and since A-6 was not in service, he was not in a position to give any information regarding those transactions. A-5 in his subsequent statement had stated that he would have paid the money so encashed by him in the manner stated above either to A-4 or A-6. A-3 in his statement had admitted that he received a sum of Rs. 1,00,000 on June 14, 1974, and a sum of Rs. 1,00,000 on June 15, 1974, from A-6 on account of one Prabhakaran, the intending buyer of Vanaspathi. He had further admitted that he transferred the sum of Rs. 2,00,000 from the company's account at Madras to Villupuram and beyond that he did not know anything. He had even stated that he did not know Prabhakaran at all. A-6 in his statement had stated that he did not know Prabhakaran ; he did not arrange any transaction for and on behalf of the said Prabhakaran and did not hand over any money to A-3. He had also stated that he did not receive any money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of his being present in the company at Villupuram in his capacity as an accountant-cum-cashier, it can be safely presumed and accepted that he is aware of the ins and outs of the affairs of the company as a whole. The statement of A-2 and A-4 is more or less confessional in nature. A-2 is not in a position to disclose the identity of those persons concerned in the cheques referred to above, namely, the persons to whom interest had been paid and the person from whom a sum of Rs. 2,00,000 had been received and to whom it was returned. A-2 being bodily and physically present as the director in charge of the administration in the company is certainly bound to give the correct details about the same to the Income-tax Department. Therefore, if he is not in a position to give the source, then it is open to the Income-tax Department to treat those amounts as taxable income. Probably with a view to avoid showing of any taxable income it appears that the entries had been made in the names of the five persons as though they had lent money to the company and for which interest is being periodically paid to them. As already stated, the identity of the person from whom Rs. 2,00,000 is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fifth accused is that the statement of the co-accused, namely, A-4 and A-6, cannot be made use of to discredit the statement of A-5 and then convict him on that, in the absence of any other evidence to support the case of the prosecution. Learned counsel for the accused would also add that when there is independent evidence, against any of the accused, then the statement of the co-accused can be utilised as lending assurance to the prosecution case and not otherwise. In this context, the submission of learned counsel for the fifth accused is that the statement of the co-accused in the same case alone cannot form the sole basis for holding the co-accused guilty of making any false statement. How far the statement of A-4 and A-6 can be used as against A-5 for holding him guilty will be discussed in detail when the case of A-3 is considered. Suffice it to say at this stage that except the statement of A-4 and A-6, there are no other materials to hold that the statement of A-5 is false. As far as the case of A-3 is concerned, his statement before the Income-tax Officer is not inculpatory in nature. In other words it is not a confession statement. All that his statement discloses i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the same case. Before going into this issue, let me find out how the appellate court chose to acquit A-6, who according to me is similarly placed like A-5 and more or less similarly placed like A-3. The learned appellate judge held that as the prosecution mainly relied upon the statement of the other accused to convict A-6 and since it cannot be acted upon without any independent evidence to corroborate, the conviction cannot be sustained. The learned appellate judge also held that none of the cheques or counterfoils were prepared by A-6 but, on the other hand, they were prepared by A-4. The learned judge went on to hold that in respect of the transaction relating to Prabhakaran, A-6 had not played any part and there is nothing to show apart from the statement given by the co-accused that A-6 alone arranged the funds and entrusted the same to A-3. The sum and substance of the reasons adopted by the learned appellate judge to acquit A-6 is that the statement of the co-accused cannot be used against him. I am at a loss to understand as to how the case of A-5 can be discriminated from the case of A-6. At least A-6 is the paid employee of the company whereas A-5 is not like tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in his questioning under section 313 of the Criminal Procedure Code. When there is so much of failure on the part of the prosecution on the lines indicated above, the submission of learned senior counsel is, if these facts were put against in clear terms against A-3 at any stage during trial, then he would have had the opportunity of explaining his case with reference to his signatures on those cheques. That opportunity had been denied to him and the accused thus was deprived of giving an explanation which may enter into the mind of the learned trial judge to decide one way or the other. It also appears, as pointed out by learned senior counsel, that only for the first time before this court at the fag end of the arguments, learned Government counsel relies upon that material. Opposing these submissions, learned counsel for the respondent brought to my notice the following judgments : Bejoy Chand Patra v. State of West Bengal [1952] AIR 1952 SC 105 ; Keki Bejonji v. State of Bombay [1961] AIR 1961 SC 967 ; Radha Kishan v. State of U. P. [1963] AIR 1963 SC 822 ; Ajit Kumar Chowdhury v. State of Bihar [1972] AIR 1972 SC 2058 and Mohan Lal v. Ajit Singh [1978] AIR 1978 SC 1183. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held as follows : "It is well established that the onus of providing the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation tinder the provisions of the Income-tax Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income." The two above referred judgments are helpful in sustaining the conviction of A-2 and A-4. Under these circumstances, Crl. R. C. No. 557 of 1996 is allowed and accused No. 5 in C. C. No. 76 of 1982 on the file of the Additional Chief Metropolitan Magistrate (E.O.I.), Egmore, Madras, is acquitted of the offence alleged against him. The fine amount, if any, paid by him is directed to be refunded to him. Likewise, Crl. R. C. No. 570 of 1996 is also allowed and A-3 in C. C. No. 76 of 1982, on the file of the Additional Chief Metropolitan Magistrate (E.O.I.), Egmore, Madras, is, acquitted of the offence alleged against him. The fine amount, if any, paid by him is directed to be refunded to him. The bail bond if any, executed by A-3 and A-5 shall stand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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