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Delhi District Court

Shri Vijay Mehta vs Shri C.S. Prasad on 3 July, 2019

     IN THE COURT OF DR. ASHISH AGGARWAL, ADDL. SESSIONS
         JUDGE-03 (CENTRAL), TIS HAZARI COURTS, DELHI

CA No. 54749/16 (Old No. 18/2014)

Shri Vijay Mehta,
R/o A­16, Naraina Industrial Area,
New Delhi.                                             ...   Appellant

        Versus

1.    Shri C.S. Prasad
      Asstt. Commissioner of Wealth­tax,
      Central Circle­25, New Delhi

2.    State                                            ...   Respondents

Date of Institution        :        30.07.2014
Date of Judgment           :        03.07.2019

JUDGMENT

1. This judgment shall assess the correctness of decision of learned Trial Court of conviction of the appellant in complaint case bearing No. 150/04 for offence under Section 35A(2) of the Wealth­tax Act, 1957 (hereinafter referred to as "the Act") pertaining to assessment year 1983­84.

2. The appeal has been filed to assail the final judgment of conviction dated 01.07.2014 and order on sentence dated 02.07.2014 passed by Shri Devender Kumar Sharma, the then Ld. Addl. Chief Metropolitan Magistrate (Special Acts), Central District, Tis Hazari Courts, Delhi. By the aforesaid judgment, CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 1 of 75 appellant Vijay Mehta had been convicted of offence under Section 35A(2) of the Wealth­tax Act. By order on sentence dated 02.07.2014, appellant Vijay Mehta had been sentenced to undergo rigorous imprisonment for a period of six months and to pay fine of Rs.20,000/­. It was further directed that in case the appellant fails to deposit the sum of fine, he shall undergo rigorous imprisonment for a period of one month.

3. The background of the case is that a complaint had been filed by the respondent no.1 (Department of Wealth­tax) which was pending before the Court of Ld. Addl. Chief Metropolitan Magistrate. It was stated in the complaint that the appellant has committed offence under Section 35A(2) of Wealth­tax Act. It was averred in the complaint that it is being filed by the authority in charge of assessment of wealth­tax; that the complaint is being preferred in discharge of official duties; that filing of complaint has been authorized by the Commissioner of Wealth­tax who has issued sanction under Section 35­I of the Wealth­tax Act; that the appellant has failed to file his return of wealth for the assessment year 1983­84 on or before 30.06.1983 (the prescribed date); that return of wealth for the said assessment year was filed only on 12.12.1984; that the said return declared net wealth of Rs.19,25,876/­; that going by the said declaration of wealth, the liability of wealth­tax amounted to Rs. 47,660/­; that assessment order for the said assessment year was passed on 30.03.1988; that wealth of the appellant was assessed at Rs.32,31,232/­; that CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 2 of 75 the appellant filed an appeal and "some relief was awarded to the accused"; that the respondent no.1 filed a further appeal; that as per Section 15B(1) of the Wealth­tax Act, the appellant was required to pay tax before furnishing the return of wealth but he failed to pay the said tax; that as per assessed wealth, the tax liability amounted to Rs.1,09,820/­; that a notice of demand under Section 30 of the Wealth­tax Act was served upon the appellant calling upon him to pay the said tax; that notice under Section 15B(3) was also served upon the appellant; that the appellant deposited tax of Rs.59,000/­ on 02.05.1988; that the entire arrears of tax was not paid by the appellant by the prescribed date; that penalty was imposed and was deposited by the accused; that a show­cause notice dated 23.10.1990 was served upon the appellant to which no reply was received within the stipulated date (05.11.1990) and reply dated 28.08.1991 was filed much later; that contents of the reply were not satisfactory; that the appellant thereby committed offence under Section 35A(2) of the Wealth­tax Act, 1957.

4. The complaint was filed on 31.03.1992. On that day, the learned Addl. Chief Metropolitan Magistrate took cognizance of the offence, dispensed with pre­summoning evidence, summoned the appellant as accused and exempted the complainant from personal appearance. The respondent no.1 led pre­charge evidence. Charge was framed by order dated 14.02.2007. The charge was put to the appellant. The appellant pleaded not guilty CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 3 of 75 and claimed trial.

5. The respondent no.1 led evidence in support of his case. It examined Mr. C.S. Prasad as PW1 on 06.11.2012. He adopted his earlier deposition (that was tendered in pre­charge evidence) in his examination­in­chief. At pre­charge evidence stage, Mr. C.S. Prasad had deposed on the lines of the complaint and had identified the complaint. The witness was cross­examined by learned counsel for appellant. The witness deposed in his cross­ examination that he had only filed the present complaint and had not done any assessment pertaining to this case. He deposed that he did not remember whether he had made any inquiry before filing the present complaint. He deposed that two years' period was prescribed for completion of assessment and for scrutiny. He deposed that under Section 148 of the Act, six years' period was granted for assessment. For the assessment year 1980­81, ten years' period was available with the department for re­opening of assessment. He deposed that it was not necessary that reopening of assessment is done only on a complaint and that this can be done on the basis of audit objections. He deposed that if anything is found during the assessment of current year, the reopening of previous assessment can also be done. He deposed that he was not aware regarding any complaint or audit objection preferred by the appellant. The witness did not remember whether there was any finding in the assessment order which gave ground for reopening of assessment order. He did not remember any CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 4 of 75 provision in force at the relevant time which authorized filing of return for a particular assessment year after the passage of stipulated time with some fine and interest. He did not remember whether in this case the assessee had deposited the due assessed amount alongwith interest. He was unable to recall whether show­cause notice was issued to the accused; whether at the time of assessment it had been replied to by the accused/appellant; whether the notice dated 30/31.10.90 was replied to by the accused vide reply dated 19.08.91; whether assessee had deposited the wealth­tax along with interest at the time of submitting reply. He deposed that it was correct that through challans Mark A, B, C and D, the assessee had filed the due amount alongwith interest with the department. The witness stated that he had considered all the available material while filing the complaint. The witness did not remember whether any order was passed by the department after considering the reply of the accused. He stated that a speaking order is passed whenever show cause notice is issued and is replied to by the assessee. He stated that he had drafted the complaint. The witness stated that he did not remember whether at the time of filing of complaint the reply was filed or not. After seeing the complaint, the witness stated that the reply had been filed by the assessee and that there was no speaking order on the reply. He deposed that it was correct that the document Ex.PW1/D1 was issued by the department on the basis of original entry in the original CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 5 of 75 document lying with the department. He deposed that it was correct that at point A to A on Ex.PW1/D1 there was a description of tax paid for the relevant year but the assessee cannot get any benefit of this. The witness stated that he had sent the records available with him at that point of time to the concerned CIT for his consideration and sanction. He deposed that he did not remember the documents which were available at that time. He deposed that it was correct that if the document was sent, the same would have been sent after diary entry and proper indexing of documents; that details of documents which were sent to the CIT and the index of the same was not placed on court record as the records were given to the CIT by the witness; that there was no document on record to suggest that he had handed over the documents to CIT. The witness denied the suggestion that no offence was committed by the accused; that he misled the CIT to grant sanction for prosecution of the accused by not sending the relevant material; that the present complaint had been filed with mala fide intent; that the complaint had been filed in mechanical manner and concealing relevant information from the court; that there was no wilful act on the part of the assessee as the amount had already been deposited by the assessee with interest. He deposed that it was correct that the original record pertaining to this case had not been produced on that day before the Court. The witness admitted that the original documents pertaining to the case in which the complaint was pending had CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 6 of 75 not been weeded out. He denied that the original documents had been hidden so as to cause prejudice to the accused.

6. Prosecution evidence was closed. Statement of accused was recorded under Section 313 of Criminal Procedure Code. The incriminating evidence was put to the accused and he was questioned on the evidence appearing against him. His responses were recorded. He stated that it is correct that he had filed return of wealth for assessment year 1983­84 on 12.12.1984 declaring net wealth of Rs.19,25,876/­ and the tax payable was Rs. 47,660/­. He stated that it is a matter of record that he was assessed at Rs. 32,31,232/­ by order dated 30.03.1988. He denied that he had to pay tax before filing return of wealth which he defaulted in paying. He stated that it is correct that the tax liability was Rs.1,09,820/­ as per assessment order and that a notice of demand had been served upon him asking him to pay outstanding tax. He admitted that he had wilfully not paid the tax within the stipulated period and that the tax was paid only on 02.05.1988. He stated that he has deposited penalty. He denied that he has committed the alleged offence. He also denied that complaint had been filed by Mr. C.S. Prasad after accord of sanction under Section 35­I of Wealth­tax Act.

7. The appellant/accused Vijay Mehta led defence evidence.

Evidence had been led before the learned Trial Court during the pendency of the appeal, pursuant to permission obtained by him from the Hon'ble High Court of Delhi by order dated 11.02.2015 CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 7 of 75 passed in Crl. M.C. No. 538, 548­553/2015. The appellant examined Sh. Radhey Shyam Meena as ADW1. The witness deposed that he was working as Manager in Canara Bank since July, 2014. He stated that he had brought certificate in respect of an account which was bearing No. SB 6157 in the name of Mr. Vijay Mehta, Canara Bank, Tagore Garden Branch for the month of January 1981 to March 1982. He deposed that in the certificate it was stated that the record for the aforesaid account was not available in the Branch record and as per bank guideline, the bank does not preserve 32 years' old record. The said certificate had been issued by Mr. Anil Kumar Verma, Assistant General Manager, Canara Bank, Tagore Garden, New Delhi. The said certificate dated 08.04.2015 alongwith copy of the guideline (running into two pages) was identified as Ex.ADW1/A. The witness was shown original statement of account of account no. SB 6157 in the name of Mr. Vijay Mehta, Canara Bank, Tagore Garden Branch pertaining to the period from January 1981 to 22nd March, 1982 bearing the stamp of Canara Bank dated 14.06.1982. After going through the same, the witness expressed his inability to identify the genuineness of the same as the same pertained to year 1982, record of which had been destroyed and since he was not posted in the said bank during the said period. The said statement of account was marked as Mark X (OSR). The witness could not say if there was any individual in the branch who was working during the period to which the said statement CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 8 of 75 of account pertained.

8. Sh. Jai Kumar Thakur was examined as ADW­2. He deposed that he was posted as Inspector, Circle 50(1), having jurisdiction over the case of Sh. Vijay Mehta. He had seen copy of the assessment order for A.Y. 1983­84 passed under Section 143(3) dated 27.02.1986 and for A.Y. 1986­87 passed under Section 143(3) dated 14.02.1989. He stated that it does not bear the signatures of the officer who has passed the same but it is an attested copy. He stated that the said orders had apparently been passed by the then ITO CC­XXV, New Delhi. He further deposed that since the original records of Income Tax for the relevant assessment year have not been received on transfer of jurisdiction, in the absence of the same, he cannot either admit or deny the said documents. The witness stated that he could not say whether the records pertaining to the relevant assessment years of the appellant were available, or whether the same had been destroyed.

9. After hearing final arguments, the Court of Ld. Addl. Chief Metropolitan Magistrate, by judgment dated 01.07.2014 convicted the appellant of the offence under Section 35A(2) of the Wealth­tax Act.

10. The appellant has challenged the judgment of conviction on multiple grounds which will be dealt with while analyzing the material on record.

11. I have heard detailed arguments and have gone through the written submissions as well as judgments cited by the appellant CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 9 of 75 and respondent no.1.

12. The appellant has been convicted of offence under Section 35A(2) of the Wealth­tax Act. The said provision reads as follows:

"If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provisions of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine."

The above provision prescribes punishment for evasion of payment of tax, penalty or interest. The learned Trial Court has held that the appellant is guilty of attempt of evasion of payment of wealth­tax. The said tax is stated to be pertaining to assessment year 1983­84.

13. For a person to be held guilty under Section 35A(2), the complainant has to prove the following:

(a) That the accused attempted to evade payment of tax, interest or penalty;

(b) That the said evasion was wilful.

14. I shall now assess whether the complainant had succeeded in proving these ingredients and whether the learned Trial Court was correct in convicting the appellant.

CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 10 of 75 Attempt to evade payment of tax, interest or penalty

15. Under the scheme of Wealth­tax Act, wealth­tax is to be charged on individuals in respect of the net wealth on the corresponding valuation date (Section 3). The Act contemplates self assessment. Section 14 of the Act provides that every person whose net wealth is such as to render him liable to wealth­tax shall, before 30th day of June of corresponding assessment year, furnish to the Wealth­tax Officer a return in the prescribed form and verified in the prescribed manner setting forth the net wealth as on that valuation date. Under Section 15 of the Act, if a person fails to furnish a return within the prescribed period, he may furnish the said return before making of assessment. As per Section 15B, where any tax is payable on the basis of a return required to be furnished under Section 14 or 15, the assessee shall pay the tax before furnishing of return and the return is required to be accompanied by proof of payment of tax. Section 16 of the Act provides for assessment of wealth­tax by the Wealth­tax Officer. As per the provision, the Wealth­tax Officer may serve notice to the assessee, consider the relevant material, assess the net wealth of the assessee and determine the amount of wealth­tax payable by the assessee. Where an assessment has been made and any sum has been found to be payable, the Wealth­tax Officer shall serve upon the assessee a notice of demand of the said sum, in accordance with Section 30 of the Wealth­tax Act. As per Section 31 of the Act, the sum said to be payable in the notice of demand CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 11 of 75 shall be paid within thirty­five days of service of notice. Section 31(4) provides that a person who does not so pay is deemed to be in default.

16. In light of the aforesaid provisions, it shall now be seen whether the appellant can be said to have attempted to evade payment of wealth­tax. According to the case of the complainant (Department of Wealth­tax), the appellant was, during the relevant period, assessable to wealth­tax. Section 14(1) lays down that every person whose net wealth in respect of which he is assessable under the Act is of such an amount as to render him liable to wealth­tax under the Act shall furnish to the Wealth­tax Officer a return of wealth­tax. It is not in dispute in this case that the appellant was assessable to wealth­tax as per his net wealth and the threshold limits prescribed under the Act. The complainant (Department of Wealth­tax) has otherwise also convincingly proved this fact through the testimony of Mr. C.S. Prasad, PW1 who has deposed about the extent of tax evaded by the appellant. The said witness has also proved the complaint. In the complaint, it is expressly stated that the appellant had earlier been filing his return of wealth and for the assessment year 1983­ 84, the appellant had to file his return of wealth on or before 30.06.1983. No question was put to the witness suggesting to him that the appellant was not assessable to wealth­tax during the abovesaid assessment year. Even in the statement under Section 313 of Criminal Procedure Code, the appellant did not CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 12 of 75 deny that he had to file a wealth­tax return or had to pay wealth tax for the assessment year 1983­84. The accused also did not lead any evidence to the effect that he was not assessable to wealth­tax for the assessment year 1983­84. It stands unerringly proved that the appellant was assessable to wealth­tax during the assessment year 1983­84.

17. Section 14(1) of the Wealth­tax Act makes it the duty of every person assessable to wealth­tax to file his wealth­tax return by the 30th day of June of the said assessment year. For the assessment year 1983­84, the assessee had to thus file his wealth­ tax return by 30.06.1983.

18. The tax emerging from the computation of self assessment is to be paid "before furnishing the return" as laid down in Section 15B(1) of the Wealth­tax Act. The appellant had to therefore make payment of the wealth­tax (at least to the extent to which he considered himself to be liable), by 30.06.1983. Admittedly, the appellant did not pay even this sum by the prescribed date i.e. 30.06.1983. Not only this, the appellant also did not pay the sum that he was liable to pay as tax, by virtue of the assessment order. All these facts are duly proved from the complaint and unrebutted testimony of PW1 C.S. Prasad. There is nothing elicited in the cross­examination of PW1 C.S. Prasad which could show that his assertion of the tax not being paid within the period stipulated by law is false. In the statement under Section 313 of Criminal Procedure Code too, the response of the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 13 of 75 appellant has been as follows:

"Question: It is further in evidence against you as per the assessment order the tax liability was Rs. 109820 and a notice of demand was served to you asking to pay the tax outstanding but you have not paid the same wilfully within stipulated time. The same was paid on 02.05.1988. What you have to say?

Answer: It is correct."

In defence evidence too, the appellant has not led any evidence to show that he made payment of wealth­tax within the period prescribed by Section 15B(1) of the Act. The defence of the appellant is not that he had paid the tax by the prescribed date. The defence is that the appellant had failed to pay the said tax but this was owing to financial constraints. It therefore stands established from the evidence that the appellant had not deposited the tax within the period prescribed by Section 15B(1).

19. Learned Counsel for accused has contended that the due date for payment of wealth­tax is not that prescribed by Section 15B(1) of the Act but the date when the period mentioned in notice under Section 30 of the Act expires. In other words, the contention is that an assessee who does not pay his wealth­tax before submission of return [which is a requirement of Section 15B(1)] cannot be held guilty of offence of evasion of tax. It is argued that an assessee who does not pay his tax before submission of return would still be able to avoid punishment under Section 35A(2) if he makes payment of the said tax after being served CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 14 of 75 with notice under Section 30 of the Act and within the period mentioned therein, or even at a later time but before filing of the complaint. Learned Counsel for appellant has tried to support this contention by relying on cases reported as Vinaychandra Chandulal Shah Vs. State of Gujarat, 1995 ITR Vol. 213 Page 307 decided by Gujarat High Court on 30.12.1993, Lal Saraf Vs. State of Bihar and Another, 1997 ITR Vol. 224 Page 306 decided by Patna High Court on 29.08.1996 Income Tax Officer, Kolar Circle and Another Vs. Seghu Buchiah Setty, 1964 ITR Vol. 52 Page 538 decided by Hon'ble Supreme Court on 02.03.1964; Cherian Vs. Income Tax Officer Ernakulam and Another, 1959 ITR Vol. XXVI Page 210 decided by Kerala High Court on 12.09.1958; Misri Bai Vs. Income Tax Officer, Hyderabad, [1963 (50) ITR (Sh. N.) 8] decided by Andhra Pradesh High Court on 09.04.1963; M.L. John and Another Vs. Income Tax Officer and Others, C.M.W.P. No. 523 of 1975 decided by Allahabad High Court on 08.04.1980 and Doorga Prosad Vs. The Secretary of State, 1945 ITR Vol. 13 Page 285 decided by Privy Council on 18.01.1945.

20. In order to evaluate this plea, the scheme of the Act and the procedure laid down for levy and collection of wealth­tax needs to be revisited. Broadly speaking, under the Wealth­tax Act, 1957, certain persons whose wealth exceeds the minimum limits prescribed by the Act are liable to pay wealth­tax and to submit their wealth­tax returns. These persons are to pay wealth­tax before filing of returns. Returns are to be filed by 30 th June of the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 15 of 75 corresponding assessment year. Persons who fail to submit return by the said date may submit their return at any time before an assessment order is passed. On submission of return, the Wealth­ tax Officer is to decide whether particulars mentioned in the return are correct and he shall accordingly assess net wealth of the assessee and the wealth­tax payable by him. In this determination, he may issue notice and hear the assessee. This assessment is under Section 16 of the Act. In case of failure on the part of the assessee to submit return, the Wealth­tax Officer may issue notice under Section 17 and pass an order of assessment. The order of assessment is appealable. After completion of assessment, a notice of demand is issued by the Wealth­tax Officer to the assessee, calling upon the latter to pay the outstanding sum (Section 30). The sum specified in the notice of demand is to be paid within thirty­five days of service of notice (Section 31). If not paid, the assessee is liable for interest and is deemed to be "in default". On the assessee being "in default", the Wealth­tax Officer is entitled to recover the outstanding sum by the modes prescribed under provisions of Income­tax Act.

21. The above shows that the consequences of not paying tax are three­fold. The assessee is liable for payment of interest, payment of penalty and for punishment (imprisonment and fine). Interest and penalty are determined through assessment proceedings before the Wealth­tax Officer and the appellate fora. The CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 16 of 75 punishment (imprisonment and fine) are decided through criminal prosecution before a Magisterial Court. These are independent proceedings. Once tax liability, interest thereon and penalty are determined and quantified, they are to be recovered by issuance of a demand notice under Section 30 and if the demand notice is not complied with, a summary procedure has been prescribed for recovery of the outstanding sum adopting the mode laid down in the Income­tax Act. The requirement of issuance of notice under Section 30 of the Act is to give an opportunity to the assessee to pay up and discharge his liability, and thereby avoid summary recovery as per the Income­tax Act. The said summary procedure may entail harsh consequences of attachment and sale of property of the assessee and therefore, if the assessee wants to avoid it, he has to pay the outstanding sum within the period prescribed by notice under Section 30 of the Act. The only significance of deeming of an assessee as being "in default" is that it paves the way for invoking summary recovery procedure prescribed by Section 32 of the Act. The issuance of notice under Section 30 and the deeming of the assessee as being "in default" does not usher in the consequences of punishment for offence under Section 35A(2) of the Act. Section 35A(2) provides punishment for evading payment of tax and has no connection with a person being deemed to be "in default". Nor is the said punishment predicated on non­compliance of notice or assessment order. Prosecution is not to await culmination of the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 17 of 75 assessment proceedings. As a corollary, the compliance on the part of the assessee with demand notice under Section 30 and his success in warding off being deemed "in default", does not avert punishment for offence under Section 35A(2) of the Act.

22. If the contention of the learned counsel for appellant is accepted, and if it is held that an assessee who pays the outstanding dues before expiry of the date mentioned in notice under Section 30 cannot be held guilty of evasion of payment, it would imply that there is no requirement of making payment of tax under self assessment. The consequence of accepting the plea of the appellant would be that an assessee will escape punishment even if he does not pay any tax within the period mentioned under Section 15B. Then no assessee would make any payment of tax by the prescribed date. All assessees would refrain from paying tax upfront through self assessment. The assessee would wait for assessment proceedings to be completed. Even on completion of the said proceedings, he would not pay any tax as per the assessment order. He will wait to be served notice under Section 30 and then only will he pay the tax and thereby avoid punishment, while the department of wealth­tax will helplessly watch the statutory requirements being flouted with impunity. This will render the requirements of self assessment and voluntary payment of tax redundant. Such an interpretation cannot be accepted and is contrary to the scheme of the Act. Section 35A(2) makes no reference to non­compliance of demand CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 18 of 75 notice under Section 30 and it is not open to this Court to transplant this requirement into Section 35A(2), and thereby do violence with its plain language.

23. Learned Counsel for appellant has relied upon the decision of Hon'ble Gujarat High Court in the case of Vinaychandra Chandulal Shah Vs. State of Gujarat, 1995 ITR Vol. 213 Page 307 decided on 30.12.1993, to support his contention that if tax has been paid after being issued notice under Section 139(2) of the Income­tax Act, the assessee cannot be punished for wilful failure to pay tax.

24. I am unable to accede to the contention of learned Counsel for appellant. In the aforesaid judgment, the prosecution was for offence under Section 276C(2) of Income­tax Act and the said Act contemplated payment of advance tax which had been paid in that case. In this case, no wealth­tax had been paid by the prescribed date. This is not a case where the assessee failed to pay tax due to a dispute over its sum. If that were the case, the assessee would have at least paid the sum which he felt he is liable to pay as per his previously assessed wealth. However, the appellant made no attempt to pay any tax at all. The whole purpose of self assessment is that the assessee himself quantifies the sum that he is liable to pay and makes the said payment. In case of any dispute, there is assessment of liability. An assessee cannot state that merely because a dispute might arise, he will not pay any tax at all and he will not undertake self assessment.

CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 19 of 75 This is what has happened in this case. The assessee paid no tax. This is not because he felt that he has no liability. He knew that he was liable. Yet, he did not pay. The judgment is not applicable to this case. Moreover, the observation in the said case that penal provisions would come into play only after the liability is quantified through disposal of appeal against the order of assessment, has not found favour with the Hon'ble Supreme Court in the case of Sasi Enterprises Vs. Assistant Commissioner of Income Tax, Crl. Appeal No. 61/2007, decided on 30.01.2014. In that case, the assessee had been prosecuted for the offence of deliberate failure to file income­tax return. Learned Counsel for assessee argued that the complaint was filed on a day when the assessment had not attained finality. It was argued that the assessee could have filed his return after the assessment order. The Hon'ble Supreme Court considered the said plea and rejected it. It was held that the date for filing of return is that which is specified for self assessment. It was noted that failure to file return by the said date does attract the penal offence, notwithstanding the fact that assessment is yet to take place and that the law permits some additional time to furnish returns. It was held that prosecution could be avoided only if the tax return is filed in the same financial year, that too voluntarily as self assessment and before the tax department detects the failure to file return. It was observed that the outcome of assessment proceedings or appeal thereof has no bearing on prosecution for CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 20 of 75 evasion of tax. It was held that if the assessment proceeding was to affect the decision whether to prosecute, the legislature would have provided for this. The following passage is relevant :

"If it was the intention of the legislature to hold up the prosecution proceedings till the assessment proceedings are completed by way of appeal or otherwise the same would have been provided in Section 276CC itself."

It needs to be noted that notice under Section 30 of the Act is issued after conclusion of assessment proceedings. As per the aforesaid observations, the Court is not to wait for culmination of assessment proceedings in deciding the guilt or innocence of the accused. This itself implies that issuance of notice under Section 30, which happens after completion of assessment proceedings, has no bearing on final decision of innocence or guilt of the assessee for the offence of evasion of tax. In other words, the offence of evasion of tax is made out even if the assessee makes payment of tax after being issued notice of demand.

25. Even in the case of Vinaychandra (supra), the Court permitted an assessee to escape punishment only if he has filed his return in response to notice under Section 139(2) of the Income­tax Act. Section 139 of Income­tax Act is akin to Sections 14 and 15 of the Wealth­tax Act as held in the Jagat Singh case (infra). Such notices are to be issued prior to commencement of assessment proceedings. There is a marked difference between notice under Section 30 and notice under Section 14 or Section 17 of the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 21 of 75 Wealth­tax Act. Notice under Section 30 is issued after completion of assessment proceedings. Notice under Sections 14 and 17 are issued prior to commencement of assessment proceedings. Notice under Section 14 is issued in cases where wealth­tax return has been filed while Section 17 is pressed into service when no such return has been filed. Therefore, even if the judgment in Vinaychandra case (supra) is applied to the facts of this case, it would have protected the appellant from punishment only if he had made payment of wealth­tax on being issued notice under Section 17 of the Act, and before completion of assessment proceedings. This is not the case here. This is besides the fact that as per decision of Hon'ble Supreme Court in the Sasi Enterprises case (supra), payment of tax even at that stage would not have shielded the appellant from punishment.

26. It would also be apt to refer to the decision of Hon'ble High Court of Delhi in the case of Jagat Singh Vs. Wealth­tax Officer, 185 ITR 242 decided on 16.03.1990. In that case too, the Hon'ble High Court has disapproved of the argument being canvassed by learned counsel for appellant. The contentions urged in that case are strikingly similar to the contentions raised by learned counsel for appellant herein, albeit in the context of failure to file wealth­ tax return. In that case, the assessee wanted to protect himself from prosecution on the ground that he had filed the return, though not by the date mentioned in Section 14, but before making of assessment as is permitted by Section 15 of the Act.

CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 22 of 75 Rejecting the plea of the assessee, it was observed as follows:

"If the contention is accepted that criminal liability is not incurred, by a defaulting assessee if he manages to file the necessary return at any time before the assessment is made, the provisions of Section 35­B proviso (ii) would become nugatory. No such interpretation could be given which would make a particular provision of the statute as nugatory. (See III Income­tax Officer, Mangalore Vs. M. Damodar Bhat, AIR 1969 SC 408 (Para 4)".

The Hon'ble High Court of Delhi held that to avoid punishment, return has to be filed by the date mentioned in Section 14(1) itself i.e. by 30th day of June of corresponding assessment year. This denotes that a person who fails to comply with Section 14(1) cannot escape punishment for the offence on the ground that he has complied with Section 15 or has at any subsequent time filed the return. The Hon'ble Supreme Court, in the case of Sasi Enterprises (supra), and the Hon'ble High Court of Delhi, in the case of Jagat Singh (supra), have unequivocally laid down that filing of return within the extended period provided by the statute will not help the accused avoid punishment. That being the legal position, by no means can the appellant escape inference of having evaded tax as he did not pay the tax within the time prescribed by Section 14(1) read with Section 15B(1). Not only this, the appellant did not even pay the tax within the extended period mentioned in Section 15, or even subsequently on being served with notice, or on completion of assessment CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 23 of 75 proceedings. The appellant chose to pay the tax only after being served with demand notice. None of the rulings cited by learned counsel for appellant provide that such belated payment as has happened in this case would afford a valid defence in criminal prosecution for evasion of tax. Besides, the decisions of other Hon'ble High Courts cited by learned counsel for appellant are not binding on this Court. This Court is obliged to follow the view taken by Hon'ble Supreme Court and Hon'ble High Court of Delhi, which is also in consonance with clear and unambiguous provisions of the statute (Wealth­tax Act). The same view has been taken by the Hon'ble Supreme Court in the case of Prakash Nath Khanna Vs. Commissioner of Income Tax, 2004 ITR Vol. 266 Page 1 and by Hon'ble Madras High Court in the case of Dasari Narayana Rao Vs. Income­tax Officer, 1993 ITR Vol. 199 Page

325.

27. In the case of Lal Saraf v. State of Bihar and Another, 1997 ITR Vol. 224 Page 306 decided by Patna High Court on 29.08.1996, cited by learned counsel for appellant, the facts were that the assessee had been prosecuted for the offence of failure to file income­tax returns by the prescribed date. In that case, the accused had voluntarily filed his tax return, though after expiry of the due date. It was noted by the Court that under the relevant law, the assessing officer had to issue a notice to the assessee before end of the assessment year. It was also noted that as per circular of the Department of Revenue laying down guidelines for CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 24 of 75 prosecution, there would be no prosecution if the tax involved is less than Rs.5,000/­ and if the taxpayer is not a habitual offender. In that case, the tax involved was less than Rs. 5,000/­. The Court also noted that in that case the complaint did not mention about any notice being issued to the assessee for not submitting his return. The notice being referred to was under

Section 139(2) of the Income­tax Act which was to be issued before assessment. The said judgment does not come to the aid of the applicant and is not applicable to the facts of this case. In this case, there is no such circular of the government which proscribes prosecution. In this case, there is a clear averment in the complaint that notice demanding tax had been served. In this case, tax was not paid before initiation of assessment proceedings. The case of the appellant herein is substantially different from the case of the assessee in the judgment cited by the appellant. Moreover, the said judgment is not binding on this Court and this Court has to follow the decisions of Hon'ble High Court of Delhi and of the Hon'ble Supreme Court which are at variance with the cited decision.

28. In the cases of Income Tax Officer, Kolar Circle and Another Vs. Seghu Buchiah Setty, 1964 ITR Vol. 52 Page 538 decided by Hon'ble Supreme Court on 02.03.1964; Cherian Vs. Income Tax Officer Ernakulam and Another, 1959 ITR Vol. XXVI Page 210 decided by Kerala High Court on 12.09.1958; Misri Bai Vs. Income Tax Officer, Hyderabad, [1963 (50) ITR (Sh. N.) 8] CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 25 of 75 decided by Andhra Pradesh High Court on 09.04.1963; M.L. John and Another Vs. Income Tax Officer and Others, C.M.W.P. No. 523 of 1975 decided by Allahabad High Court on 08.04.1980 and Doorga Prosad Vs. The Secretary of State, 1945 ITR Vol. 13 Page 285 decided by Privy Council on 18.01.1945, the facts were wholly different from the facts of this case and therefore the said decisions are not applicable to this case. In those cases, there was no criminal prosecution or punishment of any offence. The issue of whether the assessee can be said to have committed the offence was not in question. None of the said judgments hold as to what would amount to "evasion of tax". The question before the said Courts was regarding recovery proceedings. As has been observed above, under the Wealth­tax Act too, if the assessee fails to comply with notice under Section 30 of the Act, within the period prescribed by Section 31 of the Act, the consequences provided by Section 32 of the Act would ensue. In other words, if the assessee fails to comply with the notice of demand of tax issued after assessment, he would be deemed "in default" and the Department would be entitled to summarily recover the outstanding dues. It is this summary recovery which was under

challenge in the abovecited decisions. The assessee contended that till he is deemed to be "in default" on his failure to comply with the demand notice, there cannot be such recovery. The Court agreed with the plea and also held that where the Appellate Tribunal has reversed or modified the assessment, a CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 26 of 75 fresh demand notice has to be issued and it is on non­compliance of that notice that the assessee would be deemed "in default" for recovery to be initiated by attachment and sale. The aforesaid issue is not the bone of contention in this case and this case is not for attachment and sale of property. For criminal prosecution, there is no requirement of the accused to be "in default" in terms of Section 31 of the Wealth­tax Act. There is no requirement of notice under Section 30 of the said Act being violated, for the penal punishment to be attracted. Notice under Section 30 is only issued to aid recovery in a summary manner. It is not a prerequisite to punishment under Section 35A(2) of the Act. The aforesaid judgments only adjudicated on the validity of recovery proceedings. Therefore, reliance on the said judgments by learned counsel for appellant is misplaced.

29. The question that now arises is whether the said failure to pay wealth­tax amounts to attempt of evasion of payment of tax under Section 35A(2) of the Act. According to Ld. Counsel for appellant, the said failure to pay tax does not amount to "evasion" so as to attract punishment prescribed under the aforesaid provision. Learned Counsel for appellant has argued that if a person is liable to pay wealth­tax but does not pay wealth­tax after acknowledging his liability that does not amount to evasion. It is submitted that the appellant had duly filed his return but failed to pay tax and therefore he cannot be said to have evaded tax. It is submitted that evasion of tax would occur CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 27 of 75 only if there has been suppression of wealth or mis­declaration in the wealth­tax return, which is not the case here.

30. I am afraid I am unable to agree with the said contention. Under the Wealth­tax Act, separate punishments have been prescribed for different offences. Section 35A provides punishment for attempt to evade tax, penalty or interest or to evade the payment thereof. Section 35B provides punishment for failure to furnish wealth­tax return. Section 35C provides punishment for failure to produce accounts and records in pursuance to notice. Section 35D provides punishment for making false statement or submission of false accounts. Section 35E lays down punishment for making false statement in a verification submitted under Section 34AB. Section 35EE prescribes punishment for failure to furnish particulars under Section 34ACC. Section 35F lays down punishment for abetment of offence of making false statement or delivery of false accounts.

31. It is argued by learned Counsel for appellant that a person who has furnished his return with correct particulars (although even this has not happened in the instant case) but has not made payment of tax, is not liable for punishment for evasion of payment of tax. It is contended that the expression "evasion of payment of tax" describes those assessees who conceal their assets or misdeclare their wealth. If the contention of learned Counsel for appellant were to be accepted, it would imply that assessees who hide their income by manipulating their books CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 28 of 75 would be liable for offence under Section 35A(1) as well as offence under Section 35A(2) and similarly those who make false declaration of their wealth would be punished under Section 35D as well as Section 35A (1) and (2), while those who declare their wealth but decide not to pay tax go scot free. The proposition being canvassed by learned counsel for appellant is preposterous. When there are specific provisions providing punishment for offence of making false declaration of wealth and for evasion of tax, there is no reason to stretch the language of Section 35A(2) to try and apply it on cases covered by separate provisions. Each penal provision has its own scope. Its domain cannot be tinkered with by misapplying and drawing other provisions into its ambit. If Section 35A(2) would not apply to a case where there has been only evasion of payment of tax, there would then be no case where Section 35A(2) would apply because other situations are governed by separate provisions and the latter cannot be superimposed by Section 35A(2). The interpretation being advocated by learned counsel for appellant makes the provision redundant and therefore cannot be countenanced.

32. Careful reading of Section 35A of the Wealth­tax Act would reveal that there is a fine distinction between Section 35A(1) and Section 35A(2) of the Act. Section 35A(1) provides punishment for attempt of evasion of tax. Section 35A(2) provides punishment for attempt of evasion of payment of tax. This implies CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 29 of 75 that if a person is evasive in his chargeability or liability itself (say, by manipulation of his books of account) he may be said to evade the tax but a person who admits his full liability to pay tax but is evasive in only payment thereof (say, by making lame excuses, procrastination or dilly­dallying on the payment thereof) he is said to be evading payment and he would be covered in the latter case by Section 35A(2) of the Wealth­tax Act. Therefore, a person who admits his assets to be chargeable to wealth­tax but does not make payment of wealth­tax is guilty of evasion of payment of tax punishable under Section 35A(2) of the Wealth­ tax Act. It also needs to be stressed that Section 35A provides punishment not for successful evasion of tax but the very attempt to evade tax and to evade payment of tax. This shows that if a person tries to escape payment of wealth­tax but eventually pays it, he will be covered by the provision because he still attempted to evade the tax, did not succeed and finally coughed up the money.

33. For the aforesaid reasons, the contention of learned counsel for appellant that Section 35A(2) would not apply if there has been correct disclosure of assets, is liable to be rejected.

34. Learned counsel for appellant has made yet another attempt to fend off punishment by arguing that failure to pay tax by itself does not amount to evasion of tax. He has relied upon the definition of "evasion" provided in the Black's Law Dictionary as "the illegal attempt to reduce your tax amount payable by CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 30 of 75 fraudulent means". It has been contended that there has been no fraudulent means used by the assessee. He has relied upon the case of Vinaychandra Chandulal Shah Vs. State of Gujarat, 1995 ITR Vol. 213 Page 307 decided by Hon'ble Gujarat High Court on 30.12.1993, to buttress his argument that evasion of tax takes place only if the assessee has used trickery or subterfuge.

35. This argument is not tenable for two reasons. The first is that fraudulent measures are covered by separate provisions including Section 35D and Section 35A (1) depending on the manner of commission of fraud. Since fraud is covered by other provisions and scope of Section 35A (2) is independent, it cannot be held that the latter would be attracted only in the event of fraud. The second reason is that evasion includes "violation of tax law to minimise tax liability" and is said to take place when the "assessed breaches the relevant law and it involves contumacious behaviour or actual knowledge of wrong doing", as held by Hon'ble High Court of Delhi in the case of Commissioner of Income Tax, Delhi V. Shiv Raj Gupta ITA No. 41/2002 dated 22nd December, 2014. In this case too, there has been breach of the law by failure to pay tax by the due date. The assessee knew himself to be liable to pay tax, as he had earlier too been assessed to wealth­tax, and yet he omitted to pay. This clearly amounts to evasion of payment of tax.

36. A person who intends to avoid paying taxes may either conceal his wealth or may openly, blatantly defy the law. It does not CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 31 of 75 stand to reason that a person who conceals his wealth will be punished under the law but a person who admits his liability to pay taxes and yet refuses to pay will escape the clutches of the law. One who knows that he is liable to pay the tax and still brashly refuses to pay with impunity, and exhibits scant respect for the law, is no less culpable than those who try to conceal their assets. Such persons are to be judged similarly and are equally responsible for evasion of tax. If the contention of learned counsel for appellant is to be accepted, it would encourage tax evaders to openly flout the law and refuse to pay taxes and do openly what they may hitherto be doing stealthily, as it would then allow them to escape punishment which they would have otherwise attracted by concealing their assets. Such interpretation of law would be absurd and also inequitable.

37. Evasion of tax may involve deceit, trick, subterfuge, artifice, equivocation or other under­hand dealing as mentioned in the judgment cited by learned counsel for appellant. However, evasion of payment of tax may comprise of a deliberate and conscious refusal to pay. In the judgment of Vinaychandra (supra) too, evasion of tax has been held include "intentional avoidance" of payment of tax. A person who decides not to report his wealth at all by not filing his returns and who also does not pay any tax is bound to attract punishment for evasion of tax.

This Court holds that deceit is not the only method for evading payment of taxes and one may also evade it by a refusal to pay CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 32 of 75 tax and withholding of tax returns so as to avoid attracting attention of the tax officer.

38. The judgment of Vinaychandra case (supra) cited by learned counsel for appellant is not applicable to this case. There the Court was dealing with the case of an accused who had allegedly committed the offence punishable under Section 276C of the Income Tax Act. The said provision provides punishment for evasion of payment of income tax. In that case, the assessee had paid a certain sum towards advance tax. He had also paid the self assessment tax. The self assessed tax had been revised through the assessment order. The order of Assessing Officer was confirmed in appeal. In such circumstances, it was held that the assessee could not be faulted for not paying the income tax (at the stage of self assessment) which he was later found to be liable to pay through the assessment order. The Hon'ble Gujarat High Court held that the accused could not be said to have evaded payment. The facts of this case are wholly different. Here, even the admitted tax liability was not discharged by the prescribed date. Therefore, the said judgment is not applicable to the facts of the present case. Moreover, as noted above, the payment of tax at belated stage which has been approved by the Hon'ble Gujarat High Court has been frowned upon by the Hon'ble High Court of Delhi and by Hon'ble Supreme Court in the Jagat Singh case and Sasi Enterprises case respectively. There are other distinguishing factors too. In that case, the Hon'ble Gujarat CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 33 of 75 High Court held that "there is not even a whisper that there is wilful attempt in any manner whatsoever to evade the payment of tax". Here, it has been clearly alleged that "the accused wilfully attempted to evade the payment of tax" and that "the accused is habitual defaulter in payment of tax and in filing the return of wealth". The Hon'ble High Court of Delhi in Jagat Singh case has expressly laid down that whether the failure to comply with the mandate of the Wealth­tax Act was deliberate or not depends on the facts of each case. Merely because one has not misdeclared the income or that the assets were known to the taxing authority due to earlier assessments is no ground to rule out wilful default.

39. This is not to say that in this case the appellant is guilty of wilful attempt of evasion of payment of tax. I have only held so far that the mere fact that a person has not committed fraud or used trickery or subterfuge does not imply that he cannot be held guilty of evasion of payment of tax. Section 35A(2) can still be invoked against that person if it comes on record that his failure to pay wealth­tax was deliberate and contumacious. Whether in this case the appellant was prevented by reasons beyond his control in making payment of wealth­tax is still to be seen.

40. Learned counsel for appellant has argued that there was no evasion of tax because the precise tax liability was yet to be crystalized through appeal over assessment proceedings. The mere fact that assessment proceedings had not been completed or that appeal against the order of assessing officer is pending is CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 34 of 75 no justification for the assessee to pay the due tax. For the said failure, the assessee can be validly prosecuted for offence under Section 35A(2) of the Wealth­tax Act. The contentions of learned counsel for appellant that simply because assessment was still to take place evasion of tax is not made out or that the obligation to pay wealth­tax does not arise till culmination of appeal against the order of assessment, or that on modification of the assessment order in the forum of appeal, the appellant gets absolved of the offence under Section 35A(2), are untenable and are rejected. Even if the said pleas are accepted, the appellant may be able to defend himself only if he had paid the wealth­tax that he knew he was liable to pay. His wealth had earlier also been assessed to wealth­tax. He knew that he had to pay wealth­ tax. At least the wealth tax resulting from his own computation should have been paid by him. But he chose to wholly disregard his responsibility and did not pay any money towards tax. The contention of learned counsel for appellant is rejected. The failure to pay tax coupled with the fact that the appellant did not even disclose his wealth by filing of return by the prescribed date, irresistibly leads to the conclusion that the appellant attempted to evade payment of tax.

41. It stands established from the evidence led by the complainant, the orders of assessment, the responses to the questions under Section 313 of Criminal Procedure Code and the absence of defence evidence on these aspects, that:

CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 35 of 75

(a) the appellant was chargeable to wealth­tax,

(b) he was under a statutory obligation to deposit wealth­tax prior to the date prescribed for filing of returns (30.06.1983),

(c) the appellant failed to deposit wealth­tax by the said date,

(d) the appellant did not even deposit wealth­tax till conclusion of assessment proceedings,

(e) he did not even submit his tax returns disclosing his wealth by the prescribed date and

(f) thereby the appellant attempted to evade payment of wealth­tax.

"Wilful"

42. The question that now remains is whether this attempt to evade payment of tax was wilful.

43. Learned counsel for appellant has argued that the requirement of mens rea has to be read into Section 35A(2) of the Act. He has relied upon the decisions of Income Tax Officer Vs. Autofil and Others, 1990 ITR Vol. 184 Page 47 decided by Hon'ble Andhra Pradesh High Court on 24.04.1990, Gujarat Travancore Agency Vs. Commissioner of Income­tax, 1989 ITR Vol. 177 Page 455, Additional Commissioner of Income­tax Vs. Dargapandarinath Tuljayya, 1977 ITR Vol. 107 Page 850, and Commissioner of Income Tax Vs. I.M. Patel, 1993 Supp (1) SCC 621 to support this plea. There is no dispute over the proposition that mens rea is an essential ingredient of a criminal offence, unless expressly CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 36 of 75 excluded by the statute. Since criminal intent is not excluded by the Wealth­tax Act, it is deemed to be included. It is implicit in the expression "wilful" mentioned in Section 35A(2) of the Wealth­tax Act. This court therefore agrees with the plea of the appellant that it is only the wilful attempt to evade payment of tax, penalty or interest that has been made punishable under the Act.

44. It is to be seen whether the attempt to evade the taxes was wilful.

Before analyzing the evidence on this point, it needs to be examined as to what is the starting point of assumption for the Court. Learned counsel for appellant has argued that there is a presumption of existence of culpable mental state under Section 35­O of the Wealth­tax Act but the Department of Wealth­tax cannot take aid of the said provision since it was not in existence at the time when the tax liability arose. It has been argued that the said provision came into effect on 19.09.1986 having been inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986 whereas the assessment year was of 1983­

84.

45. The aforesaid contention of learned counsel for appellant is remarkably inconsistent with the previous argument of the appellant that the liability to pay wealth­tax arose, not in the year 1983, but only in the year 1988, and that the tax had been duly deposited at that time by the appellant. If liability to pay tax had arisen only in the year 1988 (as contended by appellant), it is this CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 37 of 75 year that has to be considered for deciding applicability of Section 35­O. As Section 35­O was in force in the year 1988, it does not behove the appellant to argue that it is not applicable to the offence in question.

46. Treating the relevant date as not the date of actual payment but the date when tax had to be paid but was not paid resulting in commission of offence, then too Section 35­O would apply as it was in existence on the date when the tax was payable and had not been paid. The provision had come into effect on 19.09.1986. As on that day, payment of tax had not been made by the appellant. The tax continued to be payable on that day and since it was not paid, the offence stood committed on 19.09.1986 and on subsequent days. It has been held in the case of Jagat Singh (supra) that the offence of not paying tax or not filing return is a continuing offence and it remains committed on every date while the default continues.

47. That apart, the complaint had been filed on 31.03.1992 while the provision came into force on 19.09.1986. Therefore, the provision existed on the date when the complaint was filed. The complainant was clearly entitled to the aid of the said provision in proving its case. Thus, if the provision is deemed to be prospective, then too, the said provision can be invoked and the learned Trial Court could rely on it for supporting its decision. Likewise, this Court can refer to the said provision.

CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 38 of 75

48. Even if it is assumed that the relevant date is not the date when payment of tax was actually made, not the date when tax was remaining unpaid, not the date when complaint was filed, but is the date when tax was to be paid as per Section 14 of the Wealth­ tax Act, then also there is no escape from applying the provision of Section 35­O. This is because Section 35­O is retrospectively applicable to offences that had taken place before its coming into force. Section 35­O is essentially a provision relating to mode of proof and provides a presumption as a starting point when the Court proceeds to evaluate the evidence. It is a matter relating to evidence which falls in the domain of procedure. It does not create an offence and therefore is not part of substantive law. As an adjectival law, it applies retrospectively even to offences that had been committed before its coming into force. Support for this view is drawn from the decision of Hon'ble Supreme Court in the case of Romesh Kumar v. State of Punjab, 1986 Cri.L.J.2087. That case also related to criminal prosecution. The provision being interpreted in that case also related to a rebuttable presumption. The aforesaid judgment was concerning Section 113A of Evidence Act, 1872 and it was held that since it related to presumption of evidence, it applied retrospectively to cover offences that had been committed before its coming into force. The following observation is relevant:

"Now the question is whether Section 113A of the Evidence Act applies to a case of suicide occurring CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 39 of 75 before 25­12­1983 (the date of the insertion) which has been tried or is being tried after the said date, learned Counsel for the appellant was at pains to contend that this provision had a substantive character and could not be made to apply retrospectively. He asserted that the conduct amounting to abetment in the pre­amendment times was being viewed differently but after the amendment, more than enough has been straight­ jacketed creating a fresh angle of vision and thus creating almost a new offence in the garb of a presumption. On the other hand, learned Counsel for the State maintained that the provision was procedural in nature and the view of the legislature now formulated in a presumption was not altogether alien to the concept of abetment as known to law.

It is universally recognised as a principle of law that procedure of a trial, civil or criminal, is governed by the rules of the forum and the Law of Evidence is part of the Law of Procedure. It is termed in Anglo­American language as lex fori. Taking it to be law of procedure, it results in practical convenience. It has been taken as established that the Law of Evidence is a branch of adjective law and, therefore, all questions of evidence must be decided according to the law of the forum in which the action is tried. And being part of the Law of Procedure, changes in Evidence Act like changes in other rules of procedure are CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 40 of 75 retrospective in nature. Now here the Legislature has channelised and focussed the attention of the Court that it can raise a presumption of abetment against the persons named therein if it is shown that a woman had committed suicide within a period of seven years from the date of her marriage when proved that they had subjected her to cruelty of the kind mentioned in Section 498A of the Penal Code. Even without raising the presumption in the pre­amendment period, the Court was not absolved in putting parties to proof and arrive at a conclusion that a woman committed suicide which was abetted by her husband or her relatives. By introducing the aforesaid provision, the Court has been facilitated to raise a presumption, though rebuttable. Raising of presumptions at a trial is not part of the substantive law and hence the question of retrospectivity in this regard does not arise".

49. Applying the same analogy, since Section 35­O of Wealth­tax Act was on the statute book when the complaint was filed, it would govern the said case notwithstanding the said fact that the offence relates to an assessment year which was prior to the date of insertion of the provision.

50. Even it is assumed that Section 35­O of Wealth­tax Act is not applicable to this case, then also, the Court has to presume such culpable mental state and it is for the appellant to show he was prevented by factors which were beyond his control, from making payment of wealth­tax by the prescribed date. This is because it is CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 41 of 75 the appellant who wants the Court to believe that the said factors existed. These factors are personal to the appellant and were obviously within his own knowledge. There are no means for the Department of Wealth­tax to know what circumstances the assessee was going through, what difficulties he was facing, whether he had any handicap in mobilizing funds, whether he has the required paraphernalia and assistance for submission of returns and payment of wealth­tax. These are matters within the exclusive knowledge of an assessee and it is the said assessee alone who has to affirmatively lead evidence and prove these facts. Applying Section 103 and 106 of the Evidence Act, 1872, it was the appellant to prove that he did not have the required funds or that he was going through other circumstances due to which, despite his eagerness to deposit the tax, he was not able to do so. Even if it is assumed that Section 35­O is not applicable, that does not imply that provisions of Evidence Act will also not take effect. If Section 35­O had not been inserted by the legislature, the Evidence Act would still have held the field and would have governed the trial. By application of its provisions too, the onus would remain on the accused to show that there were circumstances owing to which he was unable to make payment of tax by the prescribed date, and that his failure was not deliberate. Once the prosecution (complainant) discharges its initial burden of proving that the accused failed to pay tax by the due date, the burden shifts on to the accused to show that he CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 42 of 75 made every possible effort to pay the tax but was unable to do so.

51. From the above, it follows that by virtue of the provisions of the Wealth­tax Act and those of Evidence Act, it is for the accused to prove that he did not have any intention to evade tax. As per Section 35­O, the accused has to "prove" the absence of criminal intent beyond reasonable doubt, and it would not suffice if he proves his innocence by a mere preponderance of probability. It may now be examined whether the accused has been able to attain this standard.

52. During trial, the accused did not lead any defence evidence. In his statement under Section 313 of Criminal Procedure Code, he did not plead or disclose any circumstance that prevented him from depositing tax by the due date.

53. It is only at the appellate stage that it dawned upon the appellant that he should lead evidence to prove his innocence. Pursuant to permission obtained from the Hon'ble High Court, he led evidence. Yet, he did not examine himself to disclose any such circumstance. The evidence led by the appellant comprises of examining a Bank Manager as ADW1 and an Income­tax Inspector as ADW2. Sh. Radhey Shyam Meena, ADW1 simply stated that the records of the relevant time have been destroyed. He was unable to identify a bank account statement of the period from January 1981 to 22.03.1982. His testimony therefore did not, in any manner, bolster the defence. Sh. Jai Kumar Thakur, ADW2 was shown some assessment orders to which he stated CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 43 of 75 that he cannot admit or deny the same but they were purported to have been passed by the Income­tax Officer. The said assessment orders also do not prove that the appellant did not have the means to pay wealth­tax. Therefore, the accused has miserably failed to prove that his failure to pay tax was unintentional. The standard that the accused had to attain was of proving the absence of culpable mental state "beyond reasonable doubt". However, the appellant was unable to even attain the standard of "preponderance of probability".

54. Even if the appellant had succeeded in having the bank account statement duly proved from ADW1 Radhey Shyam Meena, that would not have furnished a valid defence. The appellant ought to have led evidence to first disclose how many bank accounts he held at the time when his tax liability arose. The appellant should have then proved the funds lying in the said accounts during the assessment year and during subsequent years till he made payment of the tax. The appellant did not prove how much cash and other liquid assets he was having in hand on the day when his liability arose. Section 14 of the Act provides that wealth­tax is charged on the "net wealth" that the person is having. The fact that the appellant was chargeable to wealth­tax itself shows that he had assets which were higher than the threshold limits under the Wealth­tax Act. If the appellant genuinely wanted to pay tax, he could have liquidated his assets. Nothing prevented him from doing so. If the appellant did not have the financial means and CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 44 of 75 other assets to satisfy his tax liabilities, he would have applied to declare himself insolvent. He has not proved any such insolvency petition to have been filed by him. The assets mentioned in the assessment orders show that the appellant had sufficient means to satisfy his tax liability. It is not necessary that the appellant should have cash for paying the said tax on the day when tax had to be paid. Or else, every assessee of wealth­tax would keep all his funds in the form of immovable property or other such fixed assets and would refuse to pay wealth­tax on the ground that he does not have cash. Likewise, a person having income would invest or spend all his money and would then refuse to pay income­tax on the ground that he is not left with any liquid funds in his bank account. The appellant was having running businesses and was admittedly partner in two firms. He was a frequent traveller to other countries (In his own reply to show cause notice, he has stated that he had to go abroad very often in order to pay attention to his business exports). Yet, when it came to paying wealth­tax, he put up a pretense of penury. This shows a clear intent to evade payment of taxes. Payment of tax is a statutory duty. It is not a matter of convenience that the assessee would pay as and when he is having unutilized money. If the appellant sincerely wanted to discharge his statutory obligation of payment of wealth­tax, he would have disposed off or mortgaged his assets including shares. This is not a liability that has arisen out of a contract or tort. This liability is based on CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 45 of 75 existence of wealth and therefore, there is no scope for argument that the assessee did not have the money or means to pay. If he did not have money, the tax would not have been levied at all. The extent of tax is a small proportion of the wealth and it cannot be believed that an assessee who has no wealth is being visited with consequences of payment of wealth­tax. The assessee remained cavalier and indifferent and made no effort to mobilize his wealth so as to pay the due tax, perhaps under the impression that there are going to be no consequences. He finally paid up only after conclusion of the assessment proceedings and its appeal and after being served with notice, when his assets were on the verge of being attached and sold. The appellant has stated in the reply to show cause notice that he was depending on the staff of a company of which he was a director for his wealth­tax returns. He also stated that he did not have sufficient funds in either his own accounts or the account of the two firms of which he was partner. He has however not tried to place on record the bank account statements of the said firms and of his own self of the period from when his tax liability arose till the date of payment of tax. He stated in his reply to show­cause notice that his wealth includes fixed assets and shares in a company which did not yield any significant income. It is not understood as to why that he depended on income from the shares when he could have sold the shares of the company and his fixed assets to pay wealth­tax. He has not proved on record CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 46 of 75 the unavailability of staff who was entrusted the task of deposit of wealth­tax. Moreover, even if that is proved, that may not afford a valid defence because there is no reason for an assessee to shift his personal statutory responsibility to the employees of the company in which he is a director. If this is permitted, such plea would be taken by every assessee who would say that he has transferred his responsibilities to somebody else and that person failed to perform the duty. The statutory duty was cast on the assessee and it is not open to him to plead that he further delegated it to somebody else.

55. Learned counsel for appellant has raised a faint plea that the appellant has been prevented from defending himself and from showing unavailability of funds owing to a delayed prosecution by the Wealth­tax Department. The said plea cannot be accepted. The liability to pay tax had arisen in the year 1983. The appellant knew at that time that he has to pay tax. If he was not having funds, he should have preserved his justification for not being able to comply with his statutory duty. Income­tax assessment proceedings had started soon thereafter. The appellant carried the matter to higher fora in appeal over assessment proceedings. All throughout while facing assessment proceedings and in the appellate fora, the appellant was defending himself not only from tax liability but also from penalty and interest. In order to save himself from penalty, the appellant had already taken the plea that he was not having sufficient funds and there was absence of CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 47 of 75 staff due to which he was unable to pay tax. He would have, at that time too, preserved the relevant evidence in his favour. Soon thereafter, he was prosecuted for the offence of evasion of tax. That time also he knew that he has to defend himself and prove absence of funds in his defence. The appellant was represented by counsel all throughout. He cannot claim that he never knew that he had to prove his defence at trial. The appellant did not even make an attempt during trial to prove the absence of funds. The first time when the appellant tried to prove his defence was after filing of appeal. Therefore, it would not be proper for the appellant to plead that due to delay on the part of the complainant, he has suffered prejudice and has not been able to prove his defence. The order sheets show that even the trial had been delayed substantially due to frivolous pleas taken by the appellant. The contention of the appellant that he has not been able to prove paucity of funds due to delay cannot therefore be accepted. Moreover, even if the appellant had succeeded in getting the bank statement proved at trial (as attempted to be done through ADW1 Sh. Radhey Shyam Meena), that would not have afforded a valid defence, as explained above.

56. The Wealth­tax Act makes provision for mitigation of consequences of default in payment of tax. Section 18B provides that the Commissioner of Wealth­tax may reduce or waive the amount of penalty if he finds that the assessee has made full and true disclosure of his net wealth and has cooperated in the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 48 of 75 inquiry. Section 31 provides for reduction and waiver of interest and for permission for payment in installments. The appellant never invoked any of the above provisions, which he should have if he was indeed facing genuine hardships or financial constraints. However, the intent of the appellant was not to pay up at all. If he was interested in making payment of tax and not to avoid it, he would have at least filed his tax returns by the due date, disclosed his wealth and paid the tax to the extent to which he was able to do so as per his prevailing financial condition.

57. The irresistible conclusion is that the appellant was wilful in his attempt to evade payment of tax.

Other Contentions

58. Learned counsel for appellant has referred to the testimony of PW1 C.S. Prasad. He has stated that the said witness has admitted in his cross­examination that he does not remember whether assessee had deposited the due assessed amount. It is argued that the witness has falsely deposed to this effect and that the witness was fully aware that the accused had deposited the assessed amount with interest before filing of complaint.

59. In the present case, it is the conduct of the appellant which is under the scanner. The trial is not for the purpose of testing memory of the witness of the complainant. The question before the Court simply is whether the appellant had evaded payment of wealth­tax. If the witness faltered in recalling aspects which are not germane including the date when the appellant paid the tax CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 49 of 75 after expiry of the prescribed period, it does not affect the final decision. The offence was complete when the appellant failed in his duty to pay the applicable tax by the due date without justification. Whether the tax was later paid up is not relevant and even if paid, it does not efface or undo the offence which was already complete.

60. It further needs to be noted that whether the said tax has been deposited or not is a matter of record. It needs to be proved through documents. Oral testimony regarding the said deposit is inadmissible. If the witness had stated that the said tax had been paid or had not been paid, it would not have changed anything and this fact is to be proved only through the tax deposit challan. A fact which can be discerned from documents ought not to have been put to the witness solely to test his memory, particularly in a case of this nature which is primarily based on documents. Even if the witness said that he is not aware of the said deposit, it is inconsequential for assessing whether the offence is made out. As held above, the court has to examine whether the said deposit had been made before expiry of the due date mentioned in Section 14(1) of the Act. Subsequent payment of tax is of no consequence and does not afford a valid defence. The fact that this payment had not been made by the due date has been admitted by the accused. Whether subsequently tax was deposited or not and what the witness deposed in that regard is of no consequence and is liable to be ignored.

CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 50 of 75

61. A plea similar to the above has been raised by learned counsel for appellant with regard to reply to show­cause notice. It is argued that PW1 C.S. Prasad has displayed ignorance of whether reply to show cause notice was submitted by the appellant. Even if it is assumed that the appellant had indeed replied to the show cause notice, and the witness could not recall the same while deposing, it does not vitiate the case of the complainant. The filing of reply does not absolve the appellant of the offence of evasion of payment of tax. Admittedly, the reply was sent subsequent to the time fixed in the notice. The authority which issues the show­ cause notice is not required to wait indefinitely for reply to be submitted. He is under no obligation to consider a reply which is received after ten months of issuance of show cause notice. A public authority is not at the beck and call of the assessee to be obliged to act on a reply that the assessee may submit at his whim. Nor is a speaking order required to be passed on the said show­cause notice to decide whether or not the assessee is to be prosecuted. The questions to the witness as to whether speaking order was passed are of no consequence. Moreover, if there is no reply or objection received within the stipulated period, there would be no occasion to pass such a speaking order. The decision whether to prosecute an assessee is not appealable and this Court cannot undertake judicial scrutiny of the said decision or set it aside on the ground of insufficiency of reasons. Besides the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 51 of 75 above, even if the said reply had been taken into account, it was the choice of the department whether to prosecute the appellant. It is well within the rights of the department to brush aside the contentions raised by the assessee and to prosecute the assessee. In that event, the assessee has to prove his defence at trial. He cannot urge that he should be acquitted because the Department of Wealth­tax did not take the right decision in prosecuting him. It may not be out of place to mention that in the Wealth­tax Act, there is no express provision making it the duty of the Wealth­tax Department to issue show­cause notice asking the assessee to explain as to why he should not be prosecuted, or to pass a speaking order on the reply received to such show­cause notice. In the case of Jagat Singh (supra), it was observed, on the basis of a previous judgment of Hon'ble High Court of Delhi, that "there is no requirement of law for giving any notice to show cause before filing the criminal complaint". The contention of learned counsel for appellant is without force.

62. Another argument raised by learned counsel for appellant is that the respondent no.1 has failed to prove service of notice under section 30 of the Act. As noted above, issuance of demand notice to the assessee under section 30 for payment of tax is not a precondition to punishment for the offence. Therefore, the plea of the appellant that the complainant has failed to formally prove service of said notice, even if correct, is of no consequence and is liable to be rejected. Besides, the witness has identified the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 52 of 75 complaint in which the said averment had been expressly made. In his examination­in­chief, PW1 C.S. Prasad unequivocally stated that the appellant has evaded payment of tax "inspite of service of notice u/s 30 of W.T. Act". This assertion of the witness made in his examination­in­chief was not questioned or rebutted in the cross­examination of the witness. Remaining unchallenged, it stands established that notice under Section 30 had been served upon the appellant and, as held above, even if the said notice had not been proved, it does not vitiate the case of the complainant. The contention of learned counsel for appellant is devoid of merit.

63. Learned Counsel for appellant has argued that the witness of the complainant PW1 Sh. C.S. Prasad, in his cross­examination, stated that the appellant never pleaded insufficiency of funds as reason for not paying the tax. Learned counsel for appellant pointed out from documents that he had raised such a plea.

64. Firstly, the appellant cited paucity of funds to justify his failure to pay tax at a much belated stage. If this had been true, the appellant would have at least submitted his tax returns without payment of tax. However, he did not do that too. Tax returns were also not filed within the prescribed date, although the paucity of funds did not preclude submission of returns. Secondly, whether the said plea of absence of funds had taken before Department of Wealth­tax or not is immaterial since even if the said plea would have been taken, it would not have CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 53 of 75 exonerated the appellant from the case. The mere taking of plea is not sufficient. The plea has to be proved. The appellant has failed to prove the plea during trial and, as noted above, has failed to establish that he did not have funds at the relevant time. Thirdly, what plea had been taken is to be proved not by asking the witness of the complainant but by producing and proving the document itself. The testimony of the witness, as to contents of a document, is inadmissible. The contents of the document have to be proved by primary evidence i.e. production of document itself, as laid down in Sections 61 and 62 of Evidence Act, 1872. If the witness had to be contradicted, his attention should have been drawn to the said document. Fourthly, even if the witness has erred in recalling whether a plea had been taken in a certain document, it does not belie his testimony. The witness is not expected to rote learn the contents of every document submitted by the assessee, more particularly when the document had not been submitted in the stipulated period and was therefore not required to be mandatorily considered by the Wealth­tax Department. The witness was appearing in official capacity. He cannot be treated an expert of facts or one who has to be aware of every minute detail remotely connected to the case. The mere raising of a plea at the stage prior to filing of charge­sheet does not absolve the appellant. The plea of absence of funds has to be proved at trial. Therefore, even if it is assumed that the appellant had indeed pleaded paucity of funds at a time prior to filing of CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 54 of 75 complaint, that does not entitle him to acquittal. Since the raising of the said plea has no bearing on the fate of this case, the inability of PW1 C.S. Prasad to recall the said fact is irrelevant and inconsequential. The contention of learned counsel for appellant is liable to be rejected.

65. Learned counsel for appellant has relied upon a statement made in the cross­examination of PW1 C.S. Prasad to the effect that Wealth­tax Department does not consider it to be wilful evasion if the assessee is unable to deposit tax due to paucity of funds. Firstly, whether a certain set of facts attracts a penal provision is a matter of law and the testimony of a witness is not to be considered for construing the law. The witness is to depose on facts and not on matters of law. Even if the witness states that in a given situation, the accused is not treated as being guilty, the Court will remain under an obligation to independently assess whether the offence is made out. The Court can hold the accused guilty of commission of the offence even though witness of the complainant says that the complainant does not treat that act as commission of offence. Question regarding interpretation of law should not have even been put to the witness in the first place. Secondly, this Court has already held that if an assessee is unable to pay tax due to reasons beyond the control of the assessee, the attempt to evade payment of tax may not be wilful. However, in the present case, the plea of paucity of funds has not been substantiated. Therefore, the utterance of the aforesaid statement CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 55 of 75 by the witness does not come to the aid of the appellant.

66. Learned counsel for appellant has argued that the respondent no.1 has not been able to prove grant of sanction under Section 35­I of Wealth­tax Act. Sanction is to be issued by the Commissioner of Wealth­tax under the aforesaid provision. It is stated in the complaint that sanction was indeed issued by the Commissioner of Wealth­tax. In examination­in­chief, PW1 C.S. Prasad identified the said sanction as Ex.PW1/2. He also explained how he is in a position to prove the sanction issued by the Commissioner of Wealth­tax. He explained that he had seen the Commissioner signing documents in his official capacity. This assertion remained unchallenged in cross­examination. Nor was the genuineness of the document called into question. Since the sanction is a public document within the meaning of sanction 74(1), it may be proved by production of its certified copy. In this case, the very original sanction has been produced before the Court along with the complaint. There is no requirement of calling the author of the sanction to prove it. It has been proved by a person who had seen the author writing and signing the document in official capacity. He (PW1) was competent to prove the signatures of the sanctioning authority. No question has been put to the witness that could show that signatures on the sanction are fabricated or were not appended by the Commissioner of Wealth­tax, or that the witness had not seen the commissioner signing documents in official capacity. The CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 56 of 75 principle of law that the author of a document need not necessarily be examined to prove the document, is supported by decision of Hon'ble Bombay High Court in the case of Bhima Tima Dhotre Vs. The Pioneer Chemical Co., (1968) 70 Bom.LR 683 dated 23.06.1967. In that case, it was held as follows:

"In my opinion, to hold that a document is not admissible for proof of its contents unless the writer is called, is to denude documentary evidence of all its value and is clearly contrary to certain express statutory provisions to be found in the Evidence Act to which I will presently refer. Documentary evidence becomes meaningless if the writer has to be called in every case to give oral evidence of its contents. If that were the position, it would mean that, in the ultimate analysis, all evidence must be oral and that oral evidence would virtually be the only kind of evidence recognised by law. That, however, is not the position under the Evidence Act. The definition of the term "evidence" in Section 3 of the Evidence Act lays down that evidence means and includes statements made by witnesses, which are called oral evidence, and documents produced before the Court, which are called documentary evidence. Section 59 of the said Act enacts that all facts, except the "contents" of documents, may be proved by oral evidence. This provision would clearly indicate that to prove the contents of a document by means of oral evidence would be a violation of that section, and Section 91 expressly prohibits that being done in the case of contracts, grants or other dispositions of property which have been effected in writing. That, however, is not all. Section 61 of the said Act lays down in unambiguous terms: ' 'The contents of documents may be proved either by primary or by secondary evidence", CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 57 of 75 and Section 62 makes it clear that primary evidence means the document itself produced for the inspection of the Court. Needless to say, in view of the provisions of Section 67 of the Evidence Act, a document must, however, be proved in the manner provided by Sections 45, 47 or 73 of the said Act, or by the internal proof afforded by its own contents as laid down in Mobarik Ali's case, What is important to note is the use of the word "contents", both in Sections 59 and 61 of the Evidence Act, which leaves no room for doubt that when a document is proved in the manner laid down by the Evidence Act, the contents of that document are also proved. Of course, as Coyajee J. has observed, if the writer is not called and the matter merely rests on proof of the document, it will be for the Court to consider, on the facts of each ease, what probative value should be attached to the statements contained in the document. The view taken with regard to admissibility of documentary evidence in Madkolal Sindhu's case as well as in the case of In the matter of Mr. D. and Mr. S., is based largely on the assumption that oral evidence is always superior to documentary evidence because it is on oath and can be subjected to cross­examination. What is, however, overlooked is that a contemporaneous record is often much safer and has more probative value than oral evidence led at the trial, even though that oral evidence may have been given on the most solemn oath and subjected to the most rigorous cross­examination. It is for that reason that the Evidence Act advisedly lays down that the contents of a document can be proved by proving the document in the usual manner, a proposition that emerges unequivocally from a combined reading of Sections 59, 61 and 62 of that Act. To require that the writer of the document should be called is, in my opinion, to import in regard to documentary evidence CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 58 of 75 the rule laid down in Section 60 of the Evidence Act which, in terms, applies only to oral evidence, and to ignore the several statutory provisions set out above."

67. When the document was being sought to be proved, Ld. Counsel for appellant did not raise any objection to the mode of proof on the ground that the document is not being proved by a competent person. Such an objection cannot be now raised because this is bound to cause prejudice to the respondent no.1 Department of Wealth­tax. The wealth­tax officer cannot now summon the Commissioner of Wealth­tax and have the document proved through him. Had he known about the objection earlier, he could have taken steps to call the Commissioner of Wealth­tax as witness at trial. I draw support from the case of M/s Sangat Printers Pvt. Ltd. Vs. M/s Wimpy International Ltd. RFA No. 657/2003 decided by Hon'ble High Court of Delhi on 12.1.2012, wherein it was held as follows :

"Before the commencement of cross­examination, the respondent/ defendant did not object to the exhibition of this document, and therefore, in view of the decision of the Supreme Court in the case of R.V.E. Venkatachala Gounder Vs. Arulmigu Viswesaraswami & V.P. Temple 2003(8) SCC 752, the respondent/ defendant is estopped from objecting to the proof of the document. The Supreme Court in the case of R.V.E. Venkatachala Gounder (supra) has held that if objection is taken by the objecting party at the relevant point of time, then, the litigant which wrongly exhibits/ proves the documents, can thereafter take corrective action to ensure proper CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 59 of 75 mode and manner of proof. Therefore, once objection is not taken at the appropriate point of time, subsequently, no benefit can be derived of the same by the party subsequently objecting. In the present case, evidence was filed by way of affidavit and therefore since objection to the exhibiting/ proof was not taken before commencement of the cross­examination, the objection is deemed to have been waived inasmuch as if cross­examination would not have begun and objection would have been taken to exhibiting/ proof of document, then the appellant would have preferred to lead other evidences to ensure proof of the resolution, Ex.PW1/A."

In light of the above, it follows that the appellant ought to have objected to the mode of proving the said sanction before undertaking cross­examination of PW1. However, no such objection was raised either in pre­charge evidence or in post­ charge evidence. The appellant cannot now be permitted to contend that the sanction has not been proven in accordance with law.

68. The next contention raised by learned counsel for appellant is that sanction had been granted without considering the documents which were available with the Department of Wealth­ tax. This contention has been raised on the basis of cross­ examination of PW1 C.S. Prasad.

69. PW1 C.S. Prasad has stated in his cross­examination that he had sent all available records to the Commissioner for his consideration and for sanction. He was unable to recall the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 60 of 75 details of said documents. This is obviously due to passage of time. There is no requirement of the Department of Wealth­tax to place on record proof of sending the said documents. There is nothing on record to show that the sanction had been granted in a mechanical manner or that sanction was granted without considering the relevant material. There is a presumption, under Section 114 of Evidence Act, 1872 that official acts have been validly and regularly performed.

In the case of Hawa Singh Vs. CBI, Crl. M.C. No. 92/2012 decided by Hon'ble High Court of Delhi on 07.05.2012, the accused raised the plea that the sanctioning authority had not been summoned as a witness and therefore the sanction was not duly proved. It was also urged that the sanction did not disclose application of mind. The contentions were brushed aside by relying on the following observations made by Hon'ble Supreme Court in the case of State of Bihar Vs. P.P. Sharma, AIR 1991 SC 1260 :

"The order of sanction is only an administrative act and not a quasi­judicial one nor is a lis involved. Therefore the order of sanction need not contain detailed reasons in support thereof. But the basic facts that constitute the offence must be apparent on the impugned order and the record must give the reasons in that regard. The question of giving opportunity to the public servant at that stage does not arise. Proper application of mind to the existence of prima facie evidence of the commission of the offence is only a precondition to grant or refuse the sanction. When the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 61 of 75 Government accorded sanction, Sec.114(e) of the Evidence Act raises presumption that the official acts have been regularly performed."

It was held that the "Court is not to go into the technicalities of the sanctioning order".

70. In light of the aforesaid observations, I find no merit in the contention of learned counsel for appellant that the sanction was granted by the Commissioner without application of mind or without considering all the relevant documents.

71. Learned counsel for appellant submits that PW1 C.S. Prasad made false statements while denying knowledge of receipt of reply to show cause notice and denying the deposit of tax amount before filing of complaint. It is argued that PW1 C.S. Prasad is therefore an unreliable witness and the appellant ought not to have been convicted on the basis of testimony of such a witness. I do not find force in the said contention. Firstly, merely because a witness is unable to recall certain facts, he cannot be branded as a liar. There is bound to be loss of memory with the passage of time. The witness was deposing in the year 2012. The questions related to matters which were more than twenty­five years ago. It is natural for a person to be unable to recall certain facts. Secondly, if the witness wanted to conceal these facts, he would not have stated about them in the complaint too. The fact that the witness disclosed all facts correctly in the complaint shows that he had no intention of concealing anything. Thirdly, the CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 62 of 75 aspects on which the witness is alleged to have lied are matters of record. On such aspects, the oral testimony of the witness is inconsequential. Further, the accused could have, and rather ought to have, led evidence to prove his defence rather than pinning his hopes on eliciting of answers from the prosecution witness himself. Fourthly, as noted above, the testimony of the witness on these aspects would not have changed the outcome of the case. The aforesaid matters have no bearing on the final decision. Fifthly, whatever the witness had stated in his examination­in­chief regarding commission of offence by the accused is a matter of record. Thus, even if the credibility of the witness is sought to be impeached or his testimony is viewed with circumspection, that would not change the finding of the Court about the accused having evaded payment of wealth­tax, which is predicated on documents on record. In other words, the documents themselves incriminate the appellant and the case of Department of Wealth­tax is not dependent on the testimony of PW1 C.S. Prasad. PW1 C.S. Prasad has been examined only to formally prove the documents. Even that has been reduced to an academic exercise because the documents filed with the complaint have not been seriously disputed by the appellant and the appellant has even admitted in his statement under Section 313 of Code of Criminal Procedure that he had failed to pay wealth­tax by the due date. For the aforesaid reasons, the contention advanced by learned counsel for appellant trying to CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 63 of 75 cast doubt on the credibility of PW1 C.S. Prasad is liable to be rejected.

72. Learned Counsel for appellant has argued that the learned Trial Court committed an illegality by consolidating trial of the case in which the impugned judgment has been passed with the trial of other cases against the appellant. He submits that the learned Trial Court was dealing with seven complaint cases against the appellant alleging commission of offences under the Wealth­tax Act. The learned Trial Court joined the trials midway and passed a common judgment. It is urged that the learned Trial Court erred in passing a common judgment in the cases and in keeping the record of evidence of the said cases in a single file.

73. I have gone through the record of the learned Trial Court. Indeed seven complaint cases had been filed before the learned Trial Court. Their CC numbers are 149/04, 150/04, 151/04, 152/04, 153/04, 154/04 and 155/04. The cases were dealt with separately. There were separate orders in each individual case. Pre­charge evidence was distinctly led in all the seven cases. The witness was cross­examined separately in the said cases. Separate charges have been framed in all cases. At the post­charge stage, the witness of the complainant was cross­examined in all seven cases separately, albeit on the same day. All the seven sheets bear original signatures of the witness and of the Court. After closure of prosecution evidence, separate statements of accused were recorded under Section 313 read with Section 281 of Criminal CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 64 of 75 Procedure Code. At that stage, accused did not wish to lead defence evidence. Even later, when defence evidence was led pursuant to permission obtained from the Hon'ble High Court, testimony of the defence witnesses was recorded separately in each case, though common in content. Although the judgment is singular, its copies have been directed to be placed in the separate files. The learned Trial Court probably deemed it fit to pass a common judgment since most of the contentions advanced by the parties were similar. The only error on the part of the learned Trial Court was in record keeping. Although seven files had been prepared and initially the record was being maintained separately, at a subsequent stage, the evidence sheets of separate cases were all tagged together into a single file. However, that has caused no prejudice to the accused since this was only a ministerial task and did not affect adjudication of the case. While deciding the cases, the Court did not look beyond the material collected and the evidence recorded in the respective file, and Ld. Counsel for appellant has not pointed out any case in which the learned Trial Court would have taken into consideration the evidence of a different file. Each case was decided on the basis of its own record.

74. Although maintenance of record has been unsatisfactory, that did not infringe any right of the accused. There has not been joinder of charges or joinder of trial and there has been no infraction of Section 219 or Section 220 of Code of Criminal Procedure.

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75. Moreover, even if it is assumed that this was an error or irregularity in the conduct of judicial proceedings, that does not make the impugned judgment unsustainable. The error did not cause any failure of justice and therefore the judgment of the learned Trial Court cannot be reversed. Reference in this behalf is made to Section 465(1) of Criminal Procedure Code. In the present case, although record of the seven cases was being kept by the Ahlmad in a single file, counsel for accused would surely have maintained separate files for the different cases. Final arguments are advanced by learned counsel on the basis of his own file and not by looking at the judicial file. Yet, if the appellant had faced problem in identification of documents of individual cases, he would have brought it to the notice of the Court. The failure to maintain separate record must have made it arduous (having to painstakingly identify and mark each document as belonging to the respective file) for the learned Trial Court to finally decide the case as it has been for this Court while deciding the appeal, however, it has not affected the rights of the accused or precluded the appellant from raising his defence pleas.

76. This Court may also profitably refer to Section 465(2) of Criminal Procedure Code in which it has been laid down that in deciding whether there has been a failure of justice, the Court shall have regard to the fact whether objection could have and should have CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 66 of 75 been raised at an early stage of proceedings. If the appellant or his counsel were feeling prejudiced by the common maintenance of documents, he would have raised objection before the learned Trial Court at the stage of recording of evidence or at least at the stage of final arguments. The fact that the appellant never raised any such objection shows that there was no confusion and the appellant was never misled by the common maintenance of record. Had the appellant been affected and if he had raised the objection to the common maintenance of record at an early stage, the record would have been separated and the grievance would have been redressed. The appellant cannot be allowed to first participate in the trial, acquiesce in the said error and then complain at the appellate stage that he has been prejudically affected and trial is vitiated. The contention of learned counsel for appellant is therefore rejected.

77. Learned Counsel for appellant has argued that the government has suffered no loss of revenue since the appellant had deposited not only the due tax but also interest thereon and penalty and therefore the appellant deserved to be acquitted.

78. Even if it is assumed that there was no loss of revenue that does not imply that the offence had not been committed. As has been noted earlier, if tax is not deposited by the due date, the offence is attracted. This Court has to decide only whether the offence in question has been committed and not whether the government has suffered loss of revenue. The offence in question is of evasion CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 67 of 75 of payment of wealth­tax. If the accused evades payment of wealth­tax, the offence is attracted. Subsequent payment does not undo the offence. If the said plea would be accepted, no person would adhere to fiscal discipline and no person would honour his obligation to pay his tax by the due date. Such person would still avoid prosecution when he deposits tax after imposition of penalty. This is not the correct position of law. The monetary loss suffered by the Revenue is not required to be estimated for holding whether the offence has been committed. The contention is rejected.

79. Learned counsel for appellant has argued that since assessment proceedings have been completed, penalty has been imposed and it has also been deposited, the launch of prosecution and imposition of separate punishment for the criminal offence would amount to "double jeopardy". The said plea is wholly without force. The Hon'ble Supreme Court has laid down, in no uncertain terms, in the case of Sasi Enterprises (supra) and Jagat Singh (supra) that proceedings for imposition of penalty under the Act are distinct from criminal complaints filed under the Act. In the case of Thomas Dana Vs. State of Punjab 1959 SCR Supl. (1) 274, Constitution Bench of Hon'ble Supreme Court repelled a similar plea to the effect that penalty proceedings are in the nature of punishment for the offence and that after imposition of penalty, one cannot be prosecuted and punished for the criminal offence.

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80. As has been noted in the scheme of the Act, proceedings for imposition of penalty and criminal prosecution are distinct consequences of evasion of tax. The fact that penalty has been imposed or waived does not provide immunity from criminal prosecution and the concept of "double jeopardy" does not apply. This is also evident from the plain language of Section 35A(2) of the Act which provides that a person who wilfully attempts to evade payment of tax shall "without prejudice to any penalty that may be imposable on him under any other provisions of this Act" be punished. Penalty in the assessment proceedings are imposed under the Act itself. As per the provision, the imposition of such penalty has no bearing on award of punishment under Section 35A(2) of the Act. Therefore, the contention of learned counsel for appellant that award of punishment in the criminal trial after imposition and deposit of penalty tantamounts to "double jeopardy" is rejected.

81. It may be apt to note that the judgment dated 01.07.2014 of learned Trial Court suffers from a typographical error inasmuch as it mentions 30.06.1982 as the due date for filing of return in respect of assessment years 1983­84 and 1985­86 in paragraph no. 6, while discussing the testimony of PW1 C.S. Prasad. This is a minor and insignificant error which has not shaped the decision of the learned Trial Court and therefore, the error is to be overlooked, in view of Section 465(1) of Code of Criminal CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 69 of 75 Procedure. The due dates for filing of return, for assessment years 1983­84 and 1985­86, are to be read as 30.06.1983 and 30.06.1985 respectively.

82. It is contended by learned counsel for appellant that he never transferred any of his assets and therefore it cannot be assumed that he wanted to evade payment of wealth­tax.

83. It may be true that the appellant did not transfer his assets to defeat his creditors or the tax department. But the fact is that he also did not pay his wealth­tax. It is not necessary that a person will be prosecuted and punished only after he makes an illegal transfer of his properties. The fact that a person has wealth but choses not to pay wealth­tax is sufficient to attract the penal provision. If the contention were to be accepted, it would imply that persons who have the means to pay but deliberately do not discharge their statutory obligations can never be proceeded against for punishment under the Act till they start to sell their assets. This is not the requirement of law. Evasion of payment of tax can be suggested by varied circumstances. One of them may be transfer of assets. But at the same time, the conscious neglect and refusal to pay would also amount to evasion of payment of tax, more particularly when the assessee pleads non­existent, flimsy grounds to justify the refusal to pay tax. Merely because a person does not take any further measure to evade payment of tax does not imply that he never intended to evade payment of tax. If the argument of learned counsel for appellant is accepted, CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 70 of 75 an assessee may next contend that merely because he did not flee from the country, he should not be punished for evasion of payment of tax. Such a contention would be absurd. Conclusion

84. The onus of proof is higher in a criminal case than that in assessment proceedings. However, in this case, the complainant/respondent no.1 has succeeded in attaining this standard. The respondent no.1 succeeded in proving that the appellant willfully attempted to evade payment of tax. The appellant, on the other hand, has failed to show that he did not evade the payment of tax or that the said evasion was not wilful. It has been proved on record that the appellant did have mens rea (criminal intent). The learned Trial Court rightly held the appellant guilty of commission of offence under Section 35A(2) of the Wealth­tax Act, 1957.

85. In light of the aforesaid reasons, there is no merit in the appeal against the judgment of conviction. The appeal, to that extent, is dismissed. The judgment of conviction dated 01.07.2014 passed by Shri Devender Kumar Sharma, the then learned Addl. Chief Metropolitan Magistrate (Special Acts), Central District, Tis Hazari Courts, Delhi, is upheld.

Sentence

86. Ld. Counsel for appellant had advanced arguments on the point of sentence and had prayed that the appellant may not be sentenced to imprisonment, in the event of the appeal being CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 71 of 75 dismissed on merits. Reliance was placed by ld. counsel for appellant on the decision of Hon'ble Supreme Court in the case of K.I.Pavunny v. Asstt. Collector, Central Excise (1997) 3 SCC 721.

87. The appellant has been held guilty of offence under Section 35A(2) of the Wealth­tax Act, 1957. For the said offence, the punishment prescribed is rigorous imprisonment extending from a minimum of three months upto three years and also fine. As per Section 35G of the Act, for subsequent conviction (as has already been taken note of by the ld. trial court), the minimum period of imprisonment is for six months and it may extend to seven years. The appellant has been sentenced to undergo rigorous imprisonment for a period of six months and to pay fine of Rs. 20,000/­. This shows that the ld. trial has already taken a lenient view and has awarded the lowest punishment provided in the given spectrum.

88. It is trite that the court has to award a sentence which is proportionate to the gravity of the offence. In the case of Gopal Singh Vs. State of Uttarakhand (2013) 7 SCC 545, the Hon'ble Superme Court made certain observations which serve as a guideline for determining the appropriate sentence to be awarded to the convict. The relevant portion is extracted hereunder:

"Just punishment is the collective cry of the society. While the collective cry has to be kept uppermost in the mind, simultaneously the principle of proportionality between the crime CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 72 of 75 and punishment cannot be totally brushed aside The principle of just punishment is the bedrock of sentencing in respect of a criminal offence".

In the case of Sevaka Perumal and Anr. v. State of Tamil Nadu (1991) 3 SCC 471, the Hon'ble Supreme Court observed that undue sympathy to impose inadequate sentence would do more harm to the justice system to undermine the public confidence in the efficacy of law.

In the case of State of Karnataka v. Krishnappa, AIR 2000 SC 1470, the Hon'ble Supreme Court, while discussing the purpose of imposition of adequate sentence, opined that protection of society and deterring the criminal is the avowed object of law and that is required to be achieved by imposing an appropriate sentence.

89. The appellant has been found to be guilty of evasion of tax by not filing his returns and not paying tax. Evasion of tax eats into the framework of the economy. It undermines socio­economic objectives by impairing the capacity of the government to fund its projects. It also unjustly shifts the burden of tax to the honest tax payers.

90. The appellant has faced trial for a period of twenty years.

However, the delay in trial is attributable to the appellant himself. The ordersheet of the trial court shows that the appellant either sought exemption from personal appearance or absented himself on numerous occasions during trial which CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 73 of 75 caused delay. The appellant made every possible effort to stall or derail the trial by filing frivolous applications and revision petitions.

91. Dovetailing the competing factors, I may have been inclined to issue notice to appellant as to why sentence should not be enhanced. However, since a similar order passed in other appeals in the year 2018 has been challenged on the ground that there is no appeal filed by the Department of Wealth­tax and the order was stayed, I do not deem it appropriate to issue notice. There is, however, no ground to reduce the sentence any further. Already the minimum sentence prescribed by law has been awarded. It is not permissible to breach the law and to award a lesser sentence than that is prescribed. The benefit of probation cannot be extended to the appellant in view of express prohibition under Section 35M of the Act. Otherwise also, since there is a minimum prescribed sentence, release on probation is not permissible.

92. Reliance by the appellant on the decision of Hon'ble Supreme Court in the case of K.I.Pavunny v. Asstt. Collector, Central Excise (1997) 3 SCC 721 is misplaced. In that case, there was no minimum prescribed sentence of imprisonment and that is why the Hon'ble Supreme Court deemed it fit to impose a sentence of only fine. That is not the case here.

93. I find no reason to set aside and reduce the sentence awarded by Ld. Trial Court. The order of sentence dated 02.07.2014 is upheld. The appeal is accordingly dismissed.

CA No. 54749/16 Vijay Mehta Vs. C.S. Prasad Page No. 74 of 75 File of the appeal petition be consigned to the record room. Trial Court Record be sent back with copy of this judgment.

Announced in open court                           (Ashish Aggarwal)
on 03rd July, 2019                        Addl. Sessions Judge­03 (Central)
                                                      Delhi




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