IMPORTANT POINT
In respect of the offences relating to evasion of Income Tax, it is the appropriate Income Tax authorities who are to initiate actions, to the exclusion of others and it will be an abuse of the process of law if police is allowed to undertake suo motu, contrary to the provisions of law, investigation in respect of offences, regarding prosecution for which special provisions are there, simply by incorporating Sec. 420 I.P.C.

Headnote:Indian Penal Code, 1860 - Sections 120B/ 420/468/471 - Income Tax Act, 1961 - Sections 136,227/228,276 to 279 - Prosecution for submission of income tax return by petitioners allegedly supported by false and fabricated statements and materials - C.B.I. suo motu recorded F.I.R and started investigation Maintainability challenged - Whether in respect of offences relating to evasion of Income Tax, it was proper to initiate prosecution for offences under Code? - (No, in respect touch allegations, it is appropriate Income Tax authorities who were to initiate actions, to exclusion of others - Criminal prosecution will be an abuse of process of law) (Criminal Procedure Code, 1973 - Sections 195 & 482).
       Held: From the averments contained in the F.I.R. it is evident, apparent and transparent that substantially the allegation on the basis of which the investigation has been started is that the petitioners in collusion and conspiracy with others evaded payment of proper Income Tax and also submitted Income Tax returns based on false statements and forged and fabricated materials. The basic offences, if any, being under the Income Tax Act the requirement regarding sanction for prosecution and the bar of lack of authority on the part of the police to investigate such offences in view of the specific provisions of the Income Tax Act cannot be circumvented by inclusion of some other ancillary offences under the Indian Penal Code which are only components of, or rather only incidental to, or instrumental in the commission of the basic offences under the Income Tax Act or which are closely linked up with such offences and which have no separate consequences other than what are sought to be prevented by enacting specific penal provisions in the Income Tax Act, namely, evasion of tax and steps in that direction. In that view of the matter also the F.I.R. cannot be sustained simply because offences punishable under certain section of the Indian Penal Code, such as, Sections 420, 468, 471 read with Section 120B have been included in the F.I.R. along with the main offences punishable under the Income Tax Act which, under law, the police cannot investigate on the basis of their own authority. (Para 4)
       That for any offence punishable under Section 277 or Section 278. Income Tax Act prosecution cannot be launched except with the previous sanction of the appropriate authority mentioned in Section 279 of the Income Tax Act. Obviously no complaint has been filed for the said offences against the petitioners with any such previous sanction and instead, the police or for that matter the C.B.I. has suo motu recorded an F.I.R. and started investigation in respect of those offences by including therewith certain other offences punishable under the Indian Penal Code although the offences under Sections 277 and 278 of the Income Tax Act arc non-cognizable in view of the Section 279A of the said Act. Again, in respect of the offences punishable under the Indian Penal Code as mentioned in the F.I.R, the provisions of Section 195 (1)(b) are directly attracted so far as Section 468, Section 471 and Section 120B (conspiracy) are concerned and therefore police investigation in respect of those offences in this case is a mis-directed and unauthorized action on the part of the C.B.I. in view of the provisions of the said Section 195 Criminal Procedure Code read with Section 136 of the Income Tax Act. For our consideration there now remains only Section 420 I.P.C. which has been included in the F.I.R. along with the other sections discussed earlier. Even if it is accepted that Section 420 I.P.C. is prima facie attracted in this case on the assumption that the petitioners committed the offence of cheating .and thereby dishonestly induced the concerned Income Tax officer to issue Income Tax Assessment Certificate, this is an offence which, in view of the allegations in the F.I.R. is closely linked up and associated with and is wholly based on the other offences alleged in the F.I.R. for which prosecution can be launched or initiated only at the instance of the appropriate income tax authorities and not at the instance of the police. Having regard to the objects of the different provisions of the Income. Tax Act that in respect of the offences relating to 'evasion of Income Tax it is the appropriate Income Tax authorities who are to initiate actions, to the exclusion of others, in the manner provided by law fort the purpose, it will be an abuse of the process of law and will frustrate the very purpose of engrafting the different provisions of law as discussed above. restricting the right to initiate prosecution in respect of offences under the Income Tax Act or relating to Income Tax assessment proceedings to certain authorities only, if the police is allowed to undertake suo motu, contrary to the provisions of law, investigation in respect of offences regarding the prosecution for which special provisions are there, simply by incorporating Section 420 I.P.C. in the F.I.R. where such offence is closely linked up and associated with and is wholly based on those very offences which in view of the special provisions of law the police is not empowered to investigate. The salutary provisions of Sections 279, 279A, 136 of the Income Tax Act and Section 195 of the Code of Criminal Procedure which the Legislature in its wisdom thought it fit to enact for a wholesome purpose, will virtually stand scrapped from the statute books if the police is granted the liberty to undertake an investigation suo motu in respect of the very same matters squarely coming within the purview of the said provisions of law, by simply superadding thereto a label of Section 420 I.P.C. I have no hesitation to hold that this is plainly not permissible. (Para 7)
       Further Held: In the present case, as I have elaborately discussed, the police, in view of the specific provisions of law, are not entitled to investigate a case, of this nature. If the petitioners have evaded proper assessment of income tax payable by them and if for doing so they have made false declarations and have forged and fabricated materials and used the same for hoodwinking the income' tax authorities, in that event the income tax authorities are themselves competent and required to take appropriate action in the matter under the provisions of law, not only for prosecuting the offender but also for re-assessment of income under Section 147 of the Income Tax Act. But the income tax authorities have not considered it necessary to do anything of the sort in this matter, at any rate there is no report of any such action on the part of the income tax authorities. Be that as it may, the investigation in the matter by the police or the C.B.I. being distinctly unauthorized in law, it is incumbent upon this court to quash the same in exercise if its inherent power. (para 8)
       Result: Petition allowed.

JUDGMENT

Gitesh Ranjan Bhattacharjee, J. - This revisional application has been filed for quashing the First Information Report (F.I.R.) dated the 27th June, 1989 in R.C./9/S.C.B./89 Calcutta and all proceedings initiated thereunder in the Court of the learned Sub-Divisional Judicial Magistrate (South), Alipore, Calcutta. The said First Information Report is Annexure-E to this revisional application. The F.I.R. was recorded at the Delhi Special Police. Establishment. C.B.I. S.C.B., Calcutta Branch on 27th June, 1989 under Sections 120B/420/468/471 I.P.C. and Sections 227/ 278 of the Income Tax Act, 1961 on the basis of information reported in writing by one Sri P.S. Bose, Inspector of Police, C.B.I., S.C.B., Calcutta who also took up the investigation of the case as per order of the S.P., C.B.I., S.C.B., Calcutta. In the formal part of the F.I.R. the name of the complainant has been noted as 'source' and the date and time of occurrence has been recorded as during the years 1985 and 1986. Seven including the 4 petitioners herein have been named as accused in the F.I.R.

2. The gist of the allegations of the F.I.R. is noted below. Mahesh Kumar @ Mahesh Chand Bhagchank and the 4 petitioners, namely, Hiralal Banka, Sumit Banka, Nisha Agarwala @ Nisha Banka and Sudesh Banka, all of Calcutta, earned huge sums of money through unauthorized sources resulting in accumulation of large sums of unaccounted money which they were required to disclose to the concerned income tax authorities, but they avoided to do so for evading payment of income tax liabilities as has been reliably learnt. It was further disclosed by the source that the above named persons in contact with Omprakash Mittal and Gopal Chowdhury, both of Siliguri, and Udayram Agarwala of Gangtok and others mutually agreed to commit illegal acts and adopt illegal means to account for the unaccounted/undisclosed/unexplained amounts of money under false and fictitious cover of receipt of gifts from the contact man, said Udayrarn Agarwala of Gantok, Sikkim where the provisions of Income Tax Act, 1961 do not apply. In furtherance of the common object of the said agreement Mahesh Kumar @ Mahesh Chand Bhagchank, Hiralal Banka, Nisha Agarwala Banka and Sudesh Banka passed on their undisclosed, unexplained accumulated money to their contact-man in Sikkim through the middlemen Omprakash Mittal and Gopal Chowdhury and the said contact-man of Sikkim, Udayram in turn disclosed a major portion of the amounts so passed over to him to income tax authorities of Sikkim for nominal turnover tax on declaring that he had given a gift of Rs. 7,10,000/- to the aforesaid 5 persons of Calcutta through Bank Drafts purchased from Central Bank of India, Gangtok, Sikkim in favour of the aforesaid 5 persons of Calcutta payable at their branch in Calcutta, and the said 5 persons received the said amount in their Bank accounts at Calcutta and thereafter they reflected the same as gifts in their books of accounts and filed income tax returns before competent income tax assessing authority disclosing their unaccounted/undisclosed/unexplained money as receipt of gifts and thus claimed exemption from payment of income tax liabilities and in support of such claim they filed Photostat/xerox copies of affidavit obtained by their contact-man at Sikkim from the competent authority at Sikkim. The recipients of the so-called gifts thereby succeeded in getting exemption from payment of income tax liabilities an dishonest and

fraudulent misrepresentation of facts in their income tax returns. But far such dishonest and fraudulent misrepresentation of facts the income tax authorities would not have passed order accepting the claim of benefits of gifts. It is thus palpably clear that far perpetration of fraud, false declarations were made intentionally by the said persons in Calcutta in their income tax return and false/forged documents were used by them with full knowledge and having reasons to believe that such documents we

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