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TMI Blog2019 (12) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... n Shetty for Smt.Latha S. Shetty in Criminal Revision Petition No.969/2019 and Sri.G.Rajagopalan, Additional Solicitor General, along with Sri. Jeevan J. Neeralgi, Senior Standing Counsel for respondent. 3. The factual matrix of the case of the prosecution is that Deputy Director of Income Tax Investigation, Bengaluru, lodged a complaint against the accused persons for having committed an offence punishable under Sections 276 (C)(1), 277, 278 of the Income Tax Act and also under Sections 193, 199 and 120B of Indian Penal Code. In the said complaint it is alleged that there is escapement of the income tax in the middle of the financial year and thereby they have committed the alleged offence. Earlier all the accused persons filed a criminal petition before this Court for quashing, but the same has been withdrawn with liberty to file an application for discharge. Accordingly, application under Section 245(2) of Cr.P.C. was filed and to the said application, the respondent also contested by filing his objections. The learned Special Judge after hearing both the parties dismissed the application. Challenging the same, the petitioners-accused are before this Court. 4. It is the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances it is not mandatory that one should mechanically attribute to the said expression, the meaning assigned to it in the clause. Where the context does not permit or where the context requires otherwise, the meaning assigned to it in the said definition need not be applied. In order to substantiate his contention he relied upon the decision in the case of Printers (Mysore) Ltd. And another v. Assistant Commercial Tax Officer and Others reported in (1994) 2 SCC 434. It is his further submission that a definition clause does not necessarily in any statute apply in all possible contexts in which the word which is defined may be found therein. The meaning has to be given as assigned to it therein, unless the context otherwise requires. In order to substantiate his contention he relied upon the decision in the case of K.Balakrishna Rao and Others v. Haji Abdulla Sait and Others reported in (1980) 1 SCC 321. It is his further submission that if the above ratio is looked into the power has to be seen how the Principal Director of Income Tax is not contemplated under Section 279 of the Act and how it has authorized him to give the sanction is a fishy. It is his further contention that gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till then the initiation of the proceedings as against the petitioners-accused is not sustainable in law. In order to substantiate his contention he relied upon the decision in the case of K.C.Builders and Another v. The Assistant Commissioner of Income Tax reported in (2004) 2 SCC 731. On these grounds he prayed to allow the petition and to set aside the impugned order and discharge the accused. 7. The learned Sr. Counsel Sri.A.Shankar for Sri.Shyam Sundar M.S. appearing on behalf of petitioner-accused No.5 by reiterating the arguments advanced by the learned Senior Counsel Sri.B.V.Acharya submitted that no notice is issued to set the law into motion as contemplated under Section 153(A) of the Act and as such the proceedings initiated are premature. By referring to Section 55 of the Act, Principal Director is not having any authority to issue sanction. Section 116 of the Act gives who are all the persons appointed and having a control and called as the Income Tax Authorities. It is his further submission that the Principal Director of Income Tax being not competent person and acted contrary to the provisions of Section 279(1) of the Act. It is his further submission that in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that the power was not intended to be given to the Principal Director of Income Tax. The said Notification is observed and it is a omnibus Notification. On these grounds he prayed to allow the petition and to set aside the impugned order. 9. By supporting the arguments of the learned Senior Counsel, Sri.Shashikiran Shetty, learned Senior Counsel submitted that the written argument filed by the petitioner-accused No.4 has not been considered and the sanction order has been challenged. It is his further submission that sanction has been challenged in the writ petition before this Court and the stay has been granted. However he submitted that subsequently the Court has made a clarification to the effect that the stay is applicable only to the said case and not to other cases. It is his further submission that the Court below has not followed the procedure contemplated under Sections 340 and 195 of Cr.P.C. so as to bring home the guilt of the accused as contemplated therein. In the absence of such material the cognizance taken and the proceedings held are not maintainable and the same are liable to be set aside. On these grounds he prayed to allow the petition and to set aside th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated under Section 197 of Cr.P.C. is not applicable and the said ground urged in this behalf will also not come to the aid of the accused. It is his further submission that Section 2(16) of the Act defines the Commissioner. It includes a person appointed to be a Commissioner of Income Tax or a Director of Income Tax or a Principal Commissioner of Income Tax or a Principal Director of Income Tax. 11. It is his further submission that Section 116 of the Act gives the authorities of Income Tax and classes of Income Tax Authorities for the purpose of the said Act. As per Section 116(ba) of the Act, the Principal Directors of Income Tax or Principal Commissioners of Income Tax, Section 116(c) also says Directors of Income Tax or Commissioners of Income Tax or Commissioners of Income Tax (Appeals). In that context, if the scheme of the Act and hierarchy of the officials is taken into consideration, Act makes it clear that it covers the Principal Directors of Income Tax who is also having an authority. It is only distribution of work and sanction given by virtue of exercising the power is justifiable and the Director of Income Tax has rightly given the sanction. In that light, he submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en challenged before the Court but not finalised. In that light also the said contentions are not sustainable in law. On these grounds he prayed to dismiss the petitions. 14. I have carefully and cautiously gone through the submissions made by the learned counsel appearing for the parties and I have given my thoughtful consideration to the Citations quoted by the learned counsel appearing for the parties. 15. The first and foremost contention which was taken up by the learned Senior counsel for the parties are that when the search took place on 2.8.2017 as per Section 4 of the Income Tax Act, it was in the middle of the previous year and the assessment will be made from 1.4.2017 to 31.3.2018 and when the search took place, the total income for the entire previous year having not been computed, there is application to quantify the tax as per the rate fixed by the Finance Act and only after concluding the evasion of the tax as contended in the complaint as per Section 276(C)(1) of Income Tax Act arise. But in the instance case on hand without the said adjudicatory proceedings in the criminal proceedings having been initiated and as such the complaint itself is not maintainable in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution; (v) Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases. 39. In our opinion, therefore, the yardstick would be to judge as to whether the allegation in the adjudication proceedings as well as the proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind by the sanctioning authority and he has not gone through the records and he has mechanically issued the sanction order. The only attach which has been made is that the sanction order dated 28.5.2018 has been signed by Principal Director of Income Tax under Section 279(2) of the Act, there is no power to pass such sanction order under the said Section and in that light the sanction order is no sanction order and the entire proceedings are going to vitiate. It is further contended that if the sanction order is not issued by a Competent Authority, in that event the Court cannot take cognizance of the offence. In this behalf they have relied upon the decision in the case of State of Karnataka through CBI v. C.Nagaraj Swamy quoted supra at paragraph No.25 it has been observed as under: 25. In view of the aforementioned authoritative pronouncements, it is not possible to agree with the decision of the High Court that the trial court was bound to record either a judgment of conviction or acquittal, even after holding that the sanction was not valid. We have noticed hereinbefore that even if a judgment of conviction or acquittal was recorded, the same would not make any distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by either lodging an FIR or filing a complaint in court. The Magistrate can take cognizance of the offence under Section 190(1)(b) CrPC in the former case if the police, after investigation, submits a charge-sheet and in the latter case under Section 190(1)(c) CrPC. In order to protect persons from unnecessary prosecutions and consequent harassment that a provision for sanction is made. The sanction to prosecute is undoubtedly an important matter and it constitutes a condition precedent to the institution of the prosecution. For a valid sanction, it must be proved that the sanction was given in respect of the facts constituting the offence charged. It is desirable that the facts should be referred to on the face of the sanction, but this is not essential. If the facts constituting the offence charged are not shown on the face of the sanction, the prosecution must, in the course of the trial, prove by extraneous evidence that those facts were placed before the sanctioning authority and the authority after applying his mind to the relevant facts had accorded the sanction. The authority giving the sanction should prima facie consider the evidence and all other attending circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture of goods for sale) while the said word "goods" occurring for the fourth time (i.e., in the latter half) cannot obviously refer to raw material. It refers to manufactured "goods", i.e., goods manufactured by such purchasing dealer - in this case, newspapers. If we attach the defined meaning to "goods" in the second half of Section 8(3)(b), it would place the newspapers in a more unfavourable position than they were prior to the amendment of the definition in Section 2(d). It should also be remembered that Section 2 which defines certain expressions occurring in the Act opens with the words: "In this Act, unless the context otherwise requires". This shows that wherever the word "goods" occurs in the enactment, it is not mandatory that one should mechanically attribute to the said expression the meaning assigned to it in clause (d). Ordinarily, that is so. But where the context does not permit or where the context requires otherwise, the meaning assigned to it in the said definition need not be applied. If we keep the above consideration in mind, it would be evident that the expression "goods" occurring in the second half of Section 8(3)(b) cannot be taken to exclude newspap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o lease it and therefore it was not to be let. We are of the view that the words "any building . . . let . . .", also refer to a building which was the subject-matter of a lease which has been terminated by the issue of a notice under Section 106 of the Transfer of Property Act and which has continued to remain in occupation of the tenant. This view receives support from the definition of the expression "tenant" in Section 2(8) of the principal Act which includes a person continuing in possession after the termination of the tenancy in his favour. If the view adopted by the Division Bench is accepted then it would not be necessary for a landlord to issue a notice of vacancy under Section 3 of the principal Act when a building becomes vacant by the termination of a tenancy or by the eviction of the tenant when he wants to occupy it himself. In law he cannot do so. He would be entitled to occupy it himself when he is permitted to do so under Section 3(3) or any of the provisions of Section 3-A of the principal Act. This also illustrates that the view of the Division Bench is erroneous. We, therefore, hold that the building in question was a "building" within the meaning of that expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in enacting Section 20(1) was to confer a power on the authorities specified therein which power had to be exercised in the manner provided and not otherwise. I am not having any difference of opinion with regard to the ratio laid down in the said decisions. 29. It is the contention of the respondent that Principal Director of Income Tax has been authorized by Notification dated 13.11.2014 and he can exercise the power specified in column (4) of the said Schedule and perform the functions relating thereto in respect of the territorial areas of whole of India. It is not in dispute that the said Notification issued has been challenged before the Court, but the matter is pending for consideration. It is the contention of the learned Senior counsels for the petitioners that the said Notification is not in consonance with the earlier Notifications and it has been brought to the notice of this Court that earlier Notifications have specifically mentioned the power and functions of each of the Officers with reference to Section under which power has been given and in that light the Notification dated 13.11.2014 is not in conformity with the earlier Notifications. 30. Merely because sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zes a person named therein, he is alone entitled to issue the sanction order and in that context the said Section 279 of the Act should be given the meaning assigned therein. But admittedly, the power has been derived to issue the sanction under the Notification dated 13.11.2014. 33. For the purpose of brevity, I quote Section 279 of the Act, which reads as under: Prosecution to be at the instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 279(1): A person shall not be proceeded against for an offence under section 275A, section 275B, section 276, section 276A, section 276B, section 276BB, section 276C section 276CC, section 276D, section 277, section 277A or section 278 except with the previous sanction of the Principal Commissioner or Commissioner or Commissioner (Appeals) or the appropriate authority: Provided that the Principal Chief Commissioner or Chief Commissioner, as the case may be, Principal Director General or Director General may issue such instructions or directions to the aforesaid income-tax authorities as he may deem fit for institution of proceedings under this sub- section. Explanation.-For the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reted. "Law" has been defined and it includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India, the force of Law. When the said Notification has been challenged and not yet finalized with regard to legality or otherwise, in that light, Notification dated 13.11.2014 as per Article 13 of the Constitution of India is having a force of law and by virtue of the said authority, if the sanction has been issued by the Principal Director of Commissioner, then under such circumstances, it cannot be held that he is not having any authority to issue the sanction order. While seeing the intention and otherwise of the enactment, subsequent notification, amendments, ordinance and other aspects have to be seen conjointly. They cannot be read independently. In that light, the contention taken up by the petitioners is not having any force. As per the recent Act also some other authorities have also been included in the said Section. In that light, it is not the Principal Commissioner alone who is having the authority. By virtue of Notification the Principal Director of Income Tax will also act as an authority as observed above. 36. I am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings meaning thereby whether the same could and should have been raised at the trial stage instead of being urged in appeal or revision. 38. This fact also has not been seriously disputed by the learned Senior Counsel that subsequent sanction can also be obtained to prosecute the accused, if there is no proper sanction. Even the similar issue came up before the Hon'ble Apex Court in the case of Manju Surana v. Sunil Arora and Others reported in (2018) 5 SCC 557. But now the matter has been referred to Larger Bench. In this behalf the sanction is necessary or not, is a matter to be considered in detail. 39. Though it is contended by the learned Senior counsel that the sanction is necessary under Section 195 of Cr.P.C. to prosecute a public servant, I have carefully and cautiously gone through the provisions of law. Admittedly, all the accused persons have been prosecuted under Section 120B of IPC for conspiracy and as per Section 132 of the Act the statement given by the accused is considered to be evidence and it is reliable. 40. Even on close reading of Section 197 of Cr.P.C. sanction is very much necessary if a public servant has done any act in discharge of his official d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " court" is not defined either by the Code of Criminal Procedure or the Indian Penal Code, though " court justice" is defined by section 20 of the latter Code as denoting a judge who is empowered by law to act judicially alone, or a body of judges which is empowered by law to Act judicially as a body, when such judge or body of judges is acting judicially. 41. What are the factors which are to be considered at the time of discharge is one more aspect which the Court has to look into. It is well proposed proposition of law that at the time of hearing the discharge application, the Court has undoubted power to shift and weigh the evidence for a limited purpose for finding out as to whether there is a prima facie case as against the accused or not. But the test to determine a prima facie case would naturally depend upon the facts of each case and no straight jacket formula or universal law has been made in this behalf. It is the specific case of the prosecution that the accused has evaded the tax by concealing the huge amount and at the time of raid it was noticed that there was escapement of the income tax. Even as could be seen from the statement given by each of the accused, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so on. This however does not mean that the Judge should make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial. 42. This proposition of law has been reiterated in Larger Bench in the case of Asim Shariff v. National Investigation Agency reported in (2019) 7 SCC 148. At paragraph No.18, it has been read as under: 18. Taking note of the exposition of law on the subject laid down by this Court, it is settled that the Judge while considering the question of framing charge under Section 227 CrPC in sessions cases (which is akin to Section 239 CrPC pertaining to warrant cases) has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out; where the material placed before the court discloses grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing the charge; by and large if two views are possible and one of them giving rise to suspicion only, as distinguished from grave suspicion against the accused, the trial Judge will be justified in discharging him. It is thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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