PREM DASS Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The appellant was convicted under S. 276-C of the Income-tax Act, on a complaint being filed that he had incorrectly made a verification on the income-tax return for the Assessment Year 1980-81. For his such conviction, the learned Chief Judicial Magistrate, Faridabad, sentenced him to undergo imprisonment for six months and to pay a fine of Rs. 1000/-, in default, to further undergo imprisonment for a period of three months. He was also convicted under S. 277 of the Income-tax Act and sentenced to undergo R.I. for six months but the sentences awarded had been ordered to run concurrently. The appellant preferred an appeal to the Sessions Judge, who by Judgment dated 7th of October, 1988, came to the conclusion that the accused-appellant is entitled to benefit of doubt and accordingly he acquitted him of the charges levelled against him. The department moved the High Court against the aforesaid acquittal passed by the learned Sessions Judge and the High Court by the impugned judgment, allowed the appeal and set aside the judgment of acquittal passed by the learned sessions Judge and affirmed the conviction and sentence of the appellant passed by the learned Chief Judicial Magistrate. Learned Sessions Judge, after analysing the charges and evidence led by the prosecution in support of the said charges, came to the conclusion that the gravamen of indictment against the accused lay in the fact that he had filed an incorrect returns of income from his transportation business and intentionally withheld books of account seized during search made under S. 132 of the Income-tax Act and had made wrong verification of the statements filed in support of the return. But, according to the learned Sessions Judge, the charges were not only vague but also the prosecution evidence was totally insufficient to infer the criminal intent of the accused-assessee and, there was nothing on record to pinpoint the identity, veracity or falsity of entries in the books of account on which the entire prosecution case was sought to be founded upon. The learned Sessions Judge also came to the conclusion that no evidence whatsoever had been examined by the prosecution to lend support to the opinion formed by the Income-tax Officer in the assessment proceedings. The Sessions Judge also took into account the fact that the appeal filed by the accused-assessee in respect of the relevant assessment year was partly allowed by the Commissioner of Income-tax (Appeal), Chandigarh by Order dated 12-3-1987 and the said appellate authority had recorded that the income estimated by the Income-tax Officer was not based on reasonable data and, therefore, a direction was issued to the said Income-tax Officer to work out the commission at 8 per cent. for all assessment years instead of 10 per cent. estimated by him and on account of such order of the appellate authority, the tax liability of the assessee stood substantially reduced and this itself demonstrates that no criminal liability could be fastened on the assessee. With these findings the Sessions Judge came to the conclusion that the prosecution is held to have failed to bring the guilt home to the accused beyond reasonable manner of doubt. The High Court, however, in the impugned judgment re-appraised the evidence of Income-tax Officer P.W. 3 and in view of presumption available under S. 132(4A) of the Income-tax Act, reversed the order of acquittal on a finding that the learned Sessions Judge was in error to hold that the prosecution case has not been established beyond reasonable doubt.

(2.) Mr. Salve, learned Senior Counsel, appearing for the appellant contended that though the powers of the High Court while hearing an appeal against the acquittal are as wide and comprehensive as in an appeal against a conviction, but the High Court is required under the law to examine the reasons on which the order of acquittal was based and would be justified in interfering with an order of acquittal, after being satisfied that the view taken by the acquitting Judge was clearly unreasonable. According to Mr. Salve, if on the evidence two views are possible, one, supporting an order of acquittal and the other indicating conviction, the High Court would not be justified in interfering with an order of acquittal merely because it feels that it would, sitting as a trial Court, have taken the other view. In the case in hand, not only the High Court has not considered the reasons given by the Sessions Judge in acquitting the accused-appellant but also the order of acquittal has been reversed merely by reference to the presumption arising out of S. 132(4A) of the Income-tax Act and in this view of the matter the conclusion is inescapable that the High Court committed serious error in interfering with an order of acquittal passed by the Sessions Judge. Mr. Salve further contended that the penalty proceeding in question having ended in favour of the assessee-accused on a conclusion that the additions made in the assessment was purely on the basis of a difference of opinion as to the estimate made by the assessee and the estimate made by the department and, therefore, there has not been a case of concealment of income or furnishing of inaccurate particulars of income, the High Court committed serious error in interfering with an order of acquittal. It is in this connection, Mr. Salve brought to the notice of the Court the legislative mandate engrafted in S. 279(1A) of the Income-tax Act. He also pointed out to us the earlier order of this Court dated 28th of August, 1997, whereunder this Court had called upon the Income-tax Officer to tell whether the prosecution launched against the appellant and which has led to his conviction can independently be sustained when penalty proceedings have culminated in favour of the appellant but there has been no response from the said Income-tax Officer.

(3.) Mr. Shukla, the learned Senior Counsel, appearing for the respondent on the other hand submitted that the criminal proceeding is wholly independent of the penalty proceedings under the Income-tax Act and, therefore, a conviction in a criminal proceeding cannot be interfered with on the basis of findings of the appellate authority or the Tribunal in a penalty proceeding. With reference to S. 279(1A) of the Income-tax Act and its effect on the pending prosecution, Mr. Shukla submitted that the said provision has no application as the Commissioner or the Chief Commissioner has not reduced or waived penalty and it is only the Income-tax Appellate Tribunal which has cancelled the penalty in question and by way of written information, Mr. Shukla has intimated the Court that against the order of the Appellate Tribunal cancelling the penalty, an application under S. 256(1) of the I.T. Act for making a reference has been filed and is still pending before the Tribunal.