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TMI Blog1993 (4) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... e fourth charge is under section 276C of the Income-tax Act, 1961 ; the fifth charge is under section 277 of the Income-tax Act, 1961, and the sixth charge is also under section 277 of the Income-tax Act, on the allegations that the accused has intentionally fabricated his account books relating to the income-tax assessment years 1976-77 and 1978-79 by deliberately suppressing the commission receipt of Rs. 1,05,000 from Messrs. Greaves Cotton and Co. Ltd. for the assessment year 1976-77 and falsely showing the same as income for the assessment year 1978-79 with a view to defraud the exchequer of its legitimate revenue, and deliberately delivered false returns of income and statements of accounts based on the abovesaid fabricated account books and thereby attempting to mislead the Income-tax Officer and dishonestly inducing him to deliver the assessment orders relating to the above assessment years, computing the total income at considerably lower figure than that to which he is properly assessable, and acting and relying on the aforesaid fabricated account books and false returns of income and statements for the aforesaid income-tax assessment years. It is further alleged that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Greaves Cotton and Co. Ltd., it was revealed that Messrs. Rajasekaran and Company was actually paid a commission of Rs. 1,05,000 in June, 1975, itself by cheque for the services rendered by them. Thus, it is clear that the accused, with a view to avoid payment of lawful dues to the Government, intentionally fabricated his account books relating to the assessment years 1976-77 and 1978-79 by deliberately suppressing the commission receipt of Rs. 1,05,000 from Messrs. Greaves Cotton and Co. Ltd., for the assessment year 1976-77, and falsely showing it as if it was income for the assessment year 1978-79 with the intention to use them as genuine evidence in the course of the income-tax assessment proceedings. He has also wilfully attempted to evade tax, penalty and interest chargeable or imposable within the meaning of section 276C of the Income-tax Act. Further, he has deliberately delivered false returns of income and false statements of accounts for the assessment years 1976-77 and 1978-79. In addition, he has wilfully made false verification in the returns of income for those years. Hence the complaint. Four witnesses were examined on the side of the complainant. P.W.-1 is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 1,05,000 was shown as due to Messrs. Greaves Cotton and Co. Ltd. in exhibit P-23 relating to the year 1978-79. P. W.-1 issued summons to the accused and he produced account books, exhibits P-31 to P-33, and two K. A. T. office files, exhibits P-34 and P-36, and they were impounded by an order, exhibit P-30, dated February 21, 1979. According to him, at page 127 of exhibit P-31, ledger containing an account for Messrs. Greaves Cotton and Co. Ltd., there was an entry for a receipt of Rs. 1,05,000 on June 27, 1975, by cheque No. 086581 on Grindlays Bank without any narration to the effect that the same was received as a deposit. Page 31 of the ledger shows the commission expenses account. But there is no account for commission receipt. The correspondence between the accused-company and Messrs. Greaves Cotton and Co. Ltd. were also filed. A sworn statement, exhibit P-45, was recorded from the accused on February 21, 1979, in which the accused has clarified that he had no other business with Messrs. Greaves Cotton and Co. Ltd. excepting the commission of Rs. 1,05,000 and that the receipt of the amount was shown as deposit and it was a mistake. He has further stated that to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 195, Criminal Procedure Code, and, consequently held that the complaint under sections 193 to 196 of the Indian Penal Code has to fail. As regards points Nos. 2 and 3, the trial judge held that the charges under sections 276C and 277 of the Income tax Act have been proved. He further held that the offence under section 420 read with section 511, Indian Penal Code, has also been established. While awarding the sentence, the trial judge observed that though the minimum sentence prescribed under sections 276C and 277, Income-tax Act, is three months' rigorous imprisonment, since the accused is an aged man and the offence was committed in the year 1977 and he has not suppressed the income, but he has tried to show the income of Rs. 1,05,000 earned in 1975 as the income earned in 1978, thereby he has tried to evade tax, he felt that the minimum sentence prescribed under the Act is not necessary in this case. Ultimately, he convicted the accused under section 420 read with section 511, Indian Penal Code, and under sections 276C and 277, Income-tax Act, and sentenced him to undergo imprisonment till the rising of the court and to pay a fine of Rs. 1,000 in default to suffer rigor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, and the reasons given for such a lesser sentence are not correct and the same is not in accordance with law. He submitted that the lower court cannot dilute the provisions of a statute prescribing a minimum sentence of three months and six months rigorous imprisonment to one of imprisonment till the rising of the court on extraneous considerations. He submitted that the sentence imposed requires enhancement. With regard to the acquittal of the accused in respect of the offences under sections 193 to 196, Indian Penal Code, the learned Special Public Prosecutor for Income-tax Cases would submit that the finding of the learned trial judge that the Income-tax Officer is not a court within the meaning of section 195(1)(b), Criminal Procedure Code, and as such his complaint under sections 193 to 196, Indian Penal Code, has to fail is not sustainable as the trial magistrate relied on the decision in Associated, Industries v. First ITO [1982] 134 ITR 565 (Mad), rendered by a learned single judge of this court. He would submit that the question of interpretation of sections 136 and 131 of the Income-tax Act, 1961, was not at all considered in the light of the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes of section 196 of the Indian Penal Code.(45 of 1860), and every income-tax authority shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)." In the above-quoted decision, after referring to the amendment of section 136 of the Income-tax Act, it was observed (at pages 148 and 149): "On the face of the amended section, as extracted above, it goes without saying that a proceeding before the raiding authority shall be deemed to be a judicial proceeding and such authority shall be deemed to be a civil court for the purposes of section 195 of the Code of Criminal Procedure, 1973. 19. Even the question as to whether the procedural amendment can be made with retrospective effect had been considered by a learned judge of this court in Union of India v. Gopal Engineering Works [1988] 173 ITR 206, wherein it was held that the retrospective amendment of benevolent provision could not be in violation of article 20(1) of the Constitution of India and, therefore, the amendment of section 136 with retrospective effect from April 1, 1974, by the Finance Act, 1985, is valid. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 196, Indian Penal Code, on the ground that the complaint is not maintainable is liable to be set aside. Next we have to consider the question whether the sentence awarded is in accordance with the provisions of the Act and is a proper and legal one. The grievance of the appellant, namely, Fourth Income-tax Officer, City Circle III, Madras-6, who is the complainant before the lower court is that, in respect of the offence under section 276C of the Income-tax Act, the accused has been sentenced to imprisonment till the rising of the court and to pay a fine of Rs. 2,000 in default to suffer rigorous imprisonment for three months and similarly in respect of the offence under section 277 of the Income-tax Act (2 counts), he has been sentenced to undergo imprisonment till the rising of the court and to pay a fine of Rs. 1,000 in default to suffer rigorous imprisonment for three months. He would submit that, in respect of those offences, the statute prescribed a minimum sentence of three months and six months rigorous imprisonment respectively ; but instead of imposing the minimum sentence prescribed under the statute, the Magistrate is not justified in imposing the imprisonment till t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (52 of 1962) or the Assistant Collector of Central Excise under the Gold (Control) Act (45 of 1968) is not an agency empowered to make 'investigation' within the meaning of that expression as used in section 377(2) of the Criminal Procedure Code. Hence the appeal under section 377(2) for enhancement of sentence imposed for offence under those Acts, at the instance of such officer, would not be maintainable. (Asst. Collector of Central Excise v. R. Padmanabhan [1980] ELT 631 (Mad)), approved." The attention of this court was also drawn to the decision of the apex court in Eknath Shankarrao Mukkawar v. State of Maharashtra, AIR 1977 SC 1177 ; [1977] 2 SCJ 117, wherein it was held (at page 1180 of AIR 1977 SC) : "By section 3 of the Delhi Special Police Establishment Act, the Central Government may by notification in the Official Gazette specify the offences or class of offences which are to be investigated by the Delhi Special Police Establishment. It is only when such a notification is made by the Central Government that the Delhi Special Police Establishment is empowered to investigate the specified offences. Similarly, if in any other Central Act, not being the Code of Crimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al filed by the State of Tamil Nadu, the apex court observed as follows (at page 541 of AIR 1980 SC) : " We are, therefore, of the opinion that the sale of gingelly oil mixed with groundnut oil is punishable under section 16(1)(a)(i) read with section 2(1)(a) notwithstanding the fact that the seller had expressly stated at the time of sale that it was intended for external use only. We declare the legal position as indicated in the earlier paragraphs but we refrain from passing any further order in the appeal which we accordingly dismiss. " The decision in Bhagwan Das Motu Lal Navalani v. State of Maharashtra, [1987] 2 SCC 645, was also cited before this court. That was also a case under the Prevention of Food Adulteration Act, where the accused was liable for minimum sentence of six months rigorous imprisonment. The High Court convicted the accused reversing the order of acquittal and sentenced him to rigorous imprisonment for six months and a fine of Rs. 1,000. On appeal while confirming the conviction, the apex court observed (at page 646) : "...it was contended that the appellant had already deposited the amount of fine and also been in jail for some time during this period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in partner ship. The firm had ceased to do business with effect from December 31, 1972. But, in their returns filed on August 16, 1973, the date of cessation was given as December 31, 1969. The mistake was noticed on August 17, 1974, and it was corrected on August 26, 1974. In 1977, the Income-tax Officer filed complaints against the appellants that false statement had been made in the verification which was punishable under section 277 of the Income-tax Act, 1961, and section 420 of the Indian Penal Code. After perusing the averments in the complaint and supporting documents, the Magistrate came to the conclusion that the mention of December 31, 1972, as the date of cessation was a bona fide mistake and directed discharge of the accused. In revision, the High Court set aside the order of discharge on the ground that the Magistrate could not order discharge of the accused without recording evidence. The appellants preferred appeals to the Supreme Court on certificates granted by the High Court, and the Supreme Court admitted the appeals and granted stay of further proceedings. The Supreme Court held (headnote): " For more than a decade, the proceedings were pending in the trial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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