TMI Blog2016 (5) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that the declaration, which has been filed by the vendor was in connection with and inclusive of the complaint complained in the show-cause notice, which emanated in the assessment proceedings, 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 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 ₹ 130 lakhs and it was grossly under-valued as ₹ 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 calling upon the vendor to show cause as to why action should not be initiated under sec tion 276AB of the Act for contravening the provisions of section 269UC of the Act for the transactions effected by her for the assessment years 1987- 88 to 1996-97. Similar notices have been issued to the purchasers/respondents herein on October 22, 1996, stating that no immovable property of the value exceeding ₹ 10,00,000 should be transferred without an agreement for transfer and by submitting form 37-I and rule 48L of the Income-tax Rules, 1962. A reply was sent by the purchasers/respondents stating that each of them have only purchased 1/6th undivided share of the property for a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unishable 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. C. C. No. 239 of 1999 and to issue a consequential direction directing the Department not to proceed against her in any manner in respect of form 3 issued under the scheme. According to the vendor, the immunity certificate issued under the scheme was not taken into account by the Department and that the offence alleged against her is not made out by the Department especially when she has paid the entire tax arrears and later immunity certificate was given in respect of all matters. By an order dated February 23, 2001, this court disposed of W. P. No. 20364 of 1999 with a direction to the trial court to permit the vendor to make an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 23, 2001 passed by this court in W. P. No. 20364 of 1999 filed by the vendor, directing the trial court to take note of the immunity certificate granted to her and to pass an order afresh, cannot be made applicable to the purchasers herein. Even to the vendor, the immunity certificate granted by the Department under the scheme will not endure to her benefit to get discharged from the criminal prosecution as the criminal prosecution is launched for non-filing of form 37-I, which is a statutory obligation as contemplated under section 269UC of the Act. The criminal prosecution launched against the vendor and the purchasers is a separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The power under section 258 of the Criminal Procedure Code to dis charge an accused at midway stage is restricted to those cases instituted otherwise than on complaints wherein no material witness was examined at all. Placing reliance on this decision, it is contended by the learned senior special public prosecutor that the prosecution has made out a prima facie case for proceeding against the accused by producing documentary evidence while so, the trial court is not justified in discharging them. The assessee was proceeded with only on the basis of the materials seized during the raid and it is for the assessee to rebut the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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, waited for eight months to launch prosecution for the alleged non-filing of declaration in form 37-I of the Act. When the immunity certificate was obtained, the vendor has no obligation to file the declaration form. Even otherwise, the non-filing of such declaration form will not entitle the Department to launch prosecution against the vendor. Having issued the immunity certificate, the Department virtually foreclosed their right to further proceed against the vendor especially when the vendor paid the tax amount and availed of the benefits under the scheme during the pendency of statutory appeal filed by her before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction 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 ₹ 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 for full and final settlement of tax arrears under section 90(2) read with section 81 of the Finance (No. 2) Act, 1998 in respect of the scheme issued to the vendor herein reads as follows : And whereas, the designated authority, by order dated February 18, 1999 determined the amount of ₹ 31,88,675 payable by the declarant in accordance with the provisions of the scheme and granted a certificate setting forth therein the particulars of the tax arrears and the sum payable after such determination towards full and final settlement of tax arrears as per details given below : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 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 was made by the vendor on January 30, 1999. A perusal of the declaration would indicate that the alleged disputed quantum of tax amount and the actual rate of tax payable by the vendor has been duly mentioned. Further, the declaration states that it is referable to the previous years relevant to the assessment years indicated in this declaration. When the vendor has made such declaration and also made the tax arrears, the prosecution launc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 immovable property in such area and of such value exceeding five lakhs, as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson 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 and thereupon the pro visions of this Act shall apply as if such immunity had not been granted. (5) The immunity granted to a person under sub-section (3) may, at any time, be withdrawn by the Principal Commissioner or Commissioner, if he is satisfied that such person had, in the course of any proceedings, after abatement, conceded any particulars material to the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 pay up a reasonable amount of tax in accordance with the scheme after declaration made thereunder. 18. Yet another point for consideration is that soon after prosecution was launched, the vendor has approached this court and filed Writ Petition No. 20364 of 1999 to quash the proceedings initiated against her in E. O. C. C. No. 239 of 1999 and to direct the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve 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 vendor did not submit form 37-I and therefore, the launch of prosecution against the vendor as well as the purchasers is justifiable and in accordance with law. Such a contention of the learned senior special public prosecutor cannot be countenanced. There is no embargo or bar under the provisions of the Transfer of Property Act or the Income-tax Act for sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable 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 purchaser or vendor as the case may be may not take away the right of the Department to proceed against them in case of violation of any of the Act and Rules. In the present case, unfortunately, the provisions of the Act which were alleged to have been violated by the vendor or purchasers have been repealed long back but it was not taken note of by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 ₹ 10 lakhs. In the present case, as mentioned supra, each of the sale deed has been executed for a value of ₹ 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, I hold that the vendor as well as the purchasers/respondents in these criminal revision cases, did not contravene the provisions contained under section 269UC of the Act. 26. It is also very clear from the immunity certificate granted to the vendor that it is in respect of any proceedings to which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 and 6068 of 2004 once again directed the lower court to consider the petition filed by the respondents herein and to pass orders. Taking into consideration such direction issued by this court, the trial court passed the order under the direction and authority of this court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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