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High Court Of Delhi
S.HARNAM SINGH SURI - Appellant
Versus
CENTRAL BOARD OF DIRECT TAXES - Respondent
Decided On : 05/20/1983
INCOME TAX - Prosecution for false statement in verification of return - Statement in verification of return not false - No mens rea - Complaint quashed.
Fact of the Case:
The petitioner, Harnam Singh Sun, filed an income tax return for the year 1971-72, claiming exemption under section 54 of the Income-tax Act, 1961 (the Act) on the ground that the house sold by him was being used mainly for his own residential purpose for over two years and that the flat was purchased within one year out of the capital gain for his own residence. The Income-tax Officer completed the assessment without levying any tax on capital gains. In August 1972, there was a search under section 132 of the Act of several personal premises and of the companies with which the petitioner was associated. The petitioner's statement was recorded under section 132(4) of the Act, in which he stated that the house was incomplete and uninhabitable and that he did not live in the aforesaid premises for a period of two years. The Income-tax Officer issued a notice under section 148 of the Act reopening the assessment for 1971-72. The petitioner filed a revised return on 25-11-1972, again claiming exemption under section 54 of the Act. The Income-tax Officer filed a complaint in the court of the Judicial Magistrate, Delhi, under section 277 of the Act and sections 193 and 196 of the Indian Penal Code, alleging that the statement made by the petitioner in the verification filed by him on 17-1-1972 and the computation of his total income accompanying the said return was false and which he knew or believed to be false or did not believe to be true. The petitioner filed a writ petition challenging the validity of the notice issued under section 148 of the Act and the complaint filed against him.
Finding of the Court:
The court held that the statement made by the petitioner in the verification of the return was not false. The court found that the petitioner had used the house for residential purposes for more than two years and that the flat was purchased within one year out of the capital gain for his own residence. The court also found that there was no mens rea on the part of the petitioner to make a false statement. The court further held that the complaint was premature as the assessment had not been completed before the complaint was filed. The court also held that the prosecution for perjury was an abuse of the process of the court as the petitioner had already filed a declaration and return under the Voluntary Disclosure Scheme.
Issues: 1. Whether the statement made by the petitioner in the verification of the return was false? 2. Whether there was mens rea on the part of the petitioner to make a false statement? 3. Whether the complaint was premature? 4. Whether the prosecution for perjury was an abuse of the process of the court?
Ratio Decidendi: 1. The court held that the statement made by the petitioner in the verification of the return was not false. The court found that the petitioner had used the house for residential purposes for more than two years and that the flat was purchased within one year out of the capital gain for his own residence. 2. The court found that there was no mens rea on the part of the petitioner to make a false statement. 3. The court held that the complaint was premature as the assessment had not been completed before the complaint was filed. 4. The court held that the prosecution for perjury was an abuse of the process of the court as the petitioner had already filed a declaration and return under the Voluntary Disclosure Scheme.
Final Decision: The court quashed the complaint and the further proceedings thereon.
( 1 ) IN the year 1964, the petitioner Harnam Singh Sun purchased a plot of land No. l/30, Punjabi Bagh, Delhi, on which he later on constructed a house. On 17-1-1972, he filed an income-tax return for the year 1971-72. In the accompanying statement, he stated that the said house was self- occupied and was sold on 15-1-1971. "the capital gain out of the sale was Rs. 1,31,884 which was utilised for purchase of a residential flat in Asha Deep on 18-1-1971. So in column 5 of the return under the caption capital gains he entered the word none . In the verification, the petitioner solemnly declared that to the best of his knowledge and belief the information given in the return and the annexures and the statement accompanying it is correct and complete and the amount of total income and other particulars shown are truly stated. In the course of assessment proceedings, the petitioner filed an affidavit on 18-2-1972 staling inter alia that prior to its sale, he was living in the house for more than two years. The Income-tax Officer by his assessment order dated 6-3-1972 completed the assessment. No tax on capital gains was levied on account of the aforesaid statement in virtue of section 54 of the Income-tax Act, 1961 (herein the Act ).
( 2 ) IN August, 1972, there was a search under section 132 of the Act of several personal premises and of the companies with which the petitioner was associated. One Shri S. D. Kapila, an Income-tax Officer, visited the Punjabi Bagh premises and recorded the statement of the petitioner on 18-8-1972 under sec. 132 (4) of the Act. He stated that he had begun construction some three or four years back. From that statement it further appeared that the house was incomplete and uninhabitable and that the petitioner did not live in the aforesaid premises for a period of two years and that the flat purchased by him was also not occupied by him, but he gave it to his son Harpal Singh for his residence.
( 3 ) THEN, on 19125-9-1972, the Income-tax Officer issued notice under section 148 of the Act reopening the assessment for 1971-72. The notice was received by the petitioner on 28-9-1972.
( 4 ) ON 24-11-1972, the Commissioner of Income-tax issued an order under section 279 (1) of the Act for prosecution of the petitioner.
( 5 ) IN response to the said notice the petitioner filed a revised return on 25-11-1972. In this return again no capital gain was shown, and the assessee claimed exemption under section 54 of the Act on the ground that the house in question was being used mainly for his own residential purpose for over two years and that the flat was purchased within one year out of the capital gain for his own residence.
( 6 ) IN pursuance of the said sanction, the Income-tax Officer, filed on 25-11-1972 a complaint in the court of the Judicial Magistrate, Delhi, under sec. 277 of the Act and sections 193 and 196 of the Indian Penal Code, that the statement made by the accused in the verification filed by him on 17-1-1972 and the computation of his total income accompanying the said return was false and which he knew or believed to be false or did not believe to be true. The accused was bound by an oath to state the truth and make a true declaration, but he made false statements and declaration and knowing them to be so attempted to use the same as true in the assessment proceedings. That apart, he also filed a false affidavit on 18-2-1972 wherein an averment on oath was made that the petitioner was living in the said house for a period of more than two years. The Magistrate issued process against the petitioner. The present writ petition No. 128. 4172 was filed on 20-12-1972 asking for quashing of the complaint. On 21-12-1972 proceedings in the court below were stayed by. this court.
( 7 ) THEN the petitioner filed one more writ petition No. 51173 in January, 1973 challenging the validity of the notice issued in September, 1972 under sec. 148 of the Act. The proceedings for re-assessment
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