Reading Time: 59 minutes

G. S. R. Krishnamurthy v M. Govindaswamy, Income Tax Officer

Madras High Court

13 June 1991

CMP No. 3158 of 1984

The Judgment was delivered by JANARTHANAM J.

JANARTHANAM J.

Thiru G. S. R. Krishnamurthi (the petitioner herein) is accused No. 1 in E. O. C. C. No. 302 of 1984 on the file of the Court of the Additional Chief Metropolitan Magistrate (Economic Offences), Egmore, Madras-600 008 He is the karta of the undivided family consisting of himself, his wife, Thirumathi C. Indira (accused No. 2), and children born of her, residing at No. 36, Neelakantha Metha Street, Thyagaraja Nagar, Madras 600 017. His brother is Thiru G. Adhiseshagiri Rao (accused No. 3)

He, in his capacity as the karta of the undivided family, purchased a piece of agricultural land measuring 3 acres 24.5 cents in Saligramam, bordering Madras City, from Thiru A. K. Velan, his wife, Thirumathi A.K.V. Jayalakshmi and his sons, Thiru A. K. V. Vignani, Thiru A. K. V. Sivagnani and Thiru A. K. V. Kalaignani (accused Nos. 4 to 8), as per the deed registered on May 24, 1982 as document No. 2788 of 1982, before the Sub Registrar, Kodambakkam, for an apparent and recorded consideration of Rs. 5, 86, 000

He also presented Form No. 37-G (in duplicate) prescribed under rule 48G of the Income-tax Rules, 1962, and under section 269P(1) of the Income-tax Act, 1961, duly verified and signed, along with the instrument of transfer, mentioning in columns 8 and 9 the actual consideration for the transfer as well as the estimated fair market value of the property as Rs. 5, 86, 000. One such copy had been forwarded to the Income-tax Department by the Sub-Registrar

Accused Nos. 4 to 8 also delivered an application in Form No. 34A prescribed under rule 44A and tinder section 230A declaring against column No. 15(1)-

“Full value of the consideration for which the property or the right, title or interest to or in the property is purported to be transferred”-as” Rs. 5, 86, 000″

and, on the basis of such declaration, they obtained the same before the Sub-Registrar and got the sale deed registered all on the same date, viz., May 24, 1982A search u/s. 132 at the residential and business premises of accused No. 1 was conducted on December 17, 1983 and it led to the seizure of a letter of arrangement dated February 18, 1982, as per which the total consideration for the sale of 3 acres 24.5 cents was specified as Rs. 14, 11, 000 and, after receiving a sum of Rs. 8, 25, 000 in cash till that date, a final agreement was undertaken to be made only for the balance of Rs. 5, 86, 000 as if the said sum alone represented the sale consideration

According to the sworn statement recorded during the course of search from accused No. 3 u/s. 132(4), the sale consideration was only Rs. 5, 86, 000 and not Rs. 14, 11, 000

In the sworn statement recorded on February 9, 1984, accused No. 1 stated that the sale consideration was only Rs. 5, 86, 000 and not Rs. 14, 11, 000

Accused No. 4 would, however, in the course of the sworn statement recorded from him on February 20, 1984, confess to having received Rs. 14, 11, 000 as per the letter of arrangement dated February 18, 1982, and the excess over the document value of Rs. 5, 86, 000 amounting to Rs. 8, 25, 000 was received as on-money outside the registered document in cash from accused No. 1 earlier to February 18, 1982, and one Sharma, a common friend of both, got the on-money in about 5 to 10 instalments and gave it to him. A copy of the letter of arrangement dated February 18, 1982, mentioning Rs. 14, 11, 000 as the sale consideration and an earlier agreement dated December 5, 1981, referred to in the letter of arrangement dated February 18, 1982, were torn off at the time of executing the letter of agreement understating the sale consideration at Rs. 5, 86, 000

Accused No. 4 filed an income-tax return duly verified and signed for the income-tax assessment year 1983-84 on November 15, 1983, computing the capital gains on the understated sale consideration of Rs. 5, 86, 000 and declaring a loss of Rs. 1, 01, 108. He subsequently, filed a revised return of income on February 28, 1984, computing the total capital gains on the real sale consideration of Rs. 14, 11, 000 and declaring a loss of Rs. 10, 810 and explaining how he spent the on-money of Rs. 8, 25, 000The relevant assessment year for accused No. 1 is 1982-83. He ought to have filed his return of income on or before July 31, 1982. But he actually filed the return on September 30, 1986

Thus, all the accused, acting in collusion and conspiracy with a view to evade income-tax and to defraud the exchequer of its legitimate revenue and to mislead and deceive the Income-tax Officer and in furtherance of the common intention, committed offences punishable under-section 120B read with sections 193, 196, 420, 109, 34 and 37 of the Indian Penal Code, 1860, and sections 276C(1), 277 and 278 of the Income-tax Act, 1961, in one series of facts connected together to form the same transaction

The Income-tax Officer, Film Circle-I, 121, Nungambakkam High Road, Madras-600 034, launched a prosecution against all the accused for the aforesaid offences on March 23, 1984, which is now pending in the aforesaid calendar case

On receipt of process, accused No. 1 has. come forward with the present action invoking the inherent jurisdiction of this court to quash the criminal proceedings initiated against him

Mr. N. C. Raghavachari, learned senior counsel appearing for the petitioner, accused No. 1 would, with all vehemence, virtually make frontal attack as to the sustainability of the criminal proceedings by pressing the following points for consideration

(1) The proceedings initiated consequent on the seizure of the letter of arrangement dated February 18, 1982, revealing the real nature and extent of the consideration for the conveyance, before the raiding authority, before whom the petitioner accused No.1 was stated to have given a sworn statement, which is false to his knowledge as respects the consideration for the conveyance of the landed property by means of execution of a sale deed, can, by no stretch of imagination, be stated to be a proceeding before a court and, even assuming for argument’s sake to be so, the prosecution, as launched clearly falls within the embargo of s. 195(1)(b)(i) of the Code of Criminal Procedure, 1973, inasmuch as the complaint had been launched by an authority other than the raiding authority, viz., the Income-tax Officer, Film Circle-I, 121, Nungambakkam High Road, Madras-600 034(2) Presenting Form No. 37-G prescribed under rule 48G of the Income-tax Rules, 1962, and under section 269P(1) of the Income-tax Act, 1961, duly verified and signed along with the instrument of transfer mentioning in the transfer deed as well as the estimated fair market value of the property as Rs. 5, 86, 000 which is false to the knowledge of the petitioner, is of no consequence, inasmuch as such proceedings cannot at all be termed as proceedings before a court and even assuming them to be so, the Magistrate before whom the complaint had been filed could not at all take cognizance of the alleged offences u/ss. 193 and 196 of the Indian Penal Code, in the face of the bar created by s. 195(1)(b)(i) of the Code of Criminal Procedure, in the sense of non-preference of a complaint by such authority

(3) The assessment is a consequence of the filing of a return and since the assessment proceedings in the case of the petitioner, accused No. 1, had not been completed, criminal proceedings initiated for the alleged offences under sections 276C, 277 and 278 of the Income-tax Act, 1961, are premature, as the punishment for each of those offences is linked with the quantum of tax sought to be evaded or evasion of payment of tax

(4) Penalty proceedings can very well be initiated against an assessee under section 271, if he has concealed the particulars of income or furnished inaccurate particulars of such income and, in a proceeding so initiated, power inheres in the Chief Commissioner or Commissioner to reduce or waive penalty under section 273A and once there is a reduction or waiver of the amount of penalty imposed or imposable on a person under sub-cl. (iii) of sub-s. (1) of section 271, s. 279(1A) prescribes that such person shall not be proceeded against for an offence under section 276C or s. 277 and such being the legal position, the petitioner, in the instant case, cannot be prosecuted for those offences unless and until penalty proceedings had been initiated and ultimately culminated in a final order being passed(5) The prosecution of the petitioner for the offences under the Indian Penal Code, 1860, is not legally permissible, as there is no sanction for such prosecution under s. 279(1) of the Income-tax act, 1961 and, if the complaint had been filed limited to offences under the Income-tax Act alone, there was a possibility of such offences being compounded under the benevolent provisions adumbrated in sub-s. (2) of s. 279 and the launching of prosecution for offences under the Indian Penal Code, which are non-compoundable along with offences under the Incometax Act which are compoundable, caused prejudice to the cause of justice

(6) Since the vendor of the petitioner, viz., accused, filed a revised return of income on February 28, 1984, before the assessment is made giving particulars of income subsequent to his filing of the original return on November 15, 1983, containing a wrong statement of income, the petitioner cannot at all be stated, in such a situation, to have aided or abetted accused No. 4 in the alleged commission of offences under the Income-tax Act, 1961, pursuant to a conspiracy hatched to which it is said, they were also parties among others, inasmuch as accused No. 4 cannot be said to have committed only those offences and once this position is settled, it goes without saying that such of those offences under the Indian Penal Code in respect of which prosecution had been launched as are akin to the offences under theIncome-tax Act would be wiped out

(7) Sub-s. (6) of section 269F occurring in Chapter XX-A dealing with acquisition of immovable properties in certain cases of transfer to counteract evasion of tax introduced for the first time on November 15, 1972, catalogues the situations making it possible for acquisition to be made. The Competent Authority may, by a notice in writing under sub-s. (1) of section 269-1, order any person who may be in possession of immovable property to surrender or deliver possession thereof and if there was any failure or refusal to comply with the said notice, the Competent Authority may take possession of the immovable property. By using such salient provisions, it could not have been in the contemplation of the Legislature to prosecute persons presenting Form No. 37G prescribed under rule 48G and section 269P(1) containing false verification for certain offences, both under the Indian Penal Code as well as under the Income-tax Act and as the acquisition proceedings in the case on hand had already been initiated, no prosecution against the petitioner for various offences under the above said enactments could lie(8) There are no prima facie materials in the shape of averments in the complaint constituting the alleged offences under sections 120B and 420 of the Indian Penal Code, 1860

Mr. K. Ramaswamy, learned Special Public Prosecutor for incometax cases would, however, with all earnestness and sincerity, repel such submissions

The first submission, enumerated above, as projected by learned senior counsel for the petitioner, consists of two facets. The first facet revolves on the question whether a proceeding before an authority who raided the premises of the petitioner on the relevant date and before whom the petitioner was stated to have given a sworn statement which is false to his knowledge as respects the consideration for the conveyance of the landed property by means of an execution of a sale deed is judicial proceeding, thereby by implication, making that authority, for all practical purposes, a “court”

This was a vexed question and various hues of views were available emerging from various High Courts and consequently agitated before the apex court of the judicial administration of this country, which happened to consider this aspect of the matter and rendered a decision, which, at the present juncture, I feel is purely academic consequent to the amendment of s. 136 of the Income-tax Act that came into being by the Finance Act, 1985, with retrospective effect from April 1, 1974

The section as amended reads as follows

 

“Any proceeding under this Act before an income-tax authority shall be deemed to be a judicial proceeding within the meaning of ss. 193 and 228 and for the purposes of s. 196 of the Indian Penal Code, 1860 (45 of 1860), and every income-tax authority shall be deemed to be a civil court for the purposes of section 195, but not for the purpose of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).”

On the face of the amended section, as extracted above, it goes without saying that a proceeding before the raiding authority shall be deemed to be a judicial proceeding and such authority shall be deemed to be a civil court for the purposes of s. 195 of the Code of Criminal Procedure, 1973

Even the question whether the procedural amendment can be made with retrospective effect had been considered by a learned judge of this court in Union of India v. Gopal Engineering Works 1987 Indlaw MAD 55, wherein it was held that the retrospective amendment of a benevolent provision could not be in violation of art. 20(1) of the Constitution of Indiaand, therefore, the amendment of s. 136 with retrospective effect from April 1, 1974, by the Finance Act, 1985, was valid. As such, it cannot be stated that the first facet of the contention, a procedure before the raiding authority before whom the petitioner was stated to have given a sworn statement which is false to his knowledge can, by no stretch of imagination, be stated to be a proceeding before a court, reflects the real position of law and, in this view of the matter, it has to fall to the ground

The other facet of the submission hinges on the embargo of s. 195(1)(b)(i) of the Code of Criminal Procedure, 1973, which reads as follows

 

“195. (1) No court shall take cognizance.-

(b)(i) of any offence punishable under any of the following sections of the Indian Penal Code (45 of 1860), namely, ss. 193 to 196 (both inclusive), 199, 200, 205 to 211 (both inclusive) and 228, when such offence is alleged to have been committed in, or in relation to, any proceedings in any court . . except on the complaint in writing of that court, or of some other court to which that court is subordinate.”

The prosecution, as launched, is in respect of the offences falling under section 120B, read with sections 193, 196, 420, 109, 34 and 37 of the Indian Penal Code, 1860, and sections 276C(1), 277 and 278 of the Income-tax Act, 1961. Of the offences enumerated above, the offences falling u/ss. 193 and 196 fall very well within the category of offences enumerated u/ss. 195(1)(b)(i) of the Code of Criminal Procedure, 1973

S. 195(1)(b)(i) of the new Code, envisaging a bar against prosecution, except on a complaint by the court, is limited in its operation only to the offences mentioned in that section, when such offences are alleged to have been committed in or in relation to any proceeding in any court. The crux of the embargo created by that section relates to some proceeding in a court in relation to which the offences (e.g., fabrication of false evidence) is alleged to have been committed. The words “in relation to” in this clause are very general and are wide enough to cover proceeding which may not have begun when the offence was committed, but was begun afterwards. A complaint by the court is necessary not only where the offence is committed pendente lite but also where the offence was committed in anticipation of a proceeding and before such proceeding was brought

In the case on hand, there is no denial of the fact that the petitioner, accused No. 1, had given a sworn statement which was false to his knowledge as respects the sale consideration for the conveyance of the landed property by means of execution of a sale deed. Such a sworn statement, as revealed by the allegations in the complaint, prima facie makes out offences falling u/ss. 193 and 196 of the Indian Penal Code. While considering the first facet of the submission, it has already been found that the raiding officer before whom he had given a sworn statement, for all practical purposes, is to be construed as a “court” within the meaning of s. 195 of the Criminal Procedure Code. Once this position is reached, it goes without saying that the offences falling u/ss. 193 and 196 of the Indian Penal Code stated to have been committed by the petitioner, accused No. 1, and emerging out of the sworn statement would clearly fall very well within the ambit of the provisions of s. 195(1)(b)(i) of the Criminal Procedure Code. In such a situation, for the court to take cognizance of those offences, a complaint in writing from the raiding officer must have to emanate. As stated earlier, no such complaint did emerge from the raiding officer. But the sordid fact is that a complaint had been launched by the Income-tax Officer, Film Circle-I, Madras, who is not at all concerned with the recording of the sworn statement, giving rise to the commission of the alleged offences u/ss. 193 and 196 of the Indian Penal Code. In such circumstances, the embargo created by s. 195(1)(b)(i) of the Criminal Procedure Code would come into free play. If that be so, what would be the consequence that would follow from the operation of the said section ?It is not as if, as already indicated, the prosecution had been launched only in respect of offences falling within the purview of s. 195(1)(b)(i) of the Criminal Procedure Code, but it had been launched also for the offences falling under other sections of the Indian Penal Code as well as under certain sections of the Income-tax Act. It would have been easy to find an answer if the prosecution had been launched only for the offences falling within the purview of the section, when a complaint emanates from the court in regard to those offences. The answer, in such a situation, would be that the prosecution, as launched without a proper complaint under s. 195(1)(b)(i) of the Criminal Procedure Code from that court, shall stand vitiated. But that is not the situation here. Would it mean that, in cases where, in the course of the same transaction, certain other distinct offences not falling within the purview of s. 195(1)(b)(i) of the Criminal Procedure Code had been committed, in addition to the offences falling within the purview of that section and complaint in regard to those offences had been filed without a complaint from the court under the provisions of s. 195(1)(b)(i) of the Criminal Procedure Code, such complaint would be thrown out lock, stock and barrel in the sense of vitiating the prosecution in its entirety or would the complaint so filed become invalid only in respect of those offences falling under the purview of the embargo created by s. 195(1)(b)(i) of the Criminal Procedure Code

Many an occasion arose for consideration of such a moot question by High Courts as well as by the Supreme Court. Worthwhile it is, at this juncture, to refer to those scintillating epoch-making decisions, so as to serve as useful guidance in finding the answer to the problematic question so posed in a bid to arrive at a just decision in the case on handIn Basir-ul-Huq v. State of West Bengal, 1953 Indlaw SC 29, their Lordships of the Supreme Court considered the scope of s. 195 of the Criminal Procedure Code and, in the process of such consideration, reliance was sought to be placed on the Full Bench decision of the Calcutta High Court in Satish Chandra v. Ram Dayal, 1920 Indlaw CAL 253, and their Lordships expressed thus

 

“(9) Section 195, Criminal Procedure Code, on which the question raised is grounded provides, inter alia, that no court shall take cognizance of an offence punishable u/ss. 172 to 188, Indian Penal Code, except on the complaint in writing of the public servant concerned, or some other public servant to whom he is subordinate. The statute thus requires that, without a complaint in writing of the public servant concerned, no prosecution for an offence u/s. 182 can be taken cognizance of. It does not further provide that, if, in the course of the commission of that offence, other distinct offences are committed, the magistrate is debarred from taking cognizance in respect of those offences as well. The allegations made in a complaint may have a double aspect, that is, on the one hand, these may constitute an offence against the authority of the public servant or public justice and, on the other hand, they may also constitute the offence of defamation or some other distinct offence. The section does not per se bar the cognizance by the magistrate of that offence, even if no action is taken by the public servant to whom the false report has been made

It was, however, argued that if, on the same facts, an offence of which no cognizance can be taken under the provisions of s. 195 is disclosed and the same facts disclose another offence as well which is outside the purview of the section and prosecution for that other offence is taken cognizance of without the requirements of s. 195 having been fulfilled, then the provisions of that section would become nugatory and, if such a course was permitted, those provisions stand defeated. It was further said that it is not permissible for the prosecution to ignore the provisions of this section by describing the offence as being punishable under some other section of the Penal Code In our judgment, the contention raised by learned counsel for the appellants is without any substance so far as the present case is concerned. The charge for the offence under section 297, Penal Code, could, in no circumstance, as pointed out by the High Court, be described as falling within the purview of section 195, Criminal Procedure Code. The act of trespass Was alleged to have been committed subsequent to the making of the false report and all the ingredients of the offence that have been held to have been established on the evidence concern the conduct of the appellants during the post-report period. In these circumstances, no serious contention could be raised that the provisions of s. 195 would stand defeated by the Magistrate having taken cognizance of the offence under that section

As regards the charge under section 500, Indian Penal Code, it seems fairly clear both on principle and authority that, where the allegations made in a false report disclose two distinct offences, one against the public servant and the other against a private individual, that other is not debarred by the provisions of s. 195 from seeking redress for the offence committed against him. Section 499, Indian Penal Code, which mentions the ingredients of the offence of defamation gives, within defined limits, immunity to persons making depositions in court, but it is now well-settled that that immunity is a qualified one and is not absolute as it is in English law. Under section 198, Criminal Procedure Code, a complaint in respect of an offence under section 499, Indian Penal Code, can be initiated only at the instance of the person defamed, in like manner as cognizance for an offence u/s. 182 cannot be taken except at the complaint of the public servant concerned. In view of these provisions, there does not seem in principle any warrant for the proposition that a complaint u/s. 499 in such a situation cannot be taken cognizance of unless two persons join in making it, i.e., it can be considered only if both the public servant and the person defamed join in making it, otherwise the person defamed is without any redress. The statute has prescribed distinct procedure for the making of the complaints under these two provisions of theIndian Penal Code and, when the prescribed procedure has been followed, the court is bound to take cognizance of the offence complained ofThe decided cases fully support this view and our attention has not been drawn to any case which has taken a contrary view as regards offences under section 500, Indian Penal Code. In Satish Chandra v. Ram Dayal, 1920 Indlaw CAL 253 (SB), five judges of the Calcutta High Court considered this question and held that where the maker of a single statement is guilty of two distinct offences, one under section 211, Indian Penal Code, which is an offence against public justice and the other an offence under section 499, wherein the personal element largely predominates, the offence under the latter section can be taken cognizance of without the sanction of the court concerned, as the Criminal Procedure Code has not provided for sanction of court for taking cognizance of that offence. It was said that the two offences being fundamentally distinct in nature, could be separately taken cognizance of. That they are distinct in character is patent from the fact that the former is made non-compoundable, while the latter remains compoundable, in one, for the initiation of the proceedings, the Legislature requires the sanction of the court under section 195, Criminal Procedure Code, while in the other, cognizance can be taken of the offence on the complaint of the person defamed

It could not be denied that the accused could be tried of charges u/ss. 182 and 500, Indian Penal Code, separately on same facts provided the public servant as well as the person defamed made complaints. If that is so, there is no reason why one cannot be tried independently of the other so long as the requirements of each are satisfied. Harris C. J., while delivering the Full Bench decision in question, examined all the earlier cases of the Calcutta High Court and observed that, where, upon the facts, the commission of several offences is disclosed, some of which require sanction and others do not, it is open to the complainant to proceed in respect of those only which do not require sanction; because, to hold otherwise would amount to legislating and adding very materially to the provisions of ss. 195 to 199, Criminal Procedure Code. Ss. 195 to 199 deal with the requisites for the prosecution of certain specified offences and the provisions of those sections must be limited to prosecutions for the offences actually indicated. If it was the intention of the Legislature to make sanctions or complaints in a certain form necessary for the prosecution of all offences disclosed by facts which would give rise to any of the offences specifically indicated in the sections, the Legislature could have said so but it did notRecently, this matter was canvassed before a Full Bench of the Madras High Court and it was held that, in such cases, it was open to the party defamed to take proceedings under section 499, Indian Penal Code, without the court filing a complaint in accordance with the provisions laid down in s. 195. There the question was whether the alleged defamer who had given false evidence in a court could be prosecuted under section 499,Indian Penal Code, without a complaint by the court before whom he gave evidence and the question was answered in the affirmative after an exhaustive review of the decided cases of the different High Courts in India. It was said that, if the offence of giving false evidence in judicial proceeding and defamation do not belong to the same genus but are distinct and separate in their characteristics and ingredients, it was difficult to perceive any serious inhibition by the Criminal Procedure Code for initiation and trial of one of these offences independently of anterior resort to fulfilling the conditions necessary to commence prosecution for the other. These observations have apt application to the present case. The ingredients of the offence u/s. 182 cannot be said to be the ingredients for the offence u/s. 500. Nor can it be said that the offence relating to giving false information relates to the same group of offences as that of defamation

Though, in our judgment, s. 195 does not bar the trial of an accused person for a distinct offence disclosed by the same facts and which is not included within the ambit of that section, it has also to be borne in mind that the provisions of that section cannot be evaded by resorting to devices or camouflages. The test whether there is evasion of the section or not is whether the facts disclose primarily and essentially an offence for which a complaint of the court or of the public servant is required. In other words, the provisions of the section cannot be evaded by the device of charging a person with an offence to which that section does not apply and then convicting him of an offence to which it does, upon the ground that such latter offence is a minor offence of the same character, or by describing the offence as being one punishable under some other section of the Indian Penal Code, though in truth and substance, the offence falls in the category of sections mentioned in section 195, Criminal Procedure Code. Merely by changing the garb or label of an offence which is essentially an offence covered by the provisions of section 195, prosecution for such an offence cannot be taken cognizance of by misdescribing it or by putting a wrong label on it.”

In Durgacharan Naik v. State of Orissa, 1966 Indlaw SC 357, their Lordships happened to consider the effect of prosecution under two distinct offences falling u/ss. 353 and 186 of the Indian Penal Code on the same facts without sanction under section 195, Criminal Procedure Code, and stated thus

 

“(5) We pass on to consider the next contention of the appellants that the conviction of the appellants under section 353, IPC, is illegal because there is a contravention of s. 195(1) of the Criminal Procedure Code which requires a complaint in writing by the process server or the A.S.I. It was submitted that the charge under section 353, IPC, is based upon the same facts as the charge under section 186, IPC, and no cognizance could be taken of the offence under section 186, IPC, unless there was a complaint in writing as required by s. 195(1) of the Criminal Procedure Code. It was argued that the conviction under section 353, IPC, is tantamount, in the circumstances of this case, to circumvention of the requirement of s. 195(1) of the Criminal Procedure Code, and the conviction of the appellants under section 353, IPC, by the High Court was, therefore, vitiated in law. We are unable to accept this argument as correct. It is true that most of the allegations in this case upon which the charge under section 353, IPC, is based are the same as those constituting the charge under section 186, IPC, but it cannot be ignored that ss. 186 and 353, IPC, relate to two distinct offences and, while the offence under the latter section is a cognizable offence, the one under the former section is not so. The ingredients of the two offences are also distinct. Section 186, IPC, is applicable to a case where the accused voluntarily obstructs a public servant in the discharge of his public functions but under section 353, IPC, the ingredient of assault or use of criminal force while the public servant is doing his duty as such is necessary. The characteristics of the two offences are also different. S. 186 occurs in Chapter X of the IPC, dealing with contempt of the lawful authority of public servants, while s. 353 occurs in Chapter XVI, regarding the offences affecting the human body. It is well-established that s. 195 of the Criminal Procedure Code does not bar the trial of an accused person for a distinct offence disclosed by the same set of facts but which is not within the ambit of that section. In Satish Chandra Chakravarthi v. Ramdayal De, 24 Cal WN, 1920 Indlaw CAL 253, it was held by a Full Bench of the Calcutta High Court that, where the maker of single statement is guilty of two distinct offences, one under section 211, IPC, which is an offence against public justice and the other under section 499, wherein the personal element largely predominates, the offence under the latter section can be taken cognizance of without the sanction of the court concerned, as the Criminal Procedure Code has not provided for sanction of court for taking cognizance of that offence. It was said that the two offences, being fundamentally distinct in nature, could be separately taken cognizance of. That they are distinct in character is patent from the fact that the former is made non-compoundable while the latter remains compoundable. In one, for the initiation of the proceedings, the Legislature requires the sanction of the court under section 195, Criminal Procedure Code, while, in the other, cognizance can be taken of the offence on the mere complaint of the person defamed. It is pointed out in the Full Bench case that, where, upon the facts, the commission of several offences is disclosed some of which requiring sanction and others not, it is open to the complainant to proceed in respect of those only which do not require sanction because, to hold otherwise would amount to legislating and adding very materially to the provisions of ss. 195 to 199 of the Criminal Procedure Code. The decision of the Calcutta case has been quoted with approval by this court in Basir-ul-Huq v. State of West Bengal 1953 Indlaw SC 29; AIR 1953 SC, 293 in which it was held that, if the allegations made in a false report disclose two distinct offences, one against a public servant and the other against a private individual, the latter is not debarred by the provisions of section 195, Criminal Procedure Code, from seeking redress for the offence committed against himIn the present case, therefore, we are of the opinion that section 195, Criminal Procedure Code, does not bar the trial of the appellants for the distinct offence under s. 353 of the Indian Penal Code though it is practically based on the same facts as for the prosecution under section 186, IPC.”

 

In Narayana Ayyar v. G. Veerappa Pillai [1950] MWN (Crl.) 282, Full Bench of this court, after elaborate consideration of the entire case law then available in the process of examination of the scope of section 195, Criminal Procedure Code, held that, where an alleged offence falls both u/ss. 193 and 500, IPC, a complaint by the court under s. 195(1), Criminal Procedure Code, is not necessary to enable the Magistrate to take cognizance of the offence under section 500, IPC, alone

In Mani In re [1966] LW (Crl.) 193, the prosecution case was that, in disobedience of an order under section 144,Criminal Procedure Code, the petitioners, accused formed themselves into an unlawful assembly and, in prosecution of their common object of such an assembly, committed offences u/ss. 147 and 148, IPC, besides other offences under sections 454, 427 and 435, IPC. It was contended that, since the offences were committed in the course of defying the order passed under section 144, Criminal Procedure Code, and the defiance of the order amounted to an offence under section 188, IPC, which could be taken cognizance of by the court under s. 195(1)(a), Criminal Procedure Code, only on a complaint from the Deputy Tahsildar or some other senior officer, the prosecution was bad for want of such complaint and the provisions of s. 195(1)(a) could not be allowed to be evaded by omitting the offence under section 188, IPC. In such a situation, a learned judge of this court, placing reliance on Basi-ul-Huq v. State of West Bengal, 1953 Indlaw SC 29, and other decisions of this court and other High Courts, held as follows

“Section 195, Criminal Procedure Code, does not bar the trial of an accused for a distinct offence disclosed by the same facts and which is not included within the ambit of that section. The offences under sections 147, 148, 457, 427 and 435, IPC, are offences distinct from the alleged violation of the prohibitory order. Even on the footing that an offence under section 188, IPC, had been committed, the want of complaint by the Tahsildar relating to that would not bar the Magistrate from taking cognizance of the other offences which are distinct and separate offences and, in fact, graver offences. Those offences could stand independently whether there had been an order under section 144, Criminal Procedure Code, or not.”

 

From the views expressed as above by the learned judge of this court and their Lordships of the Supreme Court, it is crystal clear that, if, in the course of the same transaction, distinct offences are made out apart from commission of offences falling within the ambit or the purview of s. 195(1)(b)(i), Criminal Procedure Code, and a complaint had been lodged in respect of all the offences without a complaint emanating from the court under the provisions of s. 195(1)(b)(i), Criminal Procedure Code, the entirety of the prosecution shall not stand vitiated and, if at all, that part of the prosecution as relatable to the offences falling within the ambit of s. 195(1)(b)(i), Criminal Procedure Code, alone would become invalid and the prosecution in respect of other offences has to be continued in the manner allowed by law

In the instant case, since no complaint has emerged from the raiding officer as respects the offences u/ss. 193 and 196 of the Indian Penal Code, tracing their origin to the sworn statement given by the petitioner-accused No. 1, the complaint in so far as it relates to such of those offences alone, would become invalid and the prosecution in respect of other distinct offences, both under the Indian Penal Code as well as under the Income-tax Act, must be continued to its logical conclusion, according to the procedure established by law, of course, if their other submissions made are found against the petitionerThe second submission is nothing but elongation of the first submission, arising out of the commission of offences u/ss. 193 and 196 of the Indian Penal Code, which fall among the category of offences listed under s. 195(1)(b)(i) of the Criminal Procedure Code by filing Form No. 37G, before the Registering Authority, containing false recitals respecting the sale consideration for the conveyance. It is not as if the averments in the complaint fall under the count of each of the offences falling u/ss. 193 and 196, IPC, arising out of the sworn statement stated to have been given by the petitioner-accused No. 1 to the raiding officer. But the sordid fact is that there are specific averments disclosing similar offences arising as a consequence of the petitioner accused No. 1 presenting before the Sub-Registrar, Kodambakkam, Form No. 37G (in duplicate) prescribed under Rule 48 of the Income-tax Rules, 1962, and section 269P(1) of the Income-tax Act, 1961, duly verified and signed, along with the instrument of transfer mentioning in columns 8 and 9, the actual consideration for the transfer as well as the estimated fair market value of the property as Rs. 5, 86, 000. The sale consideration for transfer mentioned in Form No. 37-G is apparently false to the knowledge of the petitioner-accused No. 1 inasmuch as the sale consideration for transfer was referred to in astronomical figures in the letter of arrangement that came into existence on February 18, 1982. Such false recital as respects the sale consideration in the form so presented would prima facie make out an offence falling u/ss. 193 and 196 of the Indian Penal Code. No doubt, the proceedings before the Sub Registrar, Kodambakkam, can, by no stretch of imagination, be construed to be a judicial proceeding. It is to be remembered at this juncture that one such copy of Form No. 37-G is to be forwarded by the Sub-Registrar to the Assessing Officer. Such forwarding to the Assessing Officer cannot at all be stated to be a ritualistic formality in the process of registration of the sale deed by the Sub-Registrar. There is a purpose behind such forwarding of the said form to the Assessing Officer. The purpose for which it was forwarded is rather obvious. The sale consideration specifically mentioned in Form No. 37-G could be taken into account by the Assessing Officer in the process of completion of assessment of the respective parties affected by the conveyanceAn assessment proceeding by the Assessing Officer is definitely judicial proceeding as per the provisions adumbrated under s. 136 of the Income-tax Act. No doubt it is true that, at the time when Form No. 37-G along with the instrument of transfer had been presented before the Registering Authority, there was no pendency of any assessment proceeding respecting the petitioner-accused No. 1. It is of paramount importance to note here that the recitals as regards the sale consideration for the transfer had been incorporated falsely in Form No. 37-G, obviously with an ulterior purpose of evading tax on the concealed income by the petitioner-accused No. 1 and capital gains tax by the transferors, accused Nos. 4 to 8, in the assessment proceedings to be followed thereafter. The importance of the phraseology, viz

 

“When such offence is alleged to have been committed in, or in relation to, any proceeding in any court.”

 

as couched in s. 195(1)(b)(i), Criminal Procedure Code, can very well be understood. This phraseology is wide enough to cover a proceeding in contemplation before a criminal court, though the proceedings may not have begun, when the offence was committed, but may have begun afterwards. It can very well be stated that the commission of the offences falling u/ss. 193 and 196 of the Indian Penal Code, arising from false recitals incorporated in Form 37-G by the petitioner accused No. 1 was no doubt in anticipation of assessment proceedings to be followed thereafter. In such an eventuality, the embargo created by s. 195(1)(b)(i), Criminal Procedure Code, would come into free play in the sense of requiring a complaint to be filed by the Assessing Officer in respect of those offences. A complaint by the Assessing Officer, the Income-tax Officer, Film Circle 1, Madras, had, admittedly, been filed, not only for offences u/ss. 193 and l96, IPC, falling within the ambit of s. 195(1)(b)(i), Criminal Procedure Code, but also in respect of other distinct offences failing under the Indian Penal Code as well as under the Income-tax Act. The petitioner as such has to undergo the ordeal of facing the trial for offences u/ss. 193 and 196, IPC, arising out of the false recitals incorporated in Form No. 37G as well as other sections under the Income-tax Act, subject, of course, to the verdict on the other submissions made by learned senior counsel for the petitioner. As such, this submission also bristles next to nothingThe third submission hinges on the question of launching of prosecution being premature, on the facts and circumstances of the case. Admittedly, the assessment proceedings in the case of the petitioner, accused No. 1, had not been completed and the tax liability determined. Such being the situation, criminal proceedings had been initiated for various offences under sections 276C, 277 and 278 of the Income-tax Act, I961. A perusal of the provisions of those sections, it is said, would point out that the punishment for each of those offences is linked to the quantum of tax and, on that premise, it is contended that unless and until the tax liability is determined, it is not legitimately permissible for the trial court to impose upon the petitioner, accused No. 1, the requisite punishment, in case he is found guilty of those offences and therefore, the prosecution, as launched, cannot be otherwise than premature. Of course, this submission, as propounded, on the face of it, looks highly credible. But, its credibility, I am of the view, would get irretrievably effaced, on deeper scrutiny of the sanguine provisions adumbrated in sections 276C, 277 and 278 of the Income-tax Act

Section 276C, which deals with cases of wilful failure to furnish returns of income has been replaced by new section 276C, which deals with cases of wilful attempt to evade tax, etc., and the existing section 276C, with certain modifications, had been renumbered as section 276CC. The new section 276C makes wilful attempt to evade any tax, penalty or interest chargeable or imposable under the Income-tax Act or to evade payment of any such tax, penalty or interest punishable under the law. Any person (i) who has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under the Act) containing a false entry or statement, or (ii) who makes or causes to be made any false entry in such books or documents, or (iii) who omits or causes to be omitted, any relevant entry or statement in such books or documents, or (iv) who causes any other circumstance to exist which will have the effect of enabling him to evade any tax or payment thereof shall be guilty of an offence under the new provisionNew section 276CC provides for punishment for wilful failure to furnish returns of income under sub-s. (1) of s. 139 or in response to a notice under sub-s. (2) of that section or section 148

The old s. 277 had been substituted by the Amending Act and, under the amended section, if a person makes a statement in any verification under this Act or under any rule made thereunder or delivers an account or statement which is false and which he either knows or believes to be false or does not believe to be true, he is liable to be punished. Similarly, the old s. 278 had also been substituted by new section which prescribes that, if a person abets or induces, in any manner another person to make and deliver an account or statement or declaration relating to any income chargeable to tax, which is false and which he either knows to be false or does not believe to be true or to commit an offence under sub-s. (1) of section 276C, he is liable to be punished. The amended provisions of all those sections were substituted by the Taxation Laws. (Amendment) Act, 1975, with effect from October 1, 1975, and the offence committed prior to that date will be punishable under the provisions then existing

It is only under the Amending Act that punishment is linked with the quantum of tax. Under those sections, graded punishment had been provided depending upon the quantum of tax. If the quantum of tax exceeds Rs. 1 lakh, punishment will be rigorous imprisonment for minimum term of seven years and fine and, in any other case, punishment will be rigorous imprisonment for a minimum term of three years and fine

It looks as though, at first sight, for awarding of punishment under those sections, assessment has to be completed and the quantum of tax determined. But, in reality, it is not so. Section 276, C deals with attempt at evasion of any tax, penalty or interest chargeable or imposable under the Act. Therefore, what is contemplated is evasion, before charging or imposing tax, penalty or interest. That may include wilful suppression before assessment and completionBut sub-s. (2) deals with “evading payment of any tax, penalty or interest under this Act”. The words “chargeable or imposable” are not there. What the said sub-section further says is

“without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable”and, therefore, sub-s. (2) takes in cases of tax evasion after” charging”or” imposition”

. Evasion, after completion of assessment, also comes within the operation of the sub-section. There is also an Explanation appended to section 276C and what it deals with is

“wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof”contemplated in subs. (1) and not” payment of any tax, penalty or interest under this Act”

as contemplated in sub-s. (2). Therefore, the Explanation is concerned with only sub-s. (1) and not sub-section (2)

Section 276CC uses the expression,

“where the amount of tax which would have been evaded if the failure had not been discovered”. S. 277 also uses a more or less similar expression, viz.” where the amount of tax which would have been evaded if the statement or account had been accepted As true”

. And s. 278 is not an exception, which also uses the expression more or less akin to the expression used in the earlier section, viz.,

“where the amount of tax, penalty or interest which would have been evaded, if the declaration, account or statement had been accepted as true, or which is wilfully attempted to be evaded”

 

The usage of such expressions, as catalogued above under those sections, would indicate the launching of the prosecution before completion of assessment and determination of the quantum of tax. Even otherwise, the tax sought to be evaded on the concealed income by suppression of materials is capable of being determined on the evidence to be adduced during the course of trial, so as to enable the trial court to determine the quantum of punishment to be awardedEven in the extreme case of the prosecution having been handicapped in not proving to the hilt the exact quantum of tax evasion, but none the less, was able to prove evasion of tax, the person responsible for such evasion cannot be expected to go scotfree as such a person would get punished with lesser sentence as provided for in all those sections

Learned senior counsel for the petitioner, at this juncture, would desire to make an ingenious argument that carry forward of loss is permitted u/s. 72(3) of the Income-tax Act, 1961, to a maximum period of eight assessment years and in case of loss entitling the petitioner to carry forward such loss under the said benevolent provisions, it cannot be stated that there is evasion of tax and concealment of income before the completion of assessment. This argument also does not appear to be correct for reasons more than one

The amount of tax sought to be evaded by concealment of income is a matter for evidence during the course of trial and not to be agitated in a proceeding like the one on hand. Even assuming for argument’s sake that the loss sustained is to such an extent that there is no possibility of any tax liability, it cannot be stated that there is no evasion of tax. The amount concealed in a particular assessment year is chargeable to tax at the rates then in force and, in the process of “carry forward and set off of loss”, the amount of concealed income will go in reducing the loss for the particular year and thereby consequently producing a tax effect. Useful reference can be made here to Explanation (iv) appended to section 276C, which prescribes that a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or payment thereof shall include a case where any person causes any other circumstances to exist which would have the effect of enabling such person to evade any tax, penalty, or interest chargeable or imposable under this Act or payment thereof. The petitioner, accused No. 1, had actually understated the sale consideration in Form No. 37G, in a sizable sum, which produced a tax effect in the assessment to be made in his caseJudicial precedents on the vexed question as to whether launching of prosecution for certain offences under the Income-tax Act is premature before the completion of assessment are available and they may be usefully referred to

In P. Jayappan v. S. K. Perumal, First ITO 1984 Indlaw SC 185 (SC), the petitioner submitted a return for the assessment year 1977-78 disclosing an income of Rs. 13, 380. The trading and profit and loss account for that assessment year filed by him showed that he had purchased chicory seeds of value of Rs. 65, 797 as against Rs. 2, 15, 729 as per the seized accounts. On the allegation that the petitioner had deliberately filed false return and had kept false accounts with the intention of using them as genuine evidence in the assessment proceedings, a complaint was filed against him in the court of the Addl. Chief judicial Magistrate for taking action against him for offences punishable u/s. 276 (wilful attempt to evade tax) and s. 277 (false statement in verification) of the Income-tax Act, 1961, and s. 193 (punishment for false evidence) and s. 196 (using evidence known to be false) of the I.P.C. Similar complaints were made for the three succeeding assessment years. The petitioner, thereupon, filed petitions u/s. 482 of the Criminal Procedure Code before the High Court to have the proceedings quashed contending that the launching of the prosecution was premature because the reassessment proceedings started against him for these years had not been completed. On the High Court dismissing the petitions, the petitioner preferred a petition before the Supreme Court u/art. 136 of the Constitution for special leave to appeal against the order of the High Court

Their Lordships of the Supreme Court, while dismissing the special leave petition, held :

“The pendency of the reassessment proceedings could not act as a bar to the institution of criminal prosecution for the offences punishable under section 276C or s. 277 of the Income-tax Act, 1961. Nor could the institution of the criminal proceedings, in the circumstances, amount to an abuse of the process of the court. The High Court was, therefore, right in refusing to quash the prosecutionThere is no provision in law which provides that a prosecution for the offences under section 276C or s. 277 of the Income-tax Act cannot be launched until reassessment proceedings initiated against the assessee are completed

A mere expectation of success in some proceeding in an appeal or a reference under the Income-tax Act cannot come in the way of the institution of criminal proceedings under section 276C and s. 277 of the Act

The criminal court no doubt has to give due regard to the result of any proceedings under the Income-tax Acthaving a bearing on the question in issue and, in appropriate cases, it may drop the proceedings in the light of an order passed under the Act. It does not, however, mean that the result of a proceeding under the Act would be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it

S. 279(1A) does not provide that the mere fact that there is possibility of the Commissioner passing an order waiving or reducing the penalty imposed or imposable on the accused u/s. 271(1)(c), prosecution for an offence under section 276C or s. 277 shall not be instituted

In appropriate cases, the criminal court may adjourn or postpone the hearing of a criminal case to exercise its discretionary power u/s. 309 of the Criminal Procedure code, if the disposal on any proceeding under the Income-tax Act which has a bearing on the proceedings before it is imminent so that it may take into consideration also the order to be passed therein. Even here the discretion should be exercised judicially and in such a way as not to frustrate the object of the criminal proceedings. There is no rigid rule which makes it necessary for a criminal court to adjourn or postpone the hearing of a case before it indefinitely or for an unduly long period only because some proceeding which may have some bearing on it is pending elsewhere.”

In Madras Vanaspati Ltd. v. S. Subramanian, ITO 1988 Indlaw MAD 88 (Mad) the original assessment had been set aside and reassessment ordered. Prosecution had also been simultaneously launched and the prosecution so launched was sought to be quashed on the ground that the satisfaction originally arrived at by the officer for initiating the prosecution was taken away and the criminal prosecution should necessarily be brought to a grinding halt. While negativing the contention, learned judge of this court said thus

 

“It is not in every case where the assessment order is set aside, that criminal prosecution has necessarily to be brought to a grinding halt. Certain findings of fact have to be arrived at by the tax authorities on the basis of which they have to calculate the tax, and if some findings of fact have not been arrived at on a proper analysis, higher forums could remand the matter for fresh consideration and for fixing afresh the extent of the fiscal liability. Such orders would not, in any way, affect prosecution for offences committed with reference to the documents which, on their very face, constitute offences.”

 

In Telu Ram Raunqi Ram v. ITO 1983 Indlaw PNH 29 (P & H), the Income-tax Officer, during the assessment proceedings, made additions to the income of the assessee. The Appellate Assistant Commissioner reduced the addition. On further appeal, the Tribunal made certain additions and, in the quantum proceedings, the matter came finally to rest. Simultaneously, the Inspecting Assistant Commissioner passed an order imposing penalty on the assessee. The assessee’s appeal to the Tribunal was dismissed. The assessee filed an application for reference against the order of the Inspecting Assistant Commissioner imposing penalty which was pending. Thereafter, the Department launched prosecution against the assessee under s. 277 of the Income-tax Act, 1961. The assessee filed a petition in the High Court u/s. 482 of the Criminal Procedure Code 1973, for quashing the criminal proceedings which were an abuse of the process of the court, because, the order of the Tribunal was not final and the penalty proceedings were open to correction in the light of the opinion given by the High Court in the income-tax reference which was pending. The jurisdictional foundation might be knocked off and fresh penalty proceedings might have to be initiated by the Income-tax Officer, and in that event, he might take different view so as to absolve the assessee altogether from the imposition of penalty and that, even if the Income-tax Officer did not do so, there were two other higher forums in which such a finding could be arrived at. It was held under such circumstances as follows

“Mere expectancies should not stand in the way of the criminal court from proceeding in the matter. The High Court could not stop any proceedings against an assessee in a criminal court on mere expectancy. In case the expectations of the assessee fructify and an order was passed in its favour by the time the trial was pending, or even at the appellate and revisional stages, all those courts, in dealing with that matter, would be required to give due regard to those findings in case they were favourable to the assessee. Therefore, the proceedings against the assessee, as the instant stage, were not an abuse of the process of the court and the grant of stay of the proceedings would not be in the interest of justice.”

In Geethanjali Mills Ltd. v. V. Thiruvengadathan 1988 Indlaw MAD 93 (Mad), the original assessment had been made by the Inspecting Assistant Commissioner and was subsequently confirmed by the Commissioner of Income-tax (Appeals). The Appellate Tribunal set aside the order of the Commissioner of Income-tax (Appeals), confirming the order of the Inspecting Assistant Commissioner and remanded it for fresh disposal. A prosecution was launched by the Department subsequent to the date of the order of the Income-tax Appellate Tribunal for certain offences, both under the Indian Penal Code as well as under the Income-tax Act. In such a situation, it was contended that the basis on which the prosecution was launched did not at all subsist the moment the Income-tax Appellate Tribunal set aside the order of the Commissioner of Incometax thus confirming the order of the Inspecting Assistant Commissioner and remanded it for fresh disposal and, therefore, the prosecution is not maintainable in law. Such a contention was further amplified by stating that though the Inspecting Assistant Commissioner completed the assessment subsequent to the remand order, complying with all the formalities, yet the complaint filed was on the basis of the order of the Commissioner of Income-tax confirming the order of the Inspecting Assistant Commissioner and not the fresh order passed by the Inspecting Assistant Commissioner subsequent to the remand. This argument was repelled by the Revenue stating that there is no bar to the launching of a criminal prosecution pending decision by the assessing authority and whatever adverse findings had been observed in the orders of the assessment and penalty proceedings, they were not binding on the criminal court while determining the guilt of an accused. It was further submitted that mere expectancies should not stand in the way of the criminal court proceeding in the matter. Upholding the contention of the Revenue, this court said thus

“The fact that the Tribunal has passed an order of remand in the assessment proceedings would not be a bar to prosecution for offences under the Income-tax Act. Mere expectancies should not stand in the way of the criminal court proceeding in the matter. The High Court cannot stop any proceedings against an assessee in a criminal court on mere expectancy.”

 

In view of what has been stated above, this submission has to fall to the ground

The fourth submission reflects really the manifestation of the third submission as to the prosecution being premature from a different angle, focussed from the point of view of the penalty proceedings culminating in reduction or waiver of penalty imposed unlike the third submission which was projected by linking the punishment with the quantum of tax sought to be evaded

S. 271 of the Income-tax Act deals with the consequences flowing from the failure to furnish returns, comply with notices, concealment of income etc. The officers competent to proceed under this section are specifically mentioned in the opening part of the section itself and they are

(1) the Assessing Officer;

(2) the Deputy Commissioner (Appeals) ; and

(3) the Commissioner (Appeals);

To initiate proceedings the Officers, as referred to above, have to be satisfied that the person sought to be proceeded against had failed to comply with a notice under sub-s. (1) of s. 142 or sub-s. (2) of s. 143 or fails to comply with a direction Issued under subsections (2A) of section 142, or has concealed the particulars of income or furnished inaccurate particulars of such income. Failure to comply with the notice issued u/ss. 142 and 143 is dealt with in subs. (1)(b) and the concealment of particulars of income is dealt with by sub-s. (1)(c)Once such satisfaction is derived, discretion is given to the Officers so satisfied for levying of penalty and this is indicated by the use of the phraseology, viz., “he may direct that such person shall pay by way of penalty.”

In the cases referred to in clause (b), in addition to the tax payable, a sum which shall not be less than one thousand rupees but which may extend to twenty-five thousand rupees for each such failure by way of such penalty is imposable. In the cases referred to in clause (c), in addition to any tax payable, a sum which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of particulars of the income or the furnishing of inaccurate particulars of such income, by way of penalty is imposable

Section 273A deals with power to reduce or waive penalty, etc., in certain cases. This power inheres in the Chief Commissioner and Commissioner. The section itself opens with a non obstante clause, “Notwithstanding anything contained in this Act,” meaning thereby that the Chief Commissioner and Commissioner are vested with unbridled powers in the matter of reduction or waiver of penalty. The discretion so vested in them may be exercised on their own motion or otherwise

However, the section prescribes that certain pre-requisite conditions are required to be satisfied before the exercise of such a power. The persons sought to be proceeded against u/s. 271 must have, prior to the detection by the Assessing Officer of the concealment of particulars of income or the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars. He had co-operated in any enquiry relating to the assessment of his income and lastly, these things apart, he had either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year. In a nutshell, the operation of the section is restricted to the existence of the contingencies as referred to above and not otherwiseThe provisions of this new section 273A are substantially similar to the provisions of sub-section (4A) of section 271, which was deleted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975

S. 279(1A) prescribes that a person shall not be proceeded against for an offence under s. 277 in relation to the assessment year in respect of which the penalty imposed or imposable on him under cl. (iii) of sub-s. (1) of s. 271 has been reduced or waived by an order under section 273A. In other words, this section cannot come into play at all, unless and until, as a matter of fact, there is reduction or waiver of penalty by an order emanating from the authorities concerned under section 273A

In the case on hand, the petitioner, accused No. 1, who ought to have filed his return of income on or before July 31, 1982, for the assessment year 1982-83 had actually filed his return of income only on September 30, 1986, long subsequent to the launching of the prosecution, viz., on March 23, 1984, as referred to earlier. In such a state of affairs, the question of initiation of penalty proceedings which would depend upon the findings given in the assessment proceedings is rather inconceivable. The bar created under s. 279(1A) will come into operation only when there is actual or factual reduction or waiver of the penalty imposed. As such, the contention of learned senior counsel for petitioner accused No. 1, that there cannot be any prosecution for the offence under s. 277 before the launching of the penalty proceedings cannot at all be countenanced

This question may be approached also from a different angle. It is not as if the prosecution had been launched by the Income-tax Officer, Film Circle-I, Madras-34, without an authorisation from the Commissioner, under s. 279(1). The authorisation is couched in the following order

“I authorise the filing of complaint for the assessment year 1982-83 against the said Shri G. S. R. Krishnamurthi, karta of G. S. R. Krishnamurthi (Hindu undivided family) as stated in para 1 supra for offences under sections 276C(1), 277 and 278 of the Income-tax Act, 1961

 

From the authorisation as extracted above, it is unequivocally crystal clear that the Commissioner had exercised his discretion to prosecute the petitioner, accused No. 1, for the offences under the Income-tax Act, 1961, inclusive of sections 276C and 277. From the authorisation so given, it is inferable with ease and grace that the Commissioner had exercised his discretion not to reduce or waive the penalty imposable on the petitioner, accused No. 1, on the existence of certain factual situation in the case. Such a factual situation is rather obvious from the narration of the facts in the complaint itself. Admittedly, the petitioner, accused No. 1, neither filed any return of income nor any revised return voluntarily and in good faith, making a full and true disclosure of all his income before the raid. He had neither paid nor made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under the Act in relation to the assessment year, viz., 1982-83The question as to when the protection or immunity to s. 279(1A) can be availed of by an assessee had been decided by this court in M. R. Pratap v. V. M. Muthukrishnan, ITO1977 Indlaw MAD 141, wherein a learned judge of this court held

 

“The protection or immunity under s. 279(1A) of the Incometax Act, 1961, from prosecution under s. 277 of the Act in a case where the penalty imposable on the assessee u/s. 271(1)(iii) has been reduced or waived u/s. 271(4A), can be availed of by an assessee only in a case where the Commissioner is inclined to exercise his discretion u/s. 271(4A). It cannot be contended that no criminal case can be instituted under s. 277 before the exercise of the discretionary power given u/s. 271(4A) of the Act.”

 

This submission, as such, merits little substance and consequently deserves to be rejected

The fifth submission consists of a two-pronged attack. The first prong revolves round the question that the prosecution for the offences under the Indian Penal Code is not legally permissible, as there is no sanction for such prosecution in s. 279(1) of the Income-tax Act, 1961. The second prong hinges on the pivotal question that the likelihood of irreparable prejudice being caused as a result of joinder of offences under the Indian Penal Code which are non-compoundable, along with the offences under the Income-tax Act, which are compoundable, cannot be ruled out of consideration. Sub-s. (1) of s. 279 of the Incometax Act, 1961, which is relevant for our purpose, dealing with the prosecution at the instance of the Commissioner prescribes that a person shall not be proceeded against for an offence under sections 275A, 276A, 276AA, 276B, 276C, 276CC, 276D, 276DD, 276E, 277, 278 or section 278A except at the instance of the Commissioner. The expression “at the instance of the Commissioner” as used in the section mean “with the sanction or on his authority”. It does not require the complaint to be filed by the Commissioner himself. The sanction or authority required under the section is for the prosecution of the offender for the offences committed by him under the Income-tax Act, as specifically referred thereto. To put it otherwise, there is no inhibition or prohibition for launching of prosecution for offences under any other enactment requiring the sanction or the authorisation of the CommissionerS. 2(d) of the Code of Criminal Procedure, 1973, defines “complaint” thus

 

“‘ complaint’ means any allegation made orally or in writing to Magistrate, with a view to his taking action under this code that some person, whether known or unknown, has committed an offence, but does not include a police report

Explanation.-A report made by a police officer in a case which discloses, after investigation, the commission of a non-cognizable offence shall be deemed to be a complaint

and the police officer by whom such report is made shall be deemed to be the complainant.”

 

S. 190 of the Code of Criminal Procedure, 1973, dealing with cognizance of offences by Magistrates figures in Chapter XIV, under the caption, “Conditions requisite for initiation of proceedings” and it is couched in the following terms

 

“190. Cognizance of offences by Magistrates.-(1) Subject to the provisions of this Chapter, any Magistrate of the first class, and any Magistrate of the second class specially empowered in this behalf under sub-s. (2) may take cognizance of any offence, (a) upon receiving a complaint of facts which constitute such offence ;

(b) upon a police report of such facts;

(c) upon information received from any person other than police officer, or upon his own knowledge, that such offence has been committed

(2) The Chief judicial Magistrate may empower any Magistrate of the second class to take cognizance under sub-s. (1) of such offences as are within his competence to inquire into or try.”

 

It follows from the sanguine provisions adumbrated in ss. 2(d) and 190 of the Code of Criminal Procedure that the general rule is that any person can set the law in motion by a complaint. Certain exceptions are created in ss. 195 to 198 of the said Code. S. 195 is one of the sections which prohibits a court from taking cognizance of certain offences unless and until a complaint has been made by some particular authority or a person. The other sections viz., ss. 196 to 198, also deal with similar matters. These sections do not lay down any rule of procedure ; but they only create a bar and say that unless some requirements had been complied with, no court shall take cognizance of offences described in those sectionsThe offences with which the petitioner, accused No. 1, had been prosecuted fall under section 120B read with sections 193, 196, 420, 109, 34 and 37 of the Indian Penal Code along with other offences under the Income-tax Act. For the offences u/ss. 193 and 196, Indian Penal Code, said to have been committed, as a result of giving a sworn statement before the raiding officer which is false to the knowledge of the petitioner, it has already been found that the initiation of prosecution for those offences is invalid for want of a complaint from the raiding officer under the provisions of s. 195(1)(b)(i) of the Code of Criminal Procedure. However, for similar offences arising out of the filing of Form No. 37-G before the Registering Authority, a finding had been given that the prosecution therefor cannot be stated to be invalid, as a complaint in writing by the Income-tax Officer, Film Circle-I, Madras, had been filed under s. 195(1)(b)(i) of the Criminal Procedure Code. Rest of the offences, viz., offences under sections 120B, 420, 109, 34 and 37, Indian Penal Code, do not at all require any sanction either under s. 195 or any other provisions of the Code of Criminal Procedurerequired for initiation of prosecution for those offences. As such, it goes without saying that a complaint in respect of those offences, if given before a competent magistrate, can very well be taken cognizance of u/s. 190(1)(a) of the Code of Criminal Procedure. In this view of the matter, the first prong of the contention that the offences under the Indian Penal Code, 1860, are not legally permissible, as there is no sanction for such prosecution under s. 279(1) of theIncome-tax Act, 1961, cannot at all be countenanced

As respects the other prong of the submission, no prejudice can either be said to have been caused to the petitioner, accused No. 1, by the launching of the prosecution for offences both under the Indian Penal Code as well as under theIncome-tax Act. Admittedly, in one series of facts connected together to form the same transaction, the offences under both the enactments were said to have been committed. There can be no bar for trial of those offences. But what is prohibited u/s. 26 of the General Clauses Act, 1897, is that where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offenceA profitable reference may also be made to the salutary provisions of s. 71 of the Indian Penal Code dealing with the limit of punishment of offence made up of several offences, which reads as under

 

“71. Limit of punishment of offence made up of several offences.Where anything which is an offence is made up of parts, any of which parts is itself an offence, the offender shall not be punished with the punishment of more than one such offences, unless it be so expressly provided

Where anything is an offence falling within two or more separate definitions of any law in force for the time being by which offences are defined or punished ; or

Where several acts, which one or more than one would by itself or themselves constitute an offence, constitute, when combined, a different offence, the offender shall not be punished with a more severe punishment than the court which tries could award for any one of such offences.”

 

The provisions, as extracted above, would point out in unequivocal terms that if, in a series of facts connected together in such a way as to form the same transaction constituting distinct offences, what is prohibited is that the offender shall not be punished with a more severe punishment than the court which tries him could award for any one of such offences and virtually there is no prohibition at all for the trial of the offences constituted in the same transaction

It is thus clear that what is legally permissible had been done, in the sense of launching of the prosecution for offences under both the enactments. If, in such a process, the petitioner, accused No. 1, is handicapped in his not being in a position to compound the offences, it cannot be stated that by doing what is legally permissible under law, it can be said to have caused prejudice to the cause of justice. As such, this prong of the submission also is of no substanceThe sixth submission, in pith and substance, would take in its fold, in the facts and circumstances of the case, that the petitioner, accused No. 1, cannot at all be stated to have aided or abetted accused No. 4 in the commission of any offence whatever, pursuant to the hatching of conspiracy. There is no controversy, it is said, as to accused No. 4 filing the original return on November 15, 1983, which was stated to contain wrong particulars of income, whatever might have been the oblique purpose for such a move. Even assuming, it is further said, that the original return contained false particulars of income, accused No. 4, before the completion of the assessment, filed a revised return of income on February 28, 1984, with full and correct particulars of income under the Amnesty Scheme pursuant to Circular No. 451, dated February 17, 1986 (see [1986] 158 ITR(St) 135 ), and accused revealed the full and correct particulars of income and had also paid the tax due on the concealed income before the extended date, viz., September 30, 1986 (the original date being March 31, 1986). The Amnesty Scheme Circular, it was further argued, had been considered favourably by the Income-tax Appellate Tribunal (Madras Bench-D) in its order I. T. Acq. No. 2/Mds./85, dated May 1, 1987. In such a situation, the argument further goes, it cannot be stated that any offence whatever, inclusive of evasion or attempted evasion of tax under the Income-tax Act, had been committed and, consequently, the offences under the Indian Penal Code, with respect to which accusations had been levelled against him, which are akin or similar to the offences under the Incometax Act would get extinguished

In countenancing such an argument, it is said for the Revenue, that the Amnesty Scheme envisaged in the aforesaid circular is applicable only to voluntary disclosures of income and not in cases where full particulars of income had been furnished subsequent to a search and seizure operation. The Revenue would further submit that the circular, as stated above, had been misconstrued and misapplied by the Incometax Appellate Tribunal assuming it to be in favour of the assessee, accused No. 2, and the same is being challenged before this court by way of reference and the finding of the Tribunal giving the benefit of the Amnesty Scheme to accused No. 1, is not at all binding on the criminal court, which is trying the offences for which the prosecution had been launched and it can come to an independent conclusion of its own on the materials placed and therefore, it is that the submission of the other side as to the accrual of the benefit of the Amnesty Scheme in favour of the accused No. 1, thereby effacing criminal liability for any offence whatever has to be necessarily discountenanced, and the clutches of law by facing the ordeal of trial for aiding or abetting the offences, both under the Incometax Act as well as under the Indian Penal Code, pursuant to the alleged hatching of the conspiracyThe rival submissions may now be taken for consideration in the arena of discussion

The Amnesty Scheme circular is couched in the form of questions and answers, obviously with a view to clarify the doubts that may arise in the availing of the scheme by assessees. The Tribunal, in its order, for giving the benefit of the scheme in favour of accused No. 1, placed reliance on the answer to question No. 36 in the circular. Both the question and the answer are extracted below for a better appreciation of the points raised in the case (see [1986] 158 ITR(St) 140 )

 

“Question No. 36.-Can an assessee, who has purchased a property, declare the extra consideration paid other than what is mentioned in the sale deed and get the acquisition proceedings under Chapter XX-A closed against him ?

Answer.-Yes. If tax due on extra consideration is paid by 31st March, 1986, the proceedings against the purchaser would be dropped.”

 

While placing reliance on the answer to question No. 36, as extracted above, the Tribunal, it appears, had not taken into consideration the clarificatory questions and answers, viz., questions Nos. 12 and 19, and the answers therefor, revealing the conditions precedent for the applicability of the Amnesty Scheme. The aforesaid two, questions and answers read thus (see [1986] 158 ITR(St) 137, 138)

 

“Question No. 12.-Can immunity given by the circulars be availed of by assessees whose premises have been searched by the tax authorities?

Answer.-No

Question No. 19.-Kindly clarify the expression “before detection by the department”?

Answer.-If the Income-tax Officer has already found material to show that there has been concealment, that would mean the Department has detected the concealment. If the Income-tax Officer only had prima facie belief, that would not mean that concealment has been detected.”

The answers to questions Nos. 12 and 19, as extracted above, would make it abundantly clear that the Amnesty Scheme could not at all enure to the benefit of the assessee, accused No. 1. The finding of the Tribunal as such as to the availing of the Amnesty Scheme by accused No. 1 does not appear to be correct as the same is not in consonance with the letter and spirit of the circular. The applicability of the Amnesty Scheme, as revealed by the answer to question No. 36, will arise only in a case of disclosure of concealed income and payment of tax due on the extra consideration before the specified date, on the disclosure having been made voluntarily before even any detection. The finding as given by the Tribunal on this aspect of the matter is not at all binding on the criminal court which, on the materials placed before it, can come to an independent conclusion, as rightly contended by learned counsel for the Revenue

Useful reference may be made in this context to the decision in P. Jayappan v. S. K. Perumal, First ITO 1984 Indlaw SC 185, where their Lordships of the Supreme Court said thus

 

“The criminal court no doubt has to give due regard to the result of any proceedings under the Income-tax Acthaving a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act. It does not, however, mean that the result of proceedings under the Act would be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it.”

 

On the question as to whether the original return filed would get wiped out on the filing of a revised return before the completion of the assessment disclosing the true income, learned counsel for the Revenue would draw my attention to the decision in S. R. Arulprakasam v. Smt. Prema Malini Vasan, ITO 1984 Indlaw MAD 144, wherein a learned judge of this court held thus

“Where an assessee files a revised return after the concealment had been detected by the Income-tax Officer, the contumacious conduct on the part of the assessee in filing the original return which, if it had been accepted, would have resulted in avoidance of tax would not be wiped out. In the proceedings for imposition of penalty, the original return alone should not be considered in isolation without reference to the subsequent conduct of the assessee and all the facts and circumstances commencing with the filing of the original return and ending with the assessment have to be taken as relevant for considering the assessee’s liability for penalty. As the filing of a revised return will not expatiate the contumacious conduct on the part of an assessee in not having disclosed the true income in the original return itself and will not be bar to the initiation of penalty proceedings, it will not likewise be a bar to the launching of criminal prosecution. It cannot, therefore, be said that the original return is completely wiped out and no prosecution can be instituted on the basis of the original return.”

 

In view of what has been discussed above, it goes without saying that this submission also cannot hold water

The seventh submission, in short, deals with the alleged non-contemplation of prosecution by the Legislature of persons presenting Form No. 37-G, prescribed under rule 48G and section 269P(1) containing false verification for any offence whatever either under the Indian Penal Code or under the Income-tax Act. By such a submission, a new dimension is sought to be given to Chapter XX-A dealing with the acquisition of immovable properties in certain cases of transfer to counteract evasion of tax, introduced for the first time by the Taxation Laws (Amendment) Act, 1972, with effect from November 15, 1972, consisting of sections 269A to 269S, in cases of prosecution for violation of certain provisions thereinSection 276AA inserted by the Income-tax (Amendment) Act, 1981, with effect from July 1, 1982, provides punishment for failure to comply with the provisions of section 269AB or sub-s. (5) of section 269-1

Section 269AB reads thus

 

“269AB. (1) The following transactions that is to say, (a) every transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), and

(b) every transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature) whereby a person acquires any rights in or with respect to any building or part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed or which is to be constructed (not being a transaction by way of sale, exchange or lease of such building or part of building which is required to be registered under the Registration Act, 1908 (16 of 1908)

shall be reduced to writing in the form of a statement by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties

(2) Every statement in respect of a transaction referred to in subs. (1) shall (a) be in the prescribed form;

(b) set forth such particulars as may be prescribed; and

(c) be verified in the prescribed manner, and registered with the competent authority, in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties.”Sub-s. (5) of section 269-1 is couched in the following terms

” Notwithstanding anything contained in sub-s. (4) or any other law or any instrument or any agreement for the time being in force, where an order for acquisition of any immovable property, being rights of the nature referred to in cl. (b) of sub-s. (1) of section 269AB, in or with respect to any building or part of a building which has been constructed or which is to be constructed, has become final, then, such order shall, by its own force, have the effect of (a) vesting such rights in the Central Government ; and

(b) placing the Central Government in the same position in relation to such rights as the person in whom such rights would have continued to vest if such order had not become final

and the competent authority may issue such directions as he may deem fit to any person concerned for taking the necessary steps for compliance with the provisions of cls. (a) and (b).”

 

It is worthwhile to note here that section 276AA had been omitted by the Finance Act, 1986, with effect from October 1, 1986

In the case on hand, though acquisition proceedings had been initiated at the time when the said section was in force, such proceedings did not at all culminate in any final order being passed before cessation of operation of that section. As such, there could not have been any violation contemplated under section 276AA for attracting the penal consequences provided therein

From the omission of section 276AA, an argument is sought to be made out by learned senior counsel that in acquisition proceedings initiated under Chapter XX-A, the Legislature could not have contemplated prosecution of persons violating the provisions of the said Chapter and the Revenue has to rest with the acquisition of the immovable properties and taking possession of the same by using such force as may be necessary, for such purpose, which in my view, cannot at all commend acceptance. What was made punishable under the deleted section 276AA, as already indicated, was violation of the provisions of section 269AB or sub-s. (5) of section 269-1, and the moment the said section had been omitted, such prosecution is not permissible on and from the date of such omission and it should not mean that no prosecution for violation of other provisions of that Chapter is permissible, if there are provisions incorporated to visit those violations with penal consequencesIt is to be recapitulated here that filing of Form No. 37-G prescribed in rule 48G and section 269P(1) before the Registering Authority is imperative with effect from November 15, 1972, and the prescribed form also requires to be furnished. The sale consideration for the transfer is required to be specified among other particulars, in the said form. The petitioner, accused No. 1, while filing such a form, mentioned the consideration for the transfer as Rs. 5, 86, 000 as stated earlier, as against the real consideration of Rs. 14, 11, 000 as revealed by the letter of arrangement dated February 18, 1982. The statement as regards the sale consideration in the said form is, therefore, false to the knowledge of the petitioner and despite that, lie himself seems to have made the verification declaring such particulars to be true to the best of his knowledge and belief

Worthwhile it is to mention here that false statement and verification, etc., is made punishable tinder section 277, which reads thus

 

“277. If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable (i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.”

 

The provisions, as extracted above, make it abundantly clear that making of any statement in any verification under this Act or under any rule made thereunder or delivering an account or statement, which is false and which the signatory knows or believes to be false or does not believe to be true is made punishable, to the extent indicated in the section, depending upon the quantum of tax which would have been evaded, if the statement or account had been accepted as trueThe present s. 277 was substituted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975, providing for graded punishment depending upon the quantum of tax sought to be evaded. Before such substitution, under the said section, there was no graded punishment and this is made clear by the old section 277, which reads as follows

 

“277. False statement in declaration.-If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with rigorous imprisonment for a term which may extend to two years ;

Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be for less than six months.”

 

It is thus clear that even on the date when Form No. 37-G came into force, i.e., November 15, 1972, false verification either under the Act or under the Rules made thereunder was made punishable. From what has been stated above, it has become pretty certain that the Legislature contemplated prosecution for violations not only of the provision adumbrated under section 269AB or sub-s. (5) of section 269-I but also of the provisions of section 269P(1) punishable respectively under sections 276AA and 277 and the fact that section 276AA had been deleted on and from October 1, 1986, will not mean that it is not permissible for a prosecution to be launched for violation of the other provisions of section 269P(1), punishable u/s. 277. As such, this submission of learned senior counsel also fails

The eighth and last of the submissions hovers around the question of existence or otherwise of prima facie materials in the shape of averments in the complaint constituting an alleged offence of criminal conspiracy and cheating, respectively, punishable under sections 120B and 420, Indian Penal Code. In elaboration of this submission, an argument flows from the mouth of learned senior counsel, as gushing of water from a rivulet, stating that, by a ritualistic recital in the form of averments in the complaint as to the alleged commission of offence of criminal conspiracy without giving specified details as to when, where and how the conspiracy came into being or hatched is of no legal consequence and neither the act of the petitioner, accused No. 1, nor that of accused No. 4, respectively, in filing statements in Forms Nos. 37-G and 34-A understating the sale consideration and other acts of accused No. 1, not filing any return of income up to 1986 and accused No. 4 filing the original return itself in the year 1983, subsequently, following it up by filing a revised return in 1984 and the assessment remaining not completed till up to March 23, 1984, the date of launching of the prosecution can, by no stretch of imagination, be construed to be acts satisfying the primordial requisites necessary for attracting criminal liability for the offence of cheating u/s. 420 of the Indian Penal Code. This argument, though appearing to be bewitchingly fascinating, has no merit at all and the discussion to be followed hereinafter would expose the fallacy, taking shelter thereunderSection 120A of the Indian Penal Code defines “criminal conspiracy” and it is as under

 

“120A. Definition of criminal conspiracy.-When two or more persons agree to do, or cause to be done, (1) an illegal act, or

(2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy

Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.”

Explanation.-It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object.

“A criminal conspiracy is an agreement between two or more persons to do or cause to be done (1) an illegal act (2) legal act by illegal means. Section 43, Indian Penal Code, defines the word “illegal” as meaning and including everything which is an offence or which is prohibited by law or which furnishes a ground for a civil action. The offence of conspiracy is an independent offence and though the offences are committed in the course of the conspiracy, the liability for the conspiracy will not disappear. It is not like abetment to depend upon a substantive offence to be committed. The conspiracy precedes the commission of the crime and is complete before the crime is attempted

The definition of “conspiracy” under the English law, being the law in India also, is that given by the House of Lords in Mulcahy [1868] LR 3 HLC 306, which runs as follows”

A conspiracy consists not merely in the intention of two or more persons but in the agreement of two or more persons to do an unlawful act or a lawful act by unlawful means. So long as such a design rests in intention only, it is not indictable. When two agree to carry it into effect, the very plot is an act in itself, and the act of the parties promise acts contra actum capable of being enforced, if lawful, punishable, if for criminal object or for the use of criminal means.

“The gist of the offence of criminal conspiracy is thus an agreement to break the law. The mere act of entering into an agreement to do an illegal act is an overt act, and the word “act” also includes an illegal omission. The overt acts constituting a conspiracy are acts either (i) signifying an agreement, or (ii) acts preparatory to the offence, and (iii) acts constituting the offence itself. The offence of conspiracy, therefore, lies in forming the scheme or agreement between the parties. The external or overt act of the crime is concert by which mutual consent to a common purpose is exchanged. It, therefore, suffices if the combination exists and is unlawful

The agreement may be established by direct evidence or circumstantial evidence or by both or from the conduct of the parties. To establish a criminal conspiracy, direct evidence of the date of the conspiracy, persons who took part in the formation of the conspiracy, the object of the conspiracy, the manner in which the object was implemented, may not be available, and all these are matters of inference from established facts

In the instant case, no doubt true it is, that the averments in the complaint, if perused, will not at all indicate as to when, how and where the conspiracy had been hatched, which learned senior counsel, as already indicated, would say is nothing but complete absence of materials for the proof of the alleged conspiracy. But, I cannot but refuse to signify to approve such a submission, in the facts and circumstances of the case. As already indicated, criminal conspiracy may be proved by means more than one i.e., either by adduction of direct evidence or circumstantial evidence or by both or from the conduct of the parties

The fact that there are no materials in the shape of allegations in the complaint indicating direct evidence for the proof of the conspiracy does not at a11 mean that there are no materials in the complaint, in bid to prove the conspiracy alleged therein. For the construction of a fine superstructure of conspiracy there must be materials in the shape of plethora of facts and abundant circumstances, inferable from the facts stated therein serving as an edifice or foundation for such superstructureThe alleged act of accused Nos. 1 and 4, in entering into a letter of arrangement on February 18, 1982, itself throws a flood of light as to the illegal means by which they reached such an agreement or arrangement, in a bid to cause loss to the exchequer by the evasion of tax legitimately due by them, if they have stated the real consideration for the transfer in the sale deed, as well as in the statements filed by them under Forms Nos. 37-G and 34-A all on one and the same date, viz., May 24, 1982. There is also a very well-planned act of omission on the part of accused No. 1 in not filing the return of income for the assessment year 1982-83 which fell due on July 31, 1982, till up to September 30, 1986. It is a contumacious conduct on his part to facilitate accused No. 4 in filing his return, which he did only on November 15, 1983, for the assessment year 1983-84, so as to complete his assessment by understating the consideration for the sale at Rs. 5, 86, 000 and then to have come forward with the filing of a revised return of income stating the sale consideration, as had been done by accused No. 4, in a bid to avoid detection of concealment of income by the tax authorities on his part and the capital gains tax due on the part of accused No. 4. Unfortunate it was that their design fell through by a raid conducted by the tax authorities. It is only subsequent to the raid, that both accused Nos. 1 and 4 did some salvage operations by either filing return or revised return revealing the real particulars of income. It is thus vividly clear from the various acts of omissions and commissions, their antecedent and subsequent conduct, to infer formation of the conspiracy, the object of the conspiracy and the manner in which it was implemented. In such a state of affairs, to say that there are no prima facie materials, in the shape of averments in the complaint towards the proof of the conspiracy, as contended by learned senior counsel, could not at all be countenancedWhat remains to be considered is the other part of the submission as relatable to the offence under section 420, Indian Penal Code. It is not as if there are no averments or allegations as to the commission of the alleged offence under section 420, Indian Penal Code, and the sordid fact is that paragraphs 17 and 26 of the complaint deal with this aspect of the matter. For a better understanding of the case of the prosecution, those paragraphs may be reproduced hereunder

17. In pursuance of the aforesaid conspiracy and for the aforesaid purpose and in the course of the same transaction, all the accused have intentionally fabricated the said section 230A certificate in Form No. 34A under rule 44A of the Income-tax Rules, 1962, and Form No. 37-G, under rule 48-G and under section 269P(1) of theIncome-tax Act, 1961, presented before the Registering Officer and dishonestly induced the Income-tax Officer to deliver the certificate under section 230A of the Income-tax Act and the Registering Officer to register the sale deed showing the understated sale consideration and have thus committed the offences punishable u/s. 420 of the Indian Penal Code, 1860

26. The fourth accused, by obtaining the said certificate under section 230A of the Income-tax Act by about May 24, 1982 based on the false sale consideration noted therein, has cheated the Income-tax Officer into issuing that certificate and thereby committed the offence punishable u/s. 420 of the Indian Penal Code, 1860.”

 

The materials disclosed as above, I am of the view, prima facie constitute an offence under section 420, Indian Penal Code, and whether such an offence is made out or not is a matter for the trial court by giving a finding on the materials, in the shape of evidence to be placed before it and any further delving discussion, if made, is likely to cause irreparable prejudice to the respective cases of the parties. As such, this part of the submission also merits little substanceIn view of what has been discussed above, it goes without saying that this petition deserves to be allowed in part only in so far as it relates to the offences u/ss. 193 and 196 of the Indian Penal Code, emerging from the sworn statement stated to have been given by the petitioner-accused No. 1 to the raiding officer and in other respects, it deserves to be dismissed

The petition is ordered accordingly