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TMI Blog1998 (7) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer, Salaries Circle I(2), Madras, and thereby committing an offence punishable under section 277 of the Income-tax Act, 1961. Secondly, at the same time, place and in the course of the same transaction, the first accused attempted to evade capital gains tax chargeable under the Income-tax Act to wit, the false consideration shown in the draft sale deed and application as Rs. 75,000 in respect of the assessment year 1985-86 and thereby committed an offence punishable under section 276C(1) of the Income-tax Act, 1961. Thirdly, the first accused, at the same time, place and in the course of the same transaction dishonestly attempted to cheat the Income-tax Officer, Salaries Circle I(2), Madras, by inducing him to deliver section 230A certificate which is a valuable security and thereby committed an offence punishable under section 420 read with section 511 of the Indian Penal Code. Fourthly, that the first accused, at the same time, place and in the course of the same transaction gave false evidence in the course of the section 230A proceedings, which are judicial proceedings before the Income-tax Officer, Salaries Circle I(2), Madras, and thereby committed an offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act and the same has been lost sight of by the court below; (iv) that the lower court's findings that the certificate under section 230A of the Income-tax Act is only to prevent the disposal of property, when there is a tax liability and if there is any liability to pay tax, there is no offence committed is erroneous and has resulted in miscarriage of justice ; (v) that the court below having found that the sale price was admittedly Rs. 1,70,000 and the application under section 230A of the Income-tax Act verified as true by the first accused showed the price as Rs. 75,000 which is a false statement, ought to have convicted the first accused under section 277 of the Income-tax Act ; (vi) that the lower court erred in finding that there was no tax liability when under the law, the first respondent is bound to pay capital gains tax ; (vii) that the findings of the court below that no witness has spoken to the liability of the first accused to pay capital gains tax and hence there is no proof of liability of tax is contrary to law and is opposed to the canons of evidence ; instead the court has to take judicial notice under section 57 of the Indian Evidence Act ; (viii) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dreaded enemy of those who try to evade or escape the lawful tax. Learned senior counsel would further argue that in many cases, the tax is deducted at source and would support entering into the facts of the case stating that the first accused is the seller of the property located in Plot No. AP 1665, Door No. 143, "O" Block, Ganapathy Colony, Anna Nagar, Madras 40, with an extent of 88 sq. feet. and a house built on it, and the second accused and third accused are the purchasers of the same which had been sold as per the registered sale deed dated September 30, 1985, under a document No. 3610 of 1985 on the file of the Sub-Registrar, Anna Nagar, Madras. Over and above Rs. 50,000, if the transaction is involved under section 230A of the Income-tax Act, the income-tax clearance certificate should be obtained for the transaction, that the first accused applied for section 230A certificate on August 30, 1985, and in the application the sale consideration was mentioned as "Rs. 75,000" but in fact, it should have been more that. On suspicion the income-tax authorities deputed one of the inspectors to make an enquiry and the enquiry revealed that there had been an agreement for sale be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Department. Exhibit P-12 is the fresh application. Exhibit P-13 is the copy of the sale deed registered for Rs. 1,75,000, and exhibit P-14 is the understatement of the first accused. Learned senior counsel would further point out that in the attempt to evade capital gains tax, P.W. 1 had committed an offence under section 136 of the Income-tax Act that the proceedings before the Income-tax Officer are deemed to be judicial proceedings within the meaning of section 193 and section 228 of the Indian Penal Code and that every income-tax authority is deemed to be a civil court under the authority of law. The object to be achieved is that before the income-tax authorities, one has to make the correct declaration, otherwise he would become punishable under section 193 of the Indian Penal Code for fabricating false evidence in a judicial proceeding intending to. use the same in any such proceedings. Section 196 of the Indian Penal Code would deal with any one corruptly using or attempting to use as true or genuine any evidence knowing it to be false or fabricated. Learned counsel would also point out that both the accused were very much parties to the transactions, conspirac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the original sale deed; exhibit P-19 is the sale deed for Rs. 1,75,000. exhibit P-20 is the summons issued under section 131 of the Income-tax Act to the accused ; exhibit P-21 is the summons for the appearance of the accused and giving statement on November 7, 1985 ; exhibit P-22 is another summons to P.W. 4, the auditor ; exhibit P-23 is the summons to P.W. 3, the auditor and P. Ws. 3 and 4 would appear on November 26,1985, and give sworn statements ; exhibit P-24 is the statement of P. W. 4 ; exhibit P-25 is the statement of P.W. 3 and exhibit P-26 is the authorisation to file the complaint. Learned counsel would then cite instances from the evidence of the witnesses and from the documents in consummation of his arguments to the establishment of the offence committed on the part of the accused. He would also comment on the questioning of the accused by the trial court under section 313 of the Criminal Procedure Code and the statement given by them to the said questions and would ultimately argue that from the above instances, the following conclusions should be arrived at. He would ultimately urge that the trial court has based its conclusion on the following points so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Under section 193 of the Indian Penal Code dealing with fabricating Form No. 34A the intention of the accused is to cheat the income-tax officials. Hence, the offence under section 193 is complete. He would then cite Form No. 34A, i.e., exhibit P-1 and the sale agreement exhibit P-6 as examples for the accused to have committed the offence under section 193 and further say that the offence is complete as soon as it is fabricated with the intention to commit the offence and would end up saying that the trial court had not applied its mind or having applied its mind did not find any untoward incident in the cases of the offence. So far as the evidence is concerned, the prosecution has established its case beyond reasonable doubt. The trial court had started solely on legal aspects which are fully settled citing a ruling reported in G. S. R. Krishnamurthi v. M. Govindaswamy, ITO [1992] 195 ITR 137 (Mad). Learned counsel would argue that all the points that are necessary to decide the above questions have been considered and answered in this judgment. Citing yet another judgment reported in P. Jayappan v. S.K. Perumal, First ITO [1984] 149 ITR 696 (SC), learned counsel would say th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. P.W. 4's statement had been recorded on November 26, 1985, in exhibit P-24. P.W. 3's statement had been recorded on the same day on November 26, 1985, in exhibit P-25. Reading out the questions put to P.Ws 3 and 4 learned counsel would question as to what made the Department to give up P.W. Nos. 3 and 4 from being charge sheeted along with the other accused no one knows till date. Learned counsel would further argue that in this case the first accused is the vendor and accused Nos. 2 and 3 are husband and wife, respectively, the joint purchasers of the property from the first accused, that A-3's case is akin to the case of the second accused, but they suddenly gave up the third accused and registered an appeal against the second accused excepting for the fact that one more charge is against the second accused. At this juncture, learned counsel would also remark that such arbitrariness on the part of the Department has only led casualness when different kinds of treatments are meted out to parties. Learned counsel would further attract the attention of the court towards the instructions given in Chapter 22, Part 2, wherein under the head infirmities in prosecution compoundin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of the raid a stamped paper was seized wherein the sale consideration was Rs. 3 lakhs as against Rs. 1,20,000 disclosed in the application under section. 230A(1) in their statement. In their statement the assessees have further admitted that the sale consideration was only Rs. 3 lakhs but not Rs. 1,20,000 and they have filed the application as per the market value. The learned judge on a consideration of the evidence acquitted the accused on grounds that they are not liable to pay tax under any enactment mentioned in section 230A. Citing another judgment reported in CIT v. Ram Rup Kishan [1992] 193 ITR 129 (P H), learned counsel would point out from the Division Bench judgment of the Punjab and Haryana High Court that false statement in verification the lower court ordered acquittal of the accused and after a delay of ten years of the order of acquittal, the appeal had come up for consideration remarking that the termination of criminal proceedings ordered by the lower appellate court was, therefore, the safest order in terms of the Supreme Court guidelines saying that we see no reason to disturb in the present appeal, and declined to interfere with. The next ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 15 ; (ii) [1990] (2) Prevention of Food Adulteration Cases 405 ; (iii) [1989] (3) Prevention of Food Adulteration Cases 124 ; and (iv) [1982] (2) Prevention of Food Adulteration Cases 372, learned counsel would point out that in those cases even the minimum sentence was not awarded on account of lapse of time. Learned counsel for the same proposition of law would also cite some more judgments reported in Fourth ITO v. A. K Srinivasan [1994] 205 ITR 64 (Mad); (ii) State v. Kumaresan [1992] Crl. LJ 3115 ; and (iii) S. Guin v. Grindlays Bank Ltd., AIR 1986 SC 289, and out of the above judgments, it is worth citing State v. Kumaresan [1992] Crl. LJ 3115 ; wherein a learned single judge of this court has held that "in an appeal against acquittal long time elapsing since acquittal held considering the mental agony suffered by respondent/accused right from the date of incident till disposal of the present appeal, it would not be proper to disturb verdict of acquittal though finding of trial court on which verdict of acquittal was based, is set aside." Central Government standing counsel sought to clarify certain ambiguities that arose from the argument of the other side and resumin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1976-77 and the order of acquittal was passed in 1984, no useful purpose would be served by ordering retrial at this length of time especially when the respondent had already undergone imprisonment till the rising of the court and paid the fine in respect of the offences, committed in connection with the same transaction." It is an appeal against acquittal by the trial court and in dealing with such appeals arising out of the acquittal by the trial court, sufficient guidelines have been provided by the apex court in its judgment reported in Madhavan Nair v. State of Kerala [1975] MLJ (Crl.) 239 at page 243) wherein it has been held : "In an appeal under section 417 of the Code of Criminal Procedure, against an order of acquittal the High Court has full power to review at large the evidence on which the order of acquittal was founded and to reach the conclusion that upon the evidence the order of acquittal should be reversed. No limitation should be placed upon that power unless it be found expressly stated in the Code, but in exercising the power conferred by the Code and before reaching its conclusion upon facts, the High Court should give proper weight and considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to his inspector. P.W. 2 to make an inspection on the subject-matter and the report had been filed in exhibit P-7 based on which and the copy of the agreement submitted along with exhibit P-7 he issued summons and got the original agreement in exhibit P-8 along with exhibit P-9 letter from the first accused on September 6, 1985, stating thereby that the value was only Rs. 1,75,000 and due to typographical error the sale consideration had been mentioned as "Rs. 75,000". This witness would also depose that based on the attempts made on the part of the first accused he issued instructions in exhibit P-10 to get fresh application for Rs. 1,75,000 from the first accused, and followed the other procedures in recording the statements of all the accused as per exhibits P-14 to P-17 and impounded exhibit P-8 the undervalued instrument. He also recorded the statement of P.Ws. 3 and 4 in exhibits P-24 and 25, who are the auditors of the first accused and by exhibit P-26 authorisation of the Commissioner, he lodged the complaint against the accused. P.W. 2 the income-tax inspector would depose that he conducted an enquiry on September 4, 1985, when he enquired the auditors, who produced t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement to the Income-tax Officer in exhibit P-24. From the above evidence of the prosecution P.W. 1 suspecting the value offered in exhibit P-2 draft sale deed prior to issuing certificate under section 230A(1) of the Income-tax Act had summoned the first accused and by mere asking the first accused he had plainly told P.W. 1 that it was only a typographical error and on the instructions of P.W. 1 he got a new form and prepared the sale agreement for Rs. 1,75,000 and submitted the same for the issuance of the income-tax clearance certificate. It is the further case of the prosecution that P.Ws. 3 and 4 being the auditors of the first accused they filled up the necessary forms that were to be submitted in the proper manner before the income-tax authorities concerned. With the above facts not only summoning accused Nos. 1 to 3, but also summoning their auditors P.Ws. 3 and 4 statements have been obtained from all of them and they have been marked as exhibits before the trial court. P.Ws. 2 and 3 would simply state that based on the draft sale deed supplied by the first accused they entered the necessary columns in the application and submitted before the authorities. So f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be forgotten that to attain this state, prima facie case should be made out against the accused, lest, the presumption cannot at all be formed by the court. Here is a case in which from out of four witnesses, two are claimed that is P.Ws. 3 and 4, to have been made co-accused, as per the defence, if at all the offence is Said to have been committed by the accused. But the Department would not only leave them scot free, but also make them the prosecution witnesses for speaking nothing relevant in consummating the allegations to the requirements of the sections. But their evidence only serves exculpating them from the charge, which is not the purpose of the prosecution. On the contrary, positive evidence should have been let in proof of this guilt of the accused. No least attempt has been taken in this regard by the prosecution. The document writers who really wrote the draft sale deeds have not been examined to bring forth, the circumstances under which those documents came into existence nor those who really witnessed these documents being reduced into writing got examined. Even the part said to have been played by the Assistant Commissioner of Income-tax one Lekhara and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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