TMI Blog1994 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... his court under section 397(2) of the Code of Criminal Procedure, 1973 ? (3) Whether, on the facts and in the circumstances of the cases, the assessee-accused persons should have been put on trial for wilful attempt to evade income-tax and wealth-tax ? " To these questions, the answers in my view need to be in the negative. Criminal Revision Application No. 130 of 1989 : The Income-tax Department had carried out search operations at the residential premises of the accused, Alkesh Shah, on January 24, 1984, exercising their powers under section 132 of the Income-tax Act, 1961. During the search operations a cash amount of Rs. 70,488 was recovered and/or found. Out of this, an amount of Rs. 65,000 was treated as an amount of which the nature and source of acquisition were not explained. It appears that the necessary return for the assessment year 1984-85 came to be submitted by the accused assessee before the requisite date. It is not in dispute that the returned income, as shown by the assessee in the return, has been accepted and that the tax thereon has also been assessed. It is also not in dispute that no penalty proceedings against the assessee-accused were taken either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sessions Judge, vide his orders dated February 13, 1989. After allowing the criminal revision application and after setting aside the orders of the court below, the learned Additional City Sessions Judge has ordered framing of the charge. These orders dated February 13, 1989, are in challenge in Criminal Revision Application No. 130 of 1989. Criminal Revision Application No. 131 of 1989 : These proceedings are almost similar to the previous proceedings. In this case, the residential premises of petitioner-accused, Kaushikkumar, came to be raided on the same date, i.e., January 24, 1984, and search operations were carried out. It is the case of the Department that a cash amount of more than Rs. 4,00,000, jewellery of the value of Rs. 93,590, gold ornaments of the value of Rs. 1,69,355 and silver bars of the value of Rs. 59,685 were recovered. In this case also, the assessee-accused had shown the said amount and the value of the jewellery, the gold ornaments and silver bars as his income from other sources and that, the necessary return was submitted by him on June 30, 1984, under which the returned income was in a sum of Rs. 7,37,460. The assessee-accused had also submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. The returned income was accepted by the Department and the assessment proceedings have been completed and the necessary assessment orders have been made, on October 29, 1984. The assessee-accused had submitted the necessary return under the Wealth-tax Act and the assessment proceedings were also concluded. In this case also, no penalty proceedings were initiated by the Department either on the count of concealment of income or of showing incorrect particulars in the returns. The penalty proceedings were indeed initiated in respect of the advance tax legislation but they were ultimately dropped. Thus, in this case also, the income and the wealth as disclosed by the accused-assessee came to be accepted by the Department and the necessary assessment orders have been made. Anyhow two complaints were filed against the assessee-accused, they being Criminal Case No. 12 of 1986 and Criminal Case No. 13 of 1986. In these two cases also, after the examination of the complainant and after the necessary material was submitted before the court below, there was a prayer on behalf of the accused-assessee urging that as no case is being made out for the alleged commission of the two offences, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and not " to annihilate the real meaning and intent of each other ". It was also the view expressed by the City Sessions Court, that according to the scope or the meaning of the relevant statutory provision as urged by the accused-assessee would give a lever to the assessee to escape conveniently, from the penal consequences by merely and simply showing the discovered amount or the value of the discovered articles as his income from other sources in the financial year. This reasoning adopted by the City Sessions Court, while allowing the revision applications and setting aside the orders of discharge pronounced by the court below comes under a searching questionnaire and then under a serious challenge at the hands of learned counsel Mr. Kaji, who appears on behalf of the petitioner-accused-assessee. Learned counsel, Mr. Kaji, would urge that reading the provisions of sections 14, item F and 56(1) of the Income-tax Act, 1961, as they stood at the relevant time, the discovered amount or the value of the discovered articles, jewellery, etc., should be deemed to be the income of the assessee from other sources and that, under section 69A of the Act of 1961, if the assessee was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip business he was not required to maintain any account books and that the view taken by the court below in this respect appears to be ex facie erroneous. Lastly, learned counsel would urge that the material made available to the court below would not show a prima facie case of any wilful attempt to evade income-tax or wealth-tax within the meaning of section 276C of the Income-tax Act, 1961, or under section 35A of the Wealth-tax Act, 1957, respectively, and that, regard being had to all these, the learned Metropolitan Magistrate was perfectly justified in ordering the discharge and that, there was no reason for the learned City Sessions judge to cause any interference in these orders which appear to be in complete consonance with the law on the question. Anyhow, learned standing counsel, Mr. B. B. Naik, appearing on behalf of respondent No. 2, while taking a preliminary objection would urge that, the present criminal revision applications are not maintainable under section 397(2) of the Code of Criminal Procedure, 1973, as having been directed against the interlocutory orders pronounced by the learned Additional City Sessions Judge. It is also the contention coming from learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een used in a restricted sense and that any order which substantially affects the right of the accused or decides certain rights of the parties, cannot be said to be an interlocutory order so as to bar a revision to the High Court. It is also stated by way of instance that certain orders summoning witnesses, adjourning cases, passing orders for bail and calling for the reports, etc., cannot be said to be final orders and that they would be the steps in aid of the pending proceedings and may amount to interlocutory orders against which no revision would lie. Anyhow, it is pointed out that those orders, which are matters of moment and which affect or adjudicate upon the rights of the accused or a particular aspect of the trial, cannot be said to be interlocutory. It has been pointed out further that, the orders compelling the appellant to face, a trial, without proper application of mind cannot be held to be an interlocutory matter but one which decides a serious question as to the rights of the appellant to be put on trial. A momentry reversion to the facts of the cases on hand to reckon and appreciate that there are serious disputes as to the rights of the petitioner accused to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting the plea of the accused had been accepted, it would have concluded the proceedings initiated by the Department and, therefore, the orders cannot be said to be interlocutory. Looking to all that has been said by the Supreme Court in this pronouncement, it appears that, there is considerable force in the contention being raised by learned counsel, Mr. Kaji, in this respect. The plea of the accused, namely, that the material does not disclose a case on which they could be tried before the trial court, which was already accepted by the learned Metropolitan Magistrate, if it were to be again accepted by the learned Additional City Sessions Judge, then definitely there should have been a conclusion of the proceedings launched against the petitioner-accused. Viewing the matter from this angle it appears that the orders under challenge cannot be said to be interlocutory orders against which the revision application would not be maintainable before this court. In Haryana Land Reclamation and Development Corporation Ltd. v. State of Haryana, Crl. L. R. (SC) 412, the orders of discharge passed by the Chief Judicial Magistrate were held not to be falling within the definition of the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accepting the contention being advanced by Mr. Naik, and buttressed by Mr. Mehta, would amount to the acceptance of two different scales, one for the prosecutor and the other for the accused and that too in criminal jurisprudence, and again on the basis of the very same statutory provisions. Thus on a careful analysis of the views expressed by the Supreme Court and the provisions contained under section 397 of the Code of Criminal Procedure, 1973, it is apparently clear that the present criminal revision applications cannot be said to be not maintainable or barred under section 397(2) of the Code of Criminal Procedure, 1973, as having been filed against orders which are interlocutory in nature. The preliminary objection on this count raised by learned counsels Mr. Naik and Mr. Mehta thus in my view fails. So far as the merits of these revision petitions are concerned, the submissions of learned counsel Mr. Kaji appear to have been based upon the conjoint reading of certain statutory provisions finding their place in the Income-tax Act, 1961, and the Wealth-tax Act, 1957. The thrust of the arguments to be advanced by learned counsel, Mr. Kaji, is that the amount recovered or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l year in which they were recovered. It is abundantly clear that these provisions would have a statutory deeming fiction, under which the abovesaid income was required to be treated as the income of the assessee for the said financial year. Section 3 of the Act of 1961 which would define " previous year " for the purpose of the Act would go to show that, previous year would mean the financial year immediately preceding the assessment year. The assessment year undoubtedly is 1984-85. The previous year would be 1983-84 and the financial year in which the money or the valuable articles were recovered was also the same. The earlier discussion would go to show that this income was required to be taken as income from undisclosed sources and that also it was to be taken as the income of that financial year. It is not in dispute, on the contrary it is being substantiated by the evidence brought forth by the complainant/Department, that the amount recovered and/or the value of the valuable articles have been shown by the respective assessee as the income from undisclosed sources in that financial year and that the said position has been duly accepted by the Department and that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r items of purchases were inflated. It was held that, in view of the finding of the Tribunal that there was no concealment and no inaccurate accounts were filed by the petitioner, the criminal proceedings against the assessee could not continue and were liable to be quashed. In Kanshi Ram Wadhwa v. ITO [1984] 145 ITR 109 (P H), where during the assessment proceedings, the Income-tax Officer had passed an order imposing penalty on the assessee and that order was quashed by the Appellate Assistant Commissioner, and when on the strength of the order of the Income-tax Officer, criminal prosecution was launched against the assessee under section 277 of the Income-tax Act, 1961, it was held that there was no case of sustenance of penalty, it equally would not be a case for criminal prosecution and, therefore, the criminal complaint filed against the assessee was liable to be quashed. The Supreme Court pronouncement in Uttam Chand v. ITO [1982] 133 ITR 909 would go to show that on the findings to be rendered by the Income-tax Officer that the firm was not genuine and that one J was not the partner of the firm, there was the initiation of the prosecution against all the partners of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the initiation of the criminal proceedings against the assessee would be premature. It is true that in this pronouncement the Supreme Court has not quashed the criminal proceedings but that was done on a material distinguishing feature, namely, that the Departmental proceedings were not over. Even in such circumstances, the say of the Supreme Court is that the launching of the criminal prosecution was premature. The reliance is being placed upon this pronouncement by Mr. Kaji, with a purpose to emphasise that in all the cases on hand, the assessment proceedings are over and that, they have been in favour of the respective assessees, and that, when no penalty proceedings have been initiated for the concealment of income or for showing incorrect particulars in the statement, there could have been no prosecution of the assessee-accused. It appears that in view of what has been said by the Supreme Court, the contention of learned counsel, Mr. Kaji, is fortified and requires to be accepted. The Delhi High Court pronouncement in Asst. CIT v. Belco Engineers (P.) Ltd. [1990] 37 CTR 1, demonstrates a case in which addition to the income was made on the ground that the assessee had sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be in consonance with law, because as noticed earlier, under the very same provision, this income was required to be treated as the income of that financial year. Moreover as rightly pointed out by learned counsel, Mr. Kaji, a person having more than one business can have more than one financial year. It is, therefore, abundantly clear that, it could not have been urged that the petitioners-assessees were guilty of offence for having more than one financial year. The important aspect to be noticed is that the assessee had income from his share of the partnership business only and that even if the assessees had some other income in previous years, it could not have been said that they had changed the previous year. Similarly, whatever may be the previous year, then also in respect of such income, the petitioners-assessees could have filed their returns before June 30, 1984, which in fact has been done by all the respective assessees. So far as the violation of the provisions of the Wealth-tax Act, 1957, is concerned, the reference shall have to be made to the provisions contained under section 2(q) of the Act, which speaks of the valuation date. The return of wealth under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LR 517. This pronouncement while examining the provisions contained under sections 245 and 246 of the Code of 1973 says that at the stage of framing of the charge, the Magistrate is not required to appreciate the evidence meticulously but he has to form an opinion on the prima facie case. It is also pointed out that, if the evidence is prima facie sufficient and shows that the ground exists for framing the charge, then he cannot pass an order of discharge and he is required to frame the charge. This decision, in fact, reiterates the well-settled legal position in respect of the framing of the charge. It is made abundantly clear that if the evidence is prima facie sufficient, then the charge can be framed. The Supreme Court pronouncement in R. S. Nayak v. A. R. Antulay, AIR 1986 SC 2045, deals with the very same provisions with which I am concerned, namely, the provisions contained under section 245(1) of the Code. This pronouncement emphasises that the power to discharge is exercisable under section 245(1) of the Code when the Magistrate considers, for reasons to be recorded, that no case against the accused has been made out which, if unrebutted, would warrant his conviction. In f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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