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1999(1) Supreme 16
Supreme Court of India
(From Punjab & Haryana High Court)
G.B. Pattanaik & M.B. Shah, JJ.
Prem Dass -Appellant
versus
Income Tax Officer -Respondent
Criminal Appeal No. 518 of 1992
Decided on 9-2-1999
Counsel for the Parties :
For the Appellant : V. Shekhar, Advocate.
For the Respondent : K.N. Shukla, Sr. Advocate, Rajiv Nanda, B.K. Prasad and P. Parmeswaran, Advocates.
Held : The plentitude of power available to the court hearing an appeal against the acquittal is the same as that available to a court hearing an appeal against an order of conviction. But at the same time it is well settled by a catena of decisions of this court that the court will not interfere with an order of acquittal solely because different plausible view may arise on the evidence and the court thinks that the view taken by the trial Court of the evidence is not correct. In other words, the court must come to the conclusion that the view taken by the trial Judge while acquitting cannot be the view of a reasonable man on the materials on record. It is also well settled that the court of appeal must examine the reasons on which an order of acquittal is based and must reach the conclusion that the view taken by the acquitting Judge was clearly unreasonable. It has also been held by this court that if the evaluation of the evidence made by the courts below while recording an order of acquittal does not suffer from any illegality or manifest error and the grounds on which the said order of acquittal is based unreasonable, then the High Court should not disturb the said order of acquittal. (Para 4)
(ii) Income Tax Act, 1961-Sections 276C/277-Offences and prosecutions - Wilful attempt to evade tax/false statement in verification-Charge that appellant assessee filed incorrect returns of income from his transportation business and intentionally withheld books of accounts seized during search u/s 132 and made wrong verification statements filed in support of return - Conviction by trial Court-Acquittal by appellate Court on basis of finding that appeal against assessment order partly allowed whereby tax liability stood reduced substantially and nothing on record to pin point veracity or falsity of entries in books of account-High Court acquittal order merely relying upon presumption arising u/s 132(4A)-Not sustainable-Positive act on part of accused required to be proved to bring home charge u/s 276C-Mens rea required to be established to attract Section 277-Ingredients of offences u/ss 276C and 277 not established by prosecution beyond doubt-Acquittal order-Sustained.
Held : To attract the provisions of Section 276C of the Income Tax Act the prosecution has to establish that the accused wilfully attempted in any manner to evade any tax, penalty or interest chargeable or imposable under the Act. To attract the provisions of Section 277 the prosecution is required to establish that the accused made a statement in any verification under the Act which the either knows or believes to be false, or does not believe to be true. (Paras 4 & 5)
Willful attempt to evade any tax, penalty or interest chargeable or imposable under the Act under Section 276C is a positive act on the part of the accused which is required to be proved to bring home the charge against the accused. Similarly a statement made by a person in any verification under the Act can be an offence under Section 277 if the person making the same either knew or believe the same to be false or does not believe to be true. Necessary mensrea, therefore, is required to be established by the prosecution to attract the provisions of Section 277. We see nothing in Section 132(4)(A) which would establish the ingredients of aforesaid two criminal offence contemplated under Sections 276C and 277 of the Indian Income Tax Act. (Para 8)
On examining the Judgment of the learned Sessions Judge and the grounds on which the said learned Sessions Judge recorded an order of acquittal, as reflected in paragraphs 9, 10 and 11 of the appellate judgment, and the impugned Judgment of the High Court interfering with the said judgment of the Sessions Judge we have no hesitation to come to the conclusion that the High Court has not considered the reasons and grounds advanced by the learned Sessions Judge while recording an order of acquittal and by merely relying upon the presumption arising out of Section 132(4A) of Income Tax Act, reversed the order of acquittal without reversing the findings arrived at by the Sessions Judge on the evidence on record. The conclusion of the learned Sessions Judge after appreciating the evidence led by the prosecution and after perusing the appellate order of the Commissioner of Income Tax (Appeals) dated 12.3.87, have not been given due consideration by the High Court and the High Court has merely gone by the statutory presumption arising out of Section 132(4A) of the Act. We fail to appreciate how applying the presumption under Section 132(4)(A) the ingredients of the offence under Sections 276C and 277 can be held to have been established as has been held by the High Court. (Paras 4 & 7)
The Tribunal while interfering with the penalty imposed under Section 271(1)(C) of the Act came to a positive finding that there is no act of concealment on the part of the assessee and he had returned the income on estimate basis. The Tribunal, further found that it is a case purely on difference of opinion as to the estimates and not a case of concealment of income or even furnishing of inaccurate particulars of income. In the aforesaid premises, the High Court was totally in error in interfering with the order of acquittal passed by the learned Sessions Judge by an elaborate and well reasoned judgment. We have no hesitation to come to the conclusion that the ingredients of offence under Sections 276C and 277 of the Income Tax Act have not been established by the prosecution beyond reasonable doubt, and therefore, the appellant cannot be convicted of the offence under the said Sections. (Paras 8 & 9)
(iii) Income Tax Act, 1961-Section 279(1A)-Bar to prosecutions-In case penalty reduced or waived - Whether provisions of Section 279(1A) applies to a case wherein Commissioner (Appeals)/ Tribunal reduces/waives penalty?-Yes.
Held : Mr. Shukla, no doubt has indicated that the said provision will have no application as the penalty imposed has not been reduced or waived by an order under Section 273A. We do not agree with the aforesaid literal interpretation of the provisions of Section 279(1A) of the Act, when we find that the Commissioner of Income Tax (Appeal) has reduced the penalty. Further the tribunal has totally set aside the order, imposing penalty could not have been lost sight of by the High Court while considering the question whether the order of acquittal passed by the Sessions Judge has to be interfered with or not, particularly, when the gravamen of indictment relates to filing of incorrect return and making wrong verification of the statements filed in support of the return, resulting in initiation of penalty proceedings. Bearing in mind the legislative intent engrafted under Section 279(1A) of the Income Tax Act and the conclusion of the learned Sessions Judge, on appreciation of evidence not having been reversed by the High Court and the grounds of acquittal passed by the Sessions Judge not having been examined by the High Court, we have no hesitation to come to the conclusion that the High Court was not justified in interfering with an order of acquittal. (Para 10)
Judgment
Pattanaik, J.-The appellant was convicted under Section 276C of the Income Tax Act, on a complaint being filed that he had incorrectly made a verification on the income tax return for the Assessment Year 1980-81. For his such conviction, the learned Chief Judicial Magistrate, Faridabad, sentenced him to undergo imprisonment for six months and to pay a fine of Rs. 1000/-, in default, to further undergo imprisonment for a period of three months. He was also convicted under Section 277 of the Income Tax Act and sentenced to undergo R.I. for six months but the sentences awarded had been ordered to run concurrently. The appellant preferred an appeal to the Sessions Judge, who by Judgment dated 7th of October, 1988, came to the conclusion that the accused-appellant is entitled to benefit of doubt and accordingly he acquitted him of the charges levelled against him. The department moved the High Court against the aforesaid acquittal passed by the learned Sessions Judge and the High Court by the impugned Judgment, allowed the appeal and set aside the Judgment of acquittal passed by the learned Sessions Judge and affirmed the conviction and sentence of the appellant passed by the learned Chief Judicial Magistrate. Learned Sessions Judge, after analysing the charges and evidence led by the prosecution in support of the said charges, came to the conclusion that the gravamen of indictment against the accused lay in the fact that he had filed an incorrect returns of income from his transportation business and intentionally withheld books of account seized during search made under Section 132 of the Income Tax Act and had made wrong verification of the statements filed in support of the return. But, according to the learned Sessions Judge, the charges were not only vague but also the prosecution evidence was totally insufficient to infer the criminal intent of the accused-assessee and, there was nothing on record to pinpoint the identity, veracity or falsity of entries in the books of account on which the entire prosecution case was sought to be founded upon. The learned Sessions Judge also came to the conclusion that no evidence whatsoever had been examined by the prosecution to lend support to the opinion formed by the Income Tax Officer in the assessment proceedings. The Sessions Judge also took into account the fact that the appeal filed by the accused-assessee in respect of the relevant assessment year was partly allowed by the Commissioner of Income Tax (Appeal), Chandigarh by Order dated 12.3.1987 and the said appellate authority had recorded that the income estimated by the Income Tax Officer was not based on reasonable data and, therefore a direction was issued to the said Income Tax Officer to work out the commission at 8 per cent for all assessment years instead of 10 per cent estimated by him and on account of such order of the appellate authority, the tax liability of the assessee stood substantially reduced and this itself demonstrates that no criminal liability could be fastened on the assessee. With these findings the Sessions Judge came to the conclusion that the prosecution is held to have failed to bring the guilt home to the accused beyond reasonable manner of doubt. The High Court however, in the impugned judgment re-appraised the evidence of Income Tax Officer P.W. 3 and in view of presumption available under Section 132(4A) of the Income Tax Act, reversed the order of acquittal on a finding that the learned Sessions Judge was in error to hold that the prosecution case has not been established beyond reasonable doubt.
2. Mr. Salve, learned Senior Counsel, appearing for the appellant contended that though the powers of the High Court while hearing an appeal against the acquittal are as wide and comprehensive as in an appeal against a conviction, but the High Court is required under the law to examine the reasons on which the order of acquittal was based and would be justified in interfering with an order of
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