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TMI Blog2016 (5) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... sold the property situated at No. 1/1, Luz Avenue, Chennai 600 004 in favour of the respondents in Crl. R. C. Nos. 1553 and 1554 of 2004 (in short, the purchasers) by executing six sale deeds during March, 1995 in their favour thereby she transferred 1/6th of the undivided share of the aforesaid property for a sale price of Rs. 9,00,000 each having a total sale consideration of Rs. 54,00,000. It is claimed by the vendor that out of the sale price of Rs. 54,00,000, a sum of Rs. 44,00,000 has been remitted to the account of the Indian Bank to dis charge the debt and the balance sum of Rs. 10,00,000 has been received by her in cash. Thereafter, a search was conducted under section 132 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") in the residence of the vendor. During the course of such raid, certain documents were said to have been seized by the Department, based on which, the prosecution claimed that the sale value of the property sold by the vendor is nearly Rs. 130 lakhs and it was grossly under-valued as Rs. 54,00,000 to evade payment of tax. Therefore, on October 16, 1996, a show cause notice was issued by the Department under section 158BC of the Act callin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax arrears for the block period of assessment from April 1, 1986 to October 3, 1996 quantifying the arrears as Rs. 47,83,018 and the vendor also paid the tax due at Rs. 31,88,675. On receipt of such payment, the designated authority under the scheme issued an immunity certificate dated March 24, 1999 in favour of the vendor towards full and final settlement of tax arrears. 2.3. Thereafter, on November 25, 1999, after eight months of issuance of the immunity certificate in favour of the vendor, the Department launched prosecution against the vendors as well as the purchasers by filing a complaint in E.O.C.C. No. 239 of 1999 for the offence punishable under sections 269UC and 276AB of the Act. According to the complainant/Department, the vendor as well as the purchasers have failed to file the statement in form 37-I in respect of the sale transaction effected between them and thereby they have contravened the provisions of section 269UC of the Act, which is an offence punishable under section 276AB of the Act. 2.4. Aggrieved by the filing of the complaint by the Department, the vendor has filed W. P. No. 20364 of 1999 before this court praying to quash the proceedings in E. O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding. As directed by this court, arguments have been advanced by both sides and on March 12, 2004, the impugned orders were passed discharging the vendor as well as the purchasers from the purview of prosecution. As against the same, the present criminal revision cases are filed. 2.7. One more factor to be noted is that when the present criminal revision cases are pending, this court, by an order dated October 28, 2004, dismissed Crl. O. P. Nos. 6067 and 6068 of 2004 filed by the Department on the ground that the relief sought therein have become infructuous. Aggrieved by the same, Special Leave Petitions Nos. 6072 and 6073 of 2005 have been preferred by the Department before the honourable Supreme Court and they were dismissed by an order dated November 21, 2005 on the ground that as against the order of discharge passed by the trial court, the present criminal revision cases are pending before this court and therefore, no relief could be granted. Accordingly, the criminal original petitions were dismissed as having become infructuous. 3.1. The learned senior special public prosecutor for Income-tax Cases, appearing for the petitioner mainly argued that the order dated February ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scheme availed of by the vendor, the filing of form 37-I is mandatory, but she did not do so. The learned senior special public prosecutor has placed reliance on the decision of the honourable Supreme Court in the cases of (i) Jamnaprasad Kanhaiyalal v. CIT reported in [1981] 130 ITR 244 (SC) ; [1981] 3 SCC 441 and (ii) ITO v. Rattan Lal reported in [1984] 145 ITR 183 (SC) ; [1986] (Supp) SCC 370 to contend that the voluntary declaration of the tax due under a particular scheme or the immunity certificate obtained thereon will only confer to the declarant and not to the crediting firm or any other person. In such circumstance, the Department is justified in launching prosecution against them to investigate the true nature and source of the cash credits and to assess the firm under section 68 of the Act. 3.3 The learned senior special public prosecutor further placed reliance on the decision of the honourable Supreme Court in the case of John Thomas v. Dr. K. Jagadeesan [2001] AIR SCW 2529 to contend that section 258 of the Code of Criminal Procedure, 1973 is included in Chapter XX of the Code in the form of an exception to the normal progress chart of the trial in summon cases. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of prosecution against the purchasers is unnecessary. 5. The learned senior counsel appearing for the purchasers/respondents would rely on the decision of the Calcutta High Court in the case of MOI Engineering Ltd. v. Appropriate Authority [1992] 198 ITR 270 (Cal) to contend that the appropriate authority in exercise of his powers under section 269UD of the Act does not have the jurisdiction to adjudicate on the legality of the transaction proposed to be entered into by the applicant. The only order that could be passed under section 269UD of the Act is an order of purchase. 6. The learned senior counsel appearing for the sole respondent in Crl. R. C. No. 967 of 2004, who is the vendor, would contend that the vendor has availed of the benefit of the Scheme introduced by the Department. On the application of the vendor, under the scheme, the sum payable by her was determined and it has become conclusive with respect to the matters stated therein. The vendor also obtained an immunity certificate from the Department which duly covers the sale transaction made by her with the purchasers. Further, after issuing immunity certificate to her, the Department, for the reasons best known, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no restriction either in the Transfer of Property Act or any other enactment to sell a portion of the property and to execute sale deeds thereof in favour of more number of persons. It is the desire and interest of the parties to enter into sale transaction to dispose of the entire building or a portion of the building and such sale will not in any manner be construed as an offence under any of the enactments. Under section 269UA(d) of the Act, immovable property is defined and includes a part of the building. When there is no restriction on the part of the vendor or the purchaser to enter into a sale transaction to purchase the entire property or a portion thereof, the contention of the prosecution that six sale deeds have been executed only to evade tax liability is unsustainable. 9. I heard the counsel for both sides and perused the materials placed on record. It is seen from the certificate issued in favour of the vendor under the Kar Vivad Samadhan Scheme, Rules in form 3 that a sum of Rs. 31,88,675 has been paid by the vendor towards tax due which fell during the block assessment period April 1, 1986 to October 3, 1986. The relevant portion of the form of certificate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs from the date on which such certificate has been issued in favour of the vendor. 11. It is further seen from the form of declaration under section 89 of the Finance (No. 2) Act, 1998 in respect of the scheme that column (e) thereof relates to tax arrear outstanding as on March 31, 1998 to the tune of Rs. 52,83,013. Similarly, column (f) relates to amount of tax arrear as on the date of making the declaration under section 88, against which, a sum of Rs. 35,91,194 is indicated. In the declaration form, there is a separate column for "verification" which reads as under : "I, S. Ramayamma (name in block letters) son/daughter/of Shri Shambu Prasad, solemnly declare that to the best of my knowledge and belief (a) the information given in this declaration, statements and annexures accompanying it is correct and complete and amount of tax arrears and other particulars shown therein are truly stated and relate to the previous years relevant to the assessment years indicated in this declaration. (b) I am not disqualified in any manner from making a declaration under the scheme with reference to the provisions of section 95 of Finance (No. 2) Act, 1998 . . ." 12. This declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted in the residence of the vendor and the Department has assessed the total tax due. Against the assessment of tax, the vendor has filed an appeal. During the pendency of statutory appeal, the vendor has availed of the benefits of the scheme introduced by the Department and obtained a certificate thereof. While so, it cannot be said that the non-filing of form 37-I of the Act will entitle the Department to launch prosecution either against the vendor or the purchasers after issuance of immunity certificate in favour of the vendor. Admittedly, in this case, form 37-I was not filed by the vendor as according to her, it is not required at all. The subject matter in that case before the honourable Supreme Court is totally different, especially in this case, a portion of the undivided property has alone be sold in favour of the vendors. 14. Before proceeding further, let us have a look into the provisions of sections 269UC and 278AB of the Act, which reads as follows : "269UC. Restrictions on transfer of immovable property.-(1) Not withstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882) or in any other law for the time being in force, no transfer of any i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 245C and the proceedings for settlement have abated under section 245HA. (2) The application to the Principal Commissioner or Commissioner under sub-section (1) shall not be made after institution of the prosecution proceedings after abatement. (3) The Principal Commissioner or Commissioner may, subject to such conditions as he may think fit to impose, grant to the person immunity from prosecution for any offence under this Act, if he is satisfied that the person has, after the abatement, co-operated with the Income-tax authority in the proceedings before him and has made a full and true disclosure of his income and the manner in which such income has been derived : Provided that where the application for settlement under section 245C had been made before the 1st day of June 2007 the principal Commissioner or Commissioner may grant immunity from prosecution for any offence under this Act or under the Indian Penal Code (45 of 1980) or under any other Central Act for the time being in force. (4) The immunity granted to a person under sub-section (3) shall stand withdrawn, if such person fails to comply with any conditions subject to which the immunity was granted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for execution of six different sale deeds in favour of six different purchasers. Therefore, there is no obligation at all for the purchasers to even think of filing form 37-I. The Department was very well aware of the six different sale deeds executed by the vendor and that is the reason why the Department gave the no objection certificate to the vendor for execution of the sale deeds. 16. The learned senior counsel appearing for the Department also relied on the decision of the honourable Supreme Court in the case of Appropriate Authority (IT Dept.) v. M. Arifulla [2002] 10 SCC 342 to contend that vendor is only a co-owner and the value of the each of the property sold by her has to be determined bearing in mind the provisions of section 269UC of the Act. 17. The learned senior counsel for the Department also relied on Killick Nixon Limited v. Deputy CIT [2002] 258 ITR 627 (SC) ; [2003] 1 SCC 145 to contend that immunity from prosecution cannot be restricted only for the offences covered therein and that the scheme is to cut short litigations pertaining to taxes which were frittering away the energy of the Revenue Department and to encourage litigants to come forward and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has passed the orders after a detailed analysis of the submissions made on both sides. In view of the order passed by the trial court, this court dismissed the Criminal Original Petition Nos. 6067 and 6068 of 2004 filed by the Department as infructuous. The Department again contended that the Criminal Original Petition Nos. 6067 and 6068 of 2004 should not have been dismissed and raised a plea before the honourable Supreme Court. The special leave petitions filed there against were also dismissed by the honourable Supreme Court on the merits. Thus, identical arguments raised by the Department has been considered by this court twice and pursuant to such directions issued by this court, the impugned orders have been passed by the trial court, which was also confirmed by the Supreme Court. 20. It is the specific case of the prosecution that the property owned by one person, namely, the vendor herein and she has wantonly and wilfully sold the undivided share of the property by executing six sale deeds. In other words, a single transaction was split into six transactions only to ensure that there is no tax liability on the part of the vendor as well as the purchaser. Further, the ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or does not arise. The purchasers also bona fide purchased the property for a valuable sale consideration under the impression that they need not submit form 37-I of the Act. 22. As regards the obligation on the part of the vendor to file form 37-I, it is seen from the form 37-I that the total apparent sale consideration for transfer of the immovable property has to be disclosed. In the present case, the value of the property has been truly disclosed by the vendor in the application filed by her under the scheme mooted by the Department and it was also duly accepted and acknowledged by the Department by issuing a certificate thereof. The immunity certificate issued by the Department covers the sale transaction in question, which took place during March 1995. Therefore, the non-filing of form 37-I by the vendor will not entitle the Department to launch prosecution against her. 23. A careful perusal of the judgment passed by the trial court discharging the respondents herein and the submission of the learned Public Prosecutor appearing for the Department, it has to be held that mere splitting up of the property into several components thereof to suit the convenience of the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y different from the tax due. The filing of the declaration and the consequential payment of tax due will not enure to the benefit of the accused to get discharged from the purview of prosecution. Such an argument raised by the Department cannot be countenanced. In the declaration, what was stated by the vendor is the outcome of the sale and the consequences thereof. Further, the declaration grants immunity to the vendor from the purview of prosecution, which includes the non-filing of form 37-I of the Act. Even as admitted by the Department, the offence complained of against the respondents herein is a compoundable offence. Further, the requirement to file form 37-I will arise only if the sale transaction is more than Rs. 10 lakhs. In the present case, as mentioned supra, each of the sale deed has been executed for a value of Rs. 9 lakhs besides that the vendor has intimated the Income-tax Department prior to alienating the property in favour of the purchasers. While so, I hold that non-filing of form 37-I by the vendor, in the present facts and circumstances, will not enure to the benefit of the Department to launch prosecution against the vendor and the purchasers. Consequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent to the raid. When once the vendor submitted her application under the scheme and availed of the benefits thereof, including obtaining an immunity certificate, it also includes the violation which has been complained in the show-cause notice relating the the provisions contained under section 269UC of the Act. While so, is it not now open for the Department, at this stage, to say that the declaration is only pursuant to the order of assessment or payment of tax component and it does not form part of the declaration in so far as it relates to the violation under section 269UC of the Act. 27. This court, in the writ petition filed by the vendor, has issued direction to the trial court to consider whether the immunity already granted to the vendor under the scheme was the subject matter of the complaint on its file or not. On such direction, the trial court rightly concluded that the immunity granted to the vendor covers the past transaction relating to the sale made by her which was the subject matter of the complaint before it. Further, this court once again directed the trial court by the order dated February 23, 2014 in the Criminal Original Petition Nos. 6067 of 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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