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TMI Blog2021 (12) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... d that they are eligible for resolution of tax disputes under the provisions of the Direct Tax Vivad Se Vishwas Act 2020 (DTVSV Act). According to petitioner, relying on this communication petitioner had filed several applications for resolution of tax disputes. It is petitioner's case that the stand of respondents is contrary to the plain language of Section 9(c) of the DTVSV Act. 3. Petitioner is desirous of availing the benefit of DTVSV Act with respect to certain pending income tax litigations before various appellate levels. By an application dated 15th April 2020, petitioner sought clarification from the revenue with respect to its eligibility under the DTVSV Act. A doubt regarding petitioner's eligibility occurred in the mind of petitioner because of the following two proceedings:- (A) FIR No.17/2014 dated 11th February 2014 under Section "Section 13(1)(c) and (d) of Prevention of Corruption Act (PCA) and 420/120 B of the Indian Penal Code (IPC) registered by Anti Corruption Bureau of the National Capital Territory of Delhi dated 14th February 2014 where no charge sheet has been filed. The Accused persons include petitioner. (hereinafter referred to as the first proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The provisions of this Act shall not apply :- (a).................. (b).................. (c) to any person in respect of whom prosecution for any offence punishable under the provisions of the Unlawful Activities (Prevention) Act 1967, the Narcotic Drugs and Psychotropic Substances Act 1985, the Prevention of Corruption Act, 1988, the Prevention of Money Laundering Act 2002, the Prohibition of Benami Property Transactions Act 1988 has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts. (d).................... (e)....................." (emphasis supplied) SUBMISSIONS OF SHRI NANKANI:- 7. RE: Whether "in respect of petitioner" any prosecution has been "instituted" on or before the filing of "the declaration": (a) The word "instituted" in regard to prosecution in either of the above two proceedings is not defined under the DTVSV Act. (b) The Hon'ble Supreme Court in Jamuna Singh vs. Bhadai Shah AIR 1964 SC 1541, in relation to institution of a case for prosecution, had deliberated on and explained as to when a case is said to be "instituted". The Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 4(2) of CrPC, however, all the five Acts specified under Section 9(c) of DTVSV Act are also Special Acts, wherein, in view of section 4(2) of CrPC, investigation and trial shall be, subject to provisions of those Special Acts as per provisions of CrPC. Therefore, same meaning of the word "institution" will have to be given even for the purpose of Section 9(c) of the DTVSV Act. (e) The term "institution" in the context of any prosecution for specified offences is not defined in the DTVSV Act as well as CrPC. It is a term of art, which has to be understood in the context it is used. There is no room for dictionary or common parlance meaning. In the context of institution of a case for prosecuting for offences, the court has explained the scope and contextual meaning of the term "institution". (f) The judgment relied by respondents in State, CBI Vs. Sashi Balasubramanian & Anr (2006) 13 SCC 252 does not consider the earlier decision in Jamuna Singh (supra), which has also been followed later in Ramesh Kumar Soni (supra). Notwithstanding the above, even otherwise the case of Sashi Balasubramanian (supra) is clearly distinguishable and was in peculiar facts of that case inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 120B r/w 420 of IPC and Section 13(2) r/w 13(1)(d) of PC Act, 1988. Although the Bill proposed inclusion of IPC offences in offences specified in Section 9(c), the DTVSV Act specifically excluded IPC in the said Section. Therefore, Section 120B r/w 420 of IPC would have no bearing on the issue. Section 13 of PC Act, 1988 applies exclusively qua a Public Servant. It is not the case of respondent that petitioner Company is a Public Servant. The Hon'ble Supreme Court in State through CBI v. Jitendra Kumar Singh (2014) 11 SCC 724 held that:- "26.3. Section 13 deals with the criminal misconduct by a public servant, which is exclusively an offence against the public servant relating to criminal misconduct. ......" (b) As per the plain reading of Section 13 of PC Act, 1988 as also the aforesaid judgment of Hon'ble Supreme Court in Jitendra Singh (supra), petitioner being a "non public servant", even if petitioner fails in the 1st proposition, and even if it is presumed for the sake of arguments that the allegations in both the cases would result in the trial and conviction of petitioner, neither the prosecution can be said to have been instituted for trying petitioner (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished that no prosecution is instituted against petitioner for any offence punishable under the provisions of any of the specified Acts. IPC has been consciously omitted in Section 9(c) of the DTVSV Act. The legislative intent in not including IPC cannot be nullified by invoking provisions of abetment and conspiracy from IPC. This was purely within the domain of the Parliament. The offences punishable under the provisions of the DTVSV Act specified in Section 9(c) shall be applicable qua the declarant to cover him under the provision. There cannot be any departure from this basic requirement. 9. SUBMISSIONS OF SHRI ANIL SINGH, ASG (a) The present writ petition is misconceived and baseless. The DTVSV Act shall not apply to petitioner. (b) As held by the Apex Court in Sashi Balsubramanian (supra) court need not even take cognizance where institution of FIR has resulted in initiation of investigation to say prosecution has been instituted. Jamuna Singh (supra) relied upon by petitioner was not at all applicable because that was considering the proceedings under the IPC read with CrPC, whereas in Sashi Balsubramanian (supra) Apex Court was considering the provisions of Section 95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t whom proceedings have been instituted under the IPC, PC Act, Narcotic Drugs and Psychotropic Substances Act, 1985 etc. The class of persons who have been left out of the benefit are those against whom proceedings/prosecution have been initiated for various social-economic crimes as listed out therein. The objective of the DTVSV Act is to provide a mutual benefit,i.e., not only to collect revenue which is locked in litigation which will augment the State's resources but also benefit the tax payer who on settling the disputes pays tax only at 30% of the declared income along with immunity from penalty and prosecution. (d) Submissions of Shri Nankani that the prosecution instituted should be for an offence punishable under the PC Act and as petitioner cannot be punished under Section 13 of the PC Act, Sub Section (c) of Section 9 of the DTVSV Act is not applicable to petitioner is a nonstarter. It is because first of all the two proceedings referred to in the petition are those exclusively triable only by the court of Special Judge having jurisdiction in the matter. The Apex Court in P. Nallammal (supra) has held that even if in the two proceedings the prosecution against public se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. As there is prosecution instituted against petitioner for offence punishable under the PC Act, Income Tax Department has rightly rejected. Petitioner is accused of criminal wrongful loss of Rs. 147.41 crores to National Insurance Co. Ltd. and corresponding wrongful gain to itself and if the court grants petitioner the relief prayed for in the petition, it would amount to extending the beneficial provisions of DTVSV Act to a person against whom prosecution have been instituted for socialeconomic crime and that will be against the objective of DTVSV Act. DISCUSSION AND CONCLUSIONS:- 10. The petition seeks the following final reliefs:- "a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or any other writ order or direction under Article 226 of the Constitution of India calling for the records of the case leading to the issue of the impugned letter (Exhibit H) dated 25th January, 2021 and after going through the same and examining the question of legality thereof quash, cancel and set aside the impugned letter (Exhibit H) dated 25th January, 2021; b) that this Hon'ble Court may be pleased to issue a Writ of Mandamus or a Writ in the nature of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise be spent on the long-drawn and vexatious litigation process. 14. The DTVSV Act is a beneficial legislation enacted with a definite purpose for the benefit of both the Assessee and the Department whereby the Legislature has provided a mechanism under which pending income tax litigation is sought to be reduced as also ensuring that the revenue is generated in a timely manner for the Government. The DTVSV Act, in a sense, provides a deviation from the strict application of tax laws towards achieving this purpose. 15. The benefits granted by the DTVSV Act are, however, by legislative policy not available to certain persons like those identified in Section 9(c) of the DTVSV Act. A perusal of Section 9(c) quoted earlier, shows that Legislature, in its wisdom, has with a definite purpose, specifically carved out and provided the persons to whom the DTVSV Act shall not apply and cases in which the benefits of the DTVSV Act would not be available to certain persons. The purpose and intent behind the said provision is clear and unambiguous that the DTVSV Act would only apply to monies acquired by legal means and not to monies generated from socio-economic offences. The purpose and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit the taxpayer who on settling the dispute pays tax only at 30 per cent of the declared income along with immunity from penalty and prosecution. Once a classification as pointed out by the Revenue is found to be based on reasons, the mere fact that petitioner or the Court is of the view that the classification could be better, would not entitle the Court to interfere with the classification as done by the legislature. The role of the Court is limited only to ensure that the classification is not arbitrary i.e. absence of intelligible differentia having a nexus to the object DTVSV Act. The Courts are not in any way concerned whether the classification that is made in The DTVSV Act is the best possible in the available circumstances. This is purely within the domain of Parliament. 18. It is first contended by petitioner that ousting a person from the benefit of KVSS 1998 in respect of whom a complaint has been filed in a criminal Court, alleging offences under Chapters IX and XVII of the Penal Code, 1860 is arbitrary. This it is submitted is in view of the fact that the complaint in the Criminal Court is filed on mere suspicion and if ultimately the person so excluded is discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unched for a minor crime as provided under Chapter XVII of the Penal Code, 1860 is excluded by virtue of s. 95(iii) of the KVSS 1998 from its benefit while a person against whom prosecution is lodged for serious crimes like murder etc., is not deprived benefit of KVSS 1998. This itself, is evidence of the arbitrary nature of the exclusion having no nexus to the objective DTVSV Act which is undisputedly to collect revenue. As pointed out above, the policy DTVSV Act as set out in the affidavit-in-reply filed by the State was to exclude those classes of persons who were involved in socioeconomic crimes having obtained income/property by illegal means. The State is prosecuting those persons under the criminal law of land for having acquired/obtained income/property by committing breaches of the various Acts referred to therein. The classification is restricted only to those persons who are involved in crimes which in Parliament's experience/wisdom could have lead to generation of income/wealth/property. It is these classes of persons who have been excluded. This classification certainly has a nexus t o the objective DTVSV Act namely recovering revenue which has been clogged and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shi Balasubramaniam (supra) wherein the Hon'ble Apex Court, whilst considering the provisions of the KVSS and the provisions of Clause 95(iii) thereof, after raising a specific issue as to when is a prosecution said to be instituted, answered the same, inter alia, as under:- "28. The first information report in regard to the offences committed, as indicated hereinbefore, was lodged on 2-3-1995. The investigation started immediately thereafter. The investigation was being carried on by the Central Bureau of Investigation (Economic Offences Wing). Only at a much later stage, namely, more than three years thereafter i.e. on 31-12-1998, declarations were filed. Charge-sheet in the criminal case was filed on 12-4-1999. 29. It is in the aforementioned context that interpretation of the word "prosecution" assumes significance. The term "prosecution" would include institution or commencement of a criminal proceeding. It may include also an inquiry or investigation. The terms "prosecution" and "cognizance" are not interchangeable. They carry different meanings. Different statutes provide for grant of sanction at different stages. 30. "In initio" means in the beginning. The dictionary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged for having conspired to commit offences under Section 120B of IPC, the conspiracy to commit offences is in respect of Cheating under Section 420 of IPC as also offences under Section 13(1)(d) and Section 13(2) of the PC Act. This would be evident on a reading of the chargesheet. The Chargesheet, inter alia, provides, as under :- "14. That, the accused officials of NICL namely Sh. S. N. Raza (A-4), Sh. L. S. Sawant (A-5), Sh. S. D. Karande (A-6), Sh. D. L. Valecha (A7), Sh. Sh. G. Subramanian (A-8) and Smt. Rachana M. Patwardhan (A-10); with dishonest intention processed and settled the claims in bunches amounting to Rs. 26.81 crores approximately under Handset Policy and claims in bunches amounting to Rs. 120.60 crores approximately under Default Liability Policy lodged by Reliance Industries Ltd. (A-9), thereby causing a wrongful loss of Rs. 147.71 crore to National Insurance Co. Limited and Corresponding wrongful gain to Reliance Industries Ltd. (A9). It is further revealed that claims amounting to Rs. 98.28 crore under both the policies are outstanding. 15. The above acts constitute commission of offences punishable U/s. 120 B IPC r/w. 420 of IPC and under section 13(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a public servant or allows any other person so to do; or (d) if he,- (i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or (e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income. Explanation.-For the purposes of this section, "known sources of income" means income received from any lawful source and such receipt has been intimated in accordance with the provisions of any law, rules or orders for the time being applicable to a public servant. (2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than [four years] but which may extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts submitted his point broadly that the offence under Section 13(1)(e) of the PC Act is unabettable, since the nub of the offence is the failure of the public servant to account for the excess wealth which none else can possibly do. ... 16. Section 13 of the PC Act is enacted as a substitute for Sections 161 to 165-A of the Penal Code which were part of Chapter IX of that Code under the title "All offences by or relating to public servants". Those sections were deleted from the Penal Code contemporaneous with the enactment of Section 31 of the PC Act (vide Section 31 of the PC Act). It is appropriate to point out here that in the original old PC Act there was no provision analogous to Section 13(1)(e), but on the recommendation of Santhanam Committee the said Act was amended in 1964 by incorporating Section 5(1)(e) in the old PC Act. Parliament later proceeded to "consolidate and amend the law relating to prevention of corruption" and in the bill introduced for that purpose the following was declared as per the Statement of Objects and Reasons thereof: " 2. The Prevention of Corruption Act, 1947, was amended in 1964 based on the recommendations of the Santhanam Committee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 17 of its Judgement held that the legislative intent is manifest that the abettors of different offences under Section 13(1)(e) DTVSV Act should also be dealt with along with the public servant in the same trial held by the Special Judge having regard to the explanation appended to Section 13(1)(e) DTVSV Act. In para 24 of its Judgement, while adverting to the contentions of the learned counsel who seeks to exemplify by means of illustrations which can be clearly brought under the expression 'abetment' and finally held in para 25 that such illustrations are apt examples of how the offence under Section 13(1)(e) DTVSV Act can be abetted by non-public servants and the only mode of prosecuting such offender is through the trial envisaged in the Prevention of Corruption Act. Thus, it has been upheld ultimately that a non-public servant or a private person can be prosecuted for the offence of abetment of the offence punishable under Section 13(1)(e) DTVSV Act perpetrated by a public servant. For the first time, such an interpretation was given by the Apex Court in the annals of the law for preventing the corruption and bribery in the public life. The Judgement in P. Nallammal's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned court below without applying its judicial mind, in a routine manner, framed charges against petitioner for trial under section 120B, IPC read with sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988, vide impugned order dated 8.8.2011. The said court did not consider or dispose of the petition which was filed by petitioner under section 227 of the Code of Criminal Procedure, 1973, while passing the impugned order 8.8.2011. 6. It has been further contended that section 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988, is applicable to a government /public servant only. Since petitioner is a private person, as such, section 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988, are not at all attracted against him. Thus, the question of application of section 120B, IPC does not arise at all as the major/main offence accused of, is not attracted against petitioner. ... 17. I have considered the submissions of the rival parties. The first contention that the accused being a private person cannot be dealt with an offence under the Prevention of Corruption Act, 1988, cannot be accepted in view of the proposition of law that the Specia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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