Gujarat High Court
Chandulal Jethalal Jaiswal vs A.U. Vohra on 28 November, 2003
JUDGMENT D.A. Mehta, J.
1. This is an application seeking that the contemners be penalised under Article 215 of the Constitution of India and the Income Tax Department be directed to compensate the petitioner to the tune of Rs.50 lacs.
2. The applicant who appears as party-in-person has been heard. It is submitted that the opponents have committed the contempt of this Court in terms of the provision of Article 215 of the Constitution of India by making orders (both dated 10.3.1993) under Section 279(1) of the Income Tax Act, 1961 (the Act). It is stated that by passing the aforesaid orders the opponents have deliberately, willfully and with malafide intention and with conspiracy flouted the order of this Court made on 5.2.1992 in Income Tax Reference No.117 of 1988. It is further submitted that the opponents have committed continuous offence by filing eight criminal complaints in the Court of Chief Judicial Magistrate, Vadodara bearing Criminal Case Nos.2915/1993 to 2922/1993. It is further submitted that the prosecution has been launched by the opponents on false evidence and hence the petitioner is entitled to be compensated and that the opponents have not heard the petitioner before making the aforesaid orders under Section 279 of the Act. Various decisions have been relied upon in support of the submissions.
3. The petitioner has failed to explain the delay in preferring this application in which, it is alleged by the petitioner that the opponents have committed contempt of this Court by making the orders under Section 279 of the Act on 10.3.1993. The petition has been preferred on 16.4.2003. Section 20 of the Contempt of Courts Act, 1971 prescribes the limitation of a period of one year from the date on which the contempt is alleged to have been committed. Though the petitioner has stated in the course of his submissions that the contempt is a continuous one it has not been shown as to how the same is continuing.
4. In the case of Pallav Sheth Vs. Custodian and Others, (2001) 7 SCC 549, the Apex Court has dealt with the contention that the constitutional power contained in Article 215 of the Constitution of India could not in any way be stultified or curtailed by any Act of Parliament including Section 20 of the Contempt Act. In this context this is what has been stated by the Court :
"30. There can be no doubt that both this Court and High Courts are courts of record and the Constitution has given them the powers to punish for contempt. The decisions of this Court clearly show that this power cannot be abrogated or stultified. But if the power under Article 129 and Article 215 is absolute, can there be any legislation indicating the manner and to the extent that the power can be exercised ? If there is any provision of the law which stultifies or abrogates the power under Article 129 and/or Article 215, there can be little doubt that such law would not be regarded as having been validly enacted. It, however, appears to us that providing for the quantum of punishment or what may or may not be regarded as acts of contempt or even providing for a period of limitation for initiating proceedings for contempt cannot be taken to be a provision which abrogates or stultifies the contempt jurisdiction under Article 129 or Article 215 of the Constitution.
31. This Court has always frowned upon the grant or existence of absolute or unbridled power. Just as power or jurisdiction under Article 226 has to be exercised in accordance with law, if any, enacted by the legislature, it would stand to reason that the power under Article 129 and/or Article 215 should be exercised in consonance with the provisions of a validly enacted law. In case of apparent or likelihood of conflict the provisions should be construed harmoniously."
xxx. . xxx. . xxx. . xxx "32. xxx xxx It would, therefore, follow that if Section 20 is so interpreted that it does not stultify the powers under Article 129 or Article 215 then, like other provisions of the Contempt of Courts Act relating to the extent of punishment which can be imposed, a reasonable period of limitation can also be provided." . . . .
Therefore, it is apparent that this petition requires to be rejected on the ground of limitation . Nothing has been pleaded or no extenuating circumstances shown to exist in this regard.
5. Apart from the fact that the application is hopelessly time barred, it can be seen from the orders under Section 279 of the Act, the first order deals with the case for assessment year 1975-76 and the second order deals with the case for assessment year 1976-77. The judgment of this Court on which reliance has been placed by the petitioner for submitting that contempt of court has been committed pertains to assessment year 1972-73 and hence, it could not be stated for a moment that while passing the aforesaid orders dated 10.3.1993 under Section 279 of the Act and launching of prosecution thereupon would amount to contempt in terms of either the provisions of the Contempt of Courts Act or Article 215 of the Constitution. It is settled legal position that under the Act, every assessment for each assessment year is separate and independent.
6. Even if the aforesaid decision of this Court rendered in the petitioner's case on 5.2.1992 ( since reported in (1992) 198 ITR 476) is taken into consideration it is apparent that the petitioner has preferred this application only on the basis of the discussion made by this Court pertaining to question no.8 in a reference made to this Court under Section 256(1) of the Act. As can be seen from the said judgment, question nos. 1 to 7 pertained to ownership of trucks and income therefrom and the said questions have been answered against the assessee and in favour of the revenue. Thus, even if the said judgment can be said to be relevant in the present context, it is apparent that on the other issues the Court has held against the assessee i.e. the petitioner and in these circumstances when the orders under section 279 of the Act did not specify in relation to which head or source of income permission was being granted to file complaint it is not possible to accept the submission of the petitioner that the orders had nexus only with question no.8. In case of the petitioner for assessment year 1974-75 also the Reference had been decided against the petitioner assessee being Income Tax Reference No.204 of 1986 (since reported in (1992) 195 ITR 635). Hence, the finding in assessee's own case for assessment year 1972-73 cannot assist the petitioner in relation to proceedings for assessment years 1975-76 and 1976-77. There is nothing on record to show as to what was the assessment for assessment years 1975-76 and 1976-77, whether the same was carried in appeal/reference, and if yes, whether the same was varied in any manner or to any extent.
7. When the High Court answers any question referred to it under Section 256 of the Act the judgment is delivered in terms of Section 260 of the Act. The jurisdiction of High Court in Reference under Section 256 is a special one, different from its ordinary jurisdiction as a Civil Court. The High Court hearing a Reference under Section 256 of the Act, does not exercise any appellate or revisional or supervisory jurisdiction over the Tribunal. It acts purely in an advisory capacity, on a Reference which properly comes before it either under section 256(1) or section 256(2) of the Act. The High Court gives advice to the Tribunal and the Tribunal is required to give effect to such advice. (CIT Vs. Scindia Steam Navigation Co.Ltd. (1961) 42 ITR 589 and Liquidator of Mahamudabad Properties Pr.Ltd. Vs. CIT (1980) 124 ITR 31(SC). Thus, even on this count it cannot be successfully contended by the petitioner that any contempt in terms of Article 215 of the Constitution has been committed by the opponents.
8. It is a settled legal position that in a criminal case all the ingredients of the offence in question have to be established in order to secure the conviction of the accused. The criminal court no doubt has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act. It does not however, mean that the result of a proceeding under the Act would be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it. Otherwise, there is a danger of a contention being advanced that whenever an assessee or any other person liable under the Act had failed to convince the authorities in the proceedings under the Act that he has not deliberately made any false statement or that he has not fabricated any material evidence, the conviction of such person should invariably follow in the criminal court (P.Jayappan V. ITO (1984) 149 ITR 696, 700-01 (SC)). This position of law has been reiterated in K.T.M.S.Mohammed and another Vs. Union of India, (1992) 197 ITR 196. Therefore, it is apparent that merely because the High Court in relation to a particular source of income has rendered its opinion in the tax proceedings, that by itself is not sufficient to exonerate an assessee from criminal prosecution, but as stated by the Apex Court in the decision in case of K.T.M.S.Mohammed (supra) it would be one of the major factors to be considered and the resultant finding in the said proceeding will have some bearing in deciding the criminal prosecution in appropriate cases.
9. The contention that the petitioner was not heard before the aforesaid orders under Section 279 of the Act came to be passed has been specifically dealt with by the Apex Court in the case of Union of India and Another Vs. Banwarilal Agarwal (1999) 238 ITR 461 and it is stated thus :
" xx xx We further find that sub-section (2) of Section 279 is a provision which enables the Chief Commissioner or the Director General to compound any offence either before or after the institution of proceeding. There is no warrant in interpreting this sub-section to mean that before any prosecution is launched, either a show-cause notice should be given or an opportunity afforded to compound the matter. The enabling provision cannot give a right to a party to insist on the Chief Commissioner or the Director General to make an offer of compounding before the prosecution is launched".
10. To sum up :
[i] The application is barred by limitation;
[ii] The decision of this Court relied upon for the purpose of invoking contempt jurisdiction does not relate to the assessment years for which permission has been granted to launch prosecution;
[iii] The Criminal Court has to give due regard to result of any proceeding under the Act, but the same is not binding;
[iv] Section 279 of the Act does not envisage a hearing before permission is granted.
[v] There is no wilful disobedience of any direction of the High Court in issuing the orders under Section 279 of the Act.
12. Therefore, there is no substance in the application or the contentions raised by the applicant in support of the application and there is absolutely no warrant for initiating any action under Article 215 of the Constitution. The application is accordingly rejected. Notice is discharged with no order as to costs.