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TMI Blog2024 (3) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... ishra, Adv. Mr. Abhinav S. Raghuvanshi, AOR JUDGMENT K. V. Viswanathan, J. 1. Leave granted. 2. The present appeals call in question the correctness of the judgment of the High Court of Delhi at New Delhi dated 01.12.2020 in Writ Petition (Criminal) No. 200 of 2010 and Writ Petition (Criminal) No. 339 of 2010. These proceedings in the High Court, in turn, challenged the Order on charge dated 21.02.2006, as well as the charges framed on 28.02.2006, by the Special Judge, Delhi. While the charge against the appellant Puneet Sabharwal was under Section 109 IPC read with Section 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988, the charge against appellant R.C. Sabharwal was under Section 13(1)(e) read with 13(2) of the Prevention of Corruption Act, 1988. In substance, the charge was that appellant R.C. Sabharwal owned assets disproportionate to known sources of income and the appellant Puneet Sabharwal, son of R.C. Sabharwal, has abetted him in the commission of the said offence. The High Court, by the impugned order, dismissed the petitions. Aggrieved, the appellants are before us. Brief Facts : 3. On 23.08.1995, based on source information, the Anti- Corruption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lal Trust, M/s Morni Merchants and other firms in which the sole beneficiary was appellant Puneet Sabharwal, his son. It was further alleged that appellant R.C. Sabharwal dealt with all the financial matters of the said trusts/firms. (xii) It was concluded that a criminal case was made out against appellant R.C. Sabharwal and Puneet Sabharwal for offence punishable under 120-B IPC r/w 5(2) r/w 5(1)(e) of PC Act, 1947 corresponding to 13(2) r/w 13(1)(e) of PC Act, 1988. (xiii) Further, it was concluded that against R.C. Sabharwal a case under Section 5(2) r/w 5(1)(e) of PC Act, 1947 corresponding to 13(2) r/w 13(1)(e) of PC Act, 1988 was made out for possession of assets worth Rs. 2,05,63,341/- disproportionate to his known sources of income. Order on Charge : 5. On 21.02.2006, the Special Judge pronounced an order on charge after elaborately discussing the principles governing discharge. The learned Judge rendered the following findings in the order on charge: (i) The expression "known sources of income" can only have reference to the sources known to the prosecution; (ii) The prosecution cannot be expected to know the firms of the accused persons; (iii) The income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with 13(2) of the PC Act as he was found in possession of assets to the tune of Rs. 3,10,58,324/- as against his income and that of his family members income, to the tune of Rs. 1,23,18,091/- and expenditure of Rs. 18,23,108/- and he was found in possession of total assets of the tune of Rs. 2,05,63,341/, which were disproportionate to his known sources of income and which he could not satisfactorily account for and thereby you committed an offence, of abetment U/s 109 IPC read with 13(1)(e) and Sec. 13(2) of the PC Act, 1988 and within my cognizance. And hereby direct you to be tried by this court for the said offence." [emphasis supplied] Orders on the income tax front : 7. After the order of the Trial Court, both with regard to the order on charge and the framing of charges, and before the High Court disposed of the Petitions before it, leading up to the impugned order, certain developments took place on the income tax front. 8. The Income Tax Appellate Tribunal pronounced its judgment on 31.08.2007 in appeals and cross appeals filed by the assessees [which included the Appellants herein] and the department, with regard to the reopening of the assessments for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown to have the income necessary to purchase the said bonds. 12. The CIT (Appeals) had deleted these additions. In examining this issue and approving the said deletion, the Tribunal rendered the following findings: (i) The Appellant R.C. Sabharwal had no obligation to explain the source of investment of the founders of the trust being Smt. Morni Devi and Sh. Brij Lal. (ii) The Trust itself had been filing its return of income since it came into existence and had been assessed separately. No evidence was produced to show that the assessee was the benami owner of the trust. (iii) As regards the credits representing deposits of Special Bearer Bonds, relying upon Section 3 of the Special Bearer Bonds (Immunities and Exemptions) Act, 1981 it was held that no person who has subscribed to or has otherwise acquired Special Bearer Bonds shall be required to disclose, for any purpose whatsoever, the nature and source of acquisition of such bonds and that complete immunity has been granted to the bond holders. The presumption of the Assessing Officer that the bearer bonds were acquired by the trust was held to be not correct; (iv) Reference is made by the Tribunal to the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the Trial Court were placed before the High Court. It was contended that in view of the orders made by the Income Tax Appellate Tribunal in the reopening proceedings, which reopening was based on the search conducted by the CBI, there is absolutely no ground to proceed with the criminal trial. It was further argued, with respect to the appellant Puneet Sabharwal, that he was a minor for a large portion of the check period and therefore could not be made an accused. 16. Repelling the contentions, the High Court held as follows: (i) Simply because for a large part of the period of investigation, the appellant Puneet Sabharwal was a minor, would not by itself be a reason to disregard the fact that at least for the seven years of the investigation period he was a major; (ii) Under Section 3(2) of Special Bearer Bonds (Immunities and Exemptions) Act, 1981, the immunities under the Act are inapplicable to offences committed under the Prevention of Corruption Act or similar offences; (iii) Prosecution has sought to rely upon statements of several witnesses; (iv) In State of Karnataka v. Selvi J. Jayalalitha & Ors. (2017) 6 SCC 263, this Court had held that income tax as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal order of 31.08.2007. The contentions were as follows: (i) The order of Income Tax Appellate Tribunal categorically held that income arising from properties of various entities were wrongly added to the income of the appellant; (ii) The appellant was not the owner of those entities and consequently the properties and money held by those entities could not be held to be under the ownership of the appellant R.C. Sabharwal; (iii) The reassessment for thirteen years was carried out on the complaint of CBI itself; (iv) The courts below misapplied the judgment of this Court in Selvi J. Jayalalitha (supra) and failed to notice the distinguishing feature namely that, in the present case, it was not a case of reliance on income tax return but the returns which were subjected to an inquisition. (v) The High Court exercising power under Article 226, 227 of the Constitution of India and Section 482 of Cr.P.C. has power to look into material placed by the accused in arriving at its conclusion for discharge. 20. For both the appellants, reliance was placed on Radheshyam Kejriwal v. State of West Bengal & Anr., (2011) 3 SCC 581, Ashoo Surendranath Tewari v. CBI & An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of the Income Tax Authorities are not binding on a criminal court to readily accept the legality or lawfulness of the source of income. (ix) The power to quash a proceeding and nip the same in the bud has to be exercised with great caution and circumspection. So contending, the learned ASG prayed that no case has been made out to set aside the order on charge and the charges and the appeals deserve to be dismissed. Question : 22. Under the above circumstances, the question that arises for consideration is: Whether the courts below were justified in refusing to quash and set aside the order on charge dated 21.02.2006 and the charges as framed on 28.02.2006? Analysis : - 23. Having heard learned counsels for the parties and perused the records, we are of the opinion that the appellants have not made out a case for interference with the order on charge dated 21.02.2006 and the order of framing charge dated 28.02.2006. We say so for the following reasons. 24. The case of the prosecution is that the appellant R.C. Sabharwal, the father of appellant Puneet Sabharwal, owned assets to the tune of Rs. 2,05,63,341/- and that this was disproportionate to his known sources o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein had sought to place reliance on income tax returns and income tax assessment orders. In that context the Court had concluded that income tax returns and orders are not by themselves conclusive proof that they are lawful sources of income under Section 13 of the Prevention of Corruption Act and that independent evidence to corroborate the same would be required. The Court held: "188. In Anantharam Veerasinghaiah & Co. v. CIT, 1980 Supp SCC 13 : 1980 SCC (Tax) 274] , the return filed by the petitioner assessee, who was an Abkari contractor, was not accepted by the ITO as amongst others, excess expenditure over the disclosed available cash was noticeable and further several deposits had been made in the names of others. The assessee's explanation that the excess expenditure was met from the amounts deposited with him by other shopkeepers but were not entered in his book, was not accepted and penalty proceedings were taken out against him holding that the items of cash deficit and cash deposit represented concealed income resulting from suppressed yield and low selling rates mentioned in the books. The Appellate Tribunal, however, allowed the appeal of the assessee and set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 43 of the Evidence Act, 1872, we are of the comprehension that those need not be expatiated in details. Suffice it to state that even assuming that the income tax returns, the proceedings in connection therewith and the decisions rendered therein are relevant and admissible in evidence as well, nothing as such, turns thereon definitively as those do not furnish any guarantee or authentication of the lawfulness of the source(s) of income, the pith of the charge levelled against the respondents. It is the plea of the defence that the income tax returns and orders, while proved by the accused persons had not been objected to by the prosecution and further it (prosecution) as well had called in evidence the income tax returns/orders and thus, it cannot object to the admissibility of the records produced by the defence. To reiterate, even if such returns and orders are admissible, the probative value would depend on the nature of the information furnished, the findings recorded in the orders and having a bearing on the charge levelled. In any view of the matter, however, such returns and orders would not ipso facto either conclusively prove or disprove the charge and can at best be pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the matters were pending before the authorities concerned and all the payments were made by cheques, and thus the allegation levelled against them were baseless. It was observed that the minuteness of the details furnished by the parties and the income tax returns and assessment orders, sale deeds, etc. were necessary to be carefully looked into and analysed only by an independent agency with the assistance of chartered accountants and other accredited engineers and valuers of the property. It was observed that the Income Tax Department was concerned only with the source of income and whether the tax was paid or not and, therefore, only an independent agency or CBI could, on court direction, determine the question of disproportionate assets. CBI was thus directed to conduct a preliminary enquiry into the assets of all the respondents and to take further action in the matter after scrutinising as to whether a case was made out or not. 201. This decision is to emphasise that submission of income tax returns and the assessments orders passed thereon, would not constitute a foolproof defence against a charge of acquisition of assets disproportionate to the known lawful sources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone by the income tax records which were produced by the accused persons. However, the Trial Court had independently examined the issue and had not mechanically gone by the income tax records. It was while commenting on this that this Court said an inquisition ought to have been made on the material. (ii) Secondly, this Court in J. Jayalalitha (supra), before arriving at a conclusion regarding the probative value of the income tax returns, has examined in detail the previous decisions of this Court where there were not only assessment orders but also decisions of the Appellate Tribunal and the High Court. It is only after considering this aspect that the Court laid down that the Income Tax Returns and Orders passed in IT Proceedings are not conclusive proof. (iii) Thirdly, this Court has categorically held that while income tax returns/orders may be admissible as evidence, the probative value of the same would depend on the nature of the information furnished and findings recorded in the order, and would not ipso facto either conclusively prove or disprove a charge. (iv) Fourthly, it is important to note that the decision in J. Jayalalitha (supra) was in a matter involving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranspired that the Adjudicating Officer found that no documentary evidence was available to prove the foundational factum of the Petitioner therein entering into the alleged transactions which fell foul of the Act and thereafter directed that the proceedings be dropped. The question which fell for the consideration before this Court was whether the result of this adjudication proceeding would lead to exoneration of the Petitioner in the criminal prosecution. 36. In this background, this Court noticed that the adjudication proceedings under the Foreign Exchange Regulation Act, 1973 involved an adjudication on whether a person had committed a contravention of any provisions of the Act. It is in this context, that the Court went on to hold that where the allegation in an adjudication proceeding and proceeding for prosecution is identical and the exoneration in the former is on merits i.e. that there is no contravention of the provisions of the Act, then the trial of person concerned would be an abuse of process of the Court. 37. The decision in Radheyshyam (supra) was in a fact situation where the adjudicatory and criminal proceedings were being commenced by the same authority in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Indian Penal Code where the sanctioning authority had, while denying sanction, recorded on merits that there was no evidence to support the prosecution case. In that context, the Court was of the opinion that a criminal proceeding could not be continued. However, in the present case, the charges were framed under the Prevention of Corruption Act, while the appellants seek to rely upon findings recorded by authorities under the Income Tax Act. The scope of adjudication in both the proceedings are markedly different and therefore the findings in the latter cannot be a ground for discharge of the Accused Persons in the former. The proceedings under the Income Tax Act and its evidentiary value remains a matter of trial and they cannot be considered as conclusive proof for discharge of an accused person. 41. The appellants herein have further sought to place reliance on J. Sekar (supra) to argue that the letter of the Income-Tax Department was relied upon to quash prosecution under the Prevention of Money Laundering Act, 2002. In our opinion, this decision is again inapplicable to the present case. In J. Sekar (supra), the criminal proceedings had arisen based upon the informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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