TMI Blog2021 (12) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have to be read as composite whole as framed and cannot be segregated, as read by Shri Nankani. It is, however, the case of petitioner that despite the pendency of these two criminal proceedings, it would not fall within the ambit of Section 9(c) of the DTVSV Act since in the first proceeding prosecution has not yet been instituted and in the second proceeding, it is not punishable for offences under the PC Act. In our view, both these contentions are misconceived and baseless. At the outset, with respect to the plea of prosecution not having been instituted, this issue stands squarely covered by Sashi Balasubramaniam [ 2006 (10) TMI 147 - SUPREME COURT] 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 stating that w ord 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuary 2021 withdrawing the earlier communication dated 21st October 2020 issued by the office of Chief Commissioner of Income Tax, Mumbai. By this communication dated 21st October 2020, petitioner was informed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hurdles for petitioner. These two proceedings are still pending. In any event, they were pending on the date the declaration was filed by petitioner under the DTVSV Act. Section 9(c) of the DTVSV Act reads as under: 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 Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of Section 4 of CrPC, the provisions of CrPC were analysed for the correct meaning and scope of the word institution . Even though the DTVSV Act does not per se make any offence punishable so as to apply Section 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), whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Section 13(2) r/w 13(1)(c) (d) of PC Act, 1988. The second proceedings, i.e., Special CBI Case No. 91 of 2011 pending before the Special Judge, Mumbai, against petitioner and others, is for prosecution for alleged offences punishable under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 9(c) of the DTVSV Act, though specifically excluded. Neither such attempt to supply casus omissus can sustain in the eyes of law, nor would the same be in accordance with the legislative intent in excluding IPC offences from Section 9(c), once it is established 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the objective of the Act which was extended by way of benefit to all assessees who have disputes with the Revenue pending before the authority under the DTVSV Act or in the High Court or the Supreme Court. This benefit, however, under the DTVSV Act was not available to a person against 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conspiracy by petitioner. Trial is one, evidence will be common and the Special Court will decide the matter. The role of Income Tax Department is limited to scrutinizing the application/declaration to see the applicant s eligibility and if any person falls under the provisions of Section 9, the application will be 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding disputes on payment of the specified amount based on the percentage of the disputed tax. The objective of the DTVSV Act is to inter alia reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise 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 person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of KVSS 1998 by virtue of s. 95(iii) thereof are those against whom proceedings/prosecutions have been initiated for various social economic crimes as listed out therein. The objective 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 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which in the view of Parliament is not justified/warranted. Further, one must not loose sight of the fact that the benefit under the KVSS 1998 is a deviation from the strict application of tax laws. Thus the Challenge on the above ground is also not sustainable. 20. The next contention urged by petitioner was that a person against whom prosecution has been launched 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 ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 9(c) of the DTVSV Act since in the first proceeding prosecution has not yet been instituted and in the second proceeding, it is not punishable for offences under the PC Act. In our view, both these contentions are misconceived and baseless. 19. At the outset, with respect to the plea of prosecution not having been instituted, this issue stands squarely covered by Sashi 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be instituted only upon cognizance being taken is of no use to petitioner as even then cognizance was taken in the second proceeding where chargesheet has been filed. Hence, the said issue would not arise. 23. With respect to the second contention of petitioner, viz., that petitioner is not punishable for offences under the PC Act, the same also is faulty. We say this because:- ( a) Petitioner is charged 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 ₹ 26.81 crores approximately under Handset Policy and claims in bunches amounting to ₹ 120.60 crores approximately under Default Liability Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned; or (c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as 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 reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or conspirators to the offence under Section 13 of the PC Act who may be private persons as held in the following judgments relied upon by Shri Singh, Learned ASG:- (i) P. Nallamal (supra) 4. The appellants have restricted their contentions in these appeals to the question whether they are liable to be prosecuted along with the public servants for the offence under Section 109 of the Penal Code read with Section 13(1)(e) of the PC Act. Shri K.K. Venugopal, learned Senior Counsel arguing for the appellants 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offence under Section 13(1)(e) of the PC Act can be abetted by non-public servants. The only mode of prosecuting such offender is through the trial envisaged in the PC Act. (emphasis supplied) (ii) Santosh Kumar (supra) 2. The first petitioner is the father, petitioners 2 to 4 are his sons and petitioners 5 to 7 are his daughters. The first petitioner is a public servant working as the Assistant Social Welfare Officer in the State of Andhra Pradesh. petitioners 2 to 7 are admittedly not public servants. 19. The Apex Court in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of disproportionate assets: As such allowing possession of disproportionate assets on one's name would definitely amount to facilitating the possession and consequently amounts to abetment, as when possession of such assets is an offence, allowing to possess such assets on once name would automatically amount to abetment of possession. 18. In all these circumstances, it is not a case where the second accused, who is arrayed as an abettor can be discharged initially. (emphasis supplied) (iv) Rajendra Kumar Jain (supra) 5. It is the contention of petitioner that the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge. 30. Thus, the scheme of the PC Act makes it quite clear that even a private person who is involved in an offence mentioned in Section 3(1) of the PC Act, is required to be tried only by a Special Judge, and by no other Court. Moreover, it is not necessary that in every offence under the PC Act, a public servant must necessarily be an accused. In other words, the existence of a public servant for facing the trial before the Special Court is not a must and even in his absence, private persons can be tried for PC as well as non-PC offences, depending upon the facts of the case. We, therefore, make it clear that it is not the law that only along with the junction of a public servant in array of parties, the Special Judge can proceed against private persons who have committed offences punishable under the PC Act. Therefore, not only would this enquiry arise before the Tax Authority but even assuming such an enquiry were to arise, the same require consideration. 24. Any finding by the Tax Authority on this issue, would amount to deciding on merits the two proceedings under the PC Act referred earlier. 25. In light of the above, both the proceedings are cases where pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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