Madras High Court
M/S.Gangothri Textiles Limited ... vs The Assistant Commissioner Of Income ... on 20 November, 2019
Equivalent citations: AIRONLINE 2019 MAD 1724, (2020) 1 MADLW(CRI) 126
Author: A.D.Jagadish Chandira
Bench: A.D.Jagadish Chandira
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 20.11.2019
CORAM:
THE HONOURABLE MR.JUSTICE A.D.JAGADISH CHANDIRA
Crl.RC.No.951 of 2019
1. M/s.Gangothri Textiles Limited represented
by Sri Manoj Kumar Tiberwal, Coimbatore
2. Sri Manoj Kumar Tiberwal, Managing Director
M/s.Gangothri Textiles Limited, Coimbatore
3. Sri Mohanlal Tiberwal, Executive Director
M/s.Gangothri Textiles Limited, Coimbatore Petitioners
Vs
The Assistant Commissioner of Income Tax
Corporate Circle, Income Tax Office
67A, Race Course Road, RS Puram
Coimbatore 641002 Respondent
Prayer:- This Criminal Revision Petition is filed, against the order dated,
29.08.2019 made in Crl.MP.No.66 of 2019 in Crl.A.No.535 of 2018, by the I
Additional District Sessions Judge, Coimbatore.
For Petitioners : Ms.S.Yogalakshmi
For Respondent : Mr.Sheela, SGP
ORDER
1. This Criminal Revision Petition is filed, against the order dated, 29.08.2019 made in Crl.MP.No.66 of 2019 in Crl.A.No.535 of 2018, by the I Additional District Sessions Judge, Coimbatore.
2. The facts, leading to filing of this Criminal Revision Petition and necessary for disposal, are as follows:-
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a) The Petitioner/A1 Company, represented by the Managing Director/2nd Petitioner/A2 and the Executive Director/ 3rd Petitioner/A3 is carrying on the business of textile manufacturing. The Petitioner/A1 Company is assessed to tax in Corporate Circle-2, Coimbatore, in PAN:AAACG8018M.
b) The Respondent herein had filed a complaint under Sections 200 and 190(1) of Cr.PC, against the the Petitioners/Accused for the offences under Sections 276C(2) read with 278B(3) of the Income Tax Act, 1961, for the assessment year 2012-2013 before the Judicial Magistrate III, Coimbatore, for wilful default in payment of penalty of Rs.7,30,48,153/-
levied under Section 271(1)(c) of the Income Tax Act, 1961, for concealment of income and for not showing the capital gains to the tune of Rs.22,97,21,611/- in the income tax return.
c) It is alleged in the complaint that the Petitioner/A1 Company/ assessee had sold two landed properties at Kalapatti and at Dharapuram for a total sale consideration of Rs.1,82,00,000/- and Rs.90,08,300/- respectively, for which, the total capital gain was worked out to Rs.1,37,31,142/-. In respect of another sale of windmill, the short term capital gain, arising out of such sale, was worked out to Rs.21,59,90,469/- and in all, the capital gain was Rs.22,97,21,611/-. However, the said total capital gain was concealed in the Income Tax returns filed by the Petitioners/ Accused.
d) It is further alleged in the complaint that based on the Annual Information http://www.judis.nic.in 3 Report, assessment proceedings were initiated and that during the assessment proceedings, only at the time when the assessee was confronted with such concealment of capital gains, the assessee had surrendered those incomes arising on sale of such immovable properties and submitted a revised summary of total income statement. The assessment for the assessment year 2012-2013 was completed under Section 143(3) of the Income Tax Act, 1961, on 12.03.2015, by making addition of Rs.1,37,31,142, under long term capital gains and Rs.21,59,90,469/- under short term capital gain, thereby reducing the loss claimed at Rs.34,26,16,698/- to Rs.11,28,95,087/- and that a penalty of Rs.7,30,48,153/- was levied under Section 271(1)(c) of the Income Tax Act, 1961 for concealment of income.
e) It is further alleged in the complaint that the appeal in Appeal No.148/15- 16, filed challenging the levy of such penalty was dismissed, by order dated 28.09.2016 and the further appeal in ITA.No.3413/Mds/2016 was also dismissed by order dated, 26.05.2017, by the Income Tax Appellate Tribunal and that by letter dated, 24.10.2016, the assessee was required to pay the outstanding demand and stating that failing to pay the same, necessary proceedings under Section 276C(2) of the Act would be initiated, but the assessee defaulted in making payment of penalty and hence, a show cause notice dated 15.03.2017 under Section 276(C)(2) read with 278B(3) of the Act, was served on the assessee Company, to which, a reply dated 28.03.2017 was received and duly considered. http://www.judis.nic.in
f) It is further alleged in the complaint that since the assessee Company 4 deliberately failed to admit the capital gains arising from the above transactions, it was construed that the accused had wilfully evaded payment of penalty due for the assessment year 2012-2013 and thereby committed the offence punishable under Section 276C(2) of the Income Tax Act, 1961. Thereafter, again another show cause notice dated 24.10.2016 was issued to the accused to show cause why Prosecution proceedings under Section 276C(2) read with 278B of the Act should not be initiated for wilful failure to pay the penalty, to which a reply dated 13.02.2017 was received, but the penalty was pending due to be paid and hence, invoking presumption under Section 278B of the Income Tax Act, 1961, the complaint has been filed as stated above.
g) The complaint was taken on file in CC.No.11 of 2018 and by order dated, 3.11.2018, the Judicial Magistrate, finding the Petitioners/ accused guilty for the offence under Section 276C(2) read with 278B(3) of the Income Tax Act, 1961 and sentenced the Petitioner/A1 Company to pay a fine of Rs.10,000/- and directed to the Petitioner/A2 to pay the said fine, in default to undergo three months Simple Imprisonment and sentenced each of the Petitioners/A2 and A3 to undergo three months Rigorous Imprisonment.
h) In the appeal in Crl.A.No.535 of 2018 filed against the said conviction and sentence of the Trial Court, the Petitioners/ accused had filed Crl.MP.No.66 of 2019 under Section 391 of Cr.PC, seeking to allow the Petitioner/A2 to examine himself as a witness to substantiate that there http://www.judis.nic.in is no mens-rea and the Petitioner/A3 is not in charge for day today affairs 5 of Petitioner/A1 Company and to mark the documents mentioned in the list of documents, numbering 45 documents. The Respondent had filed a counter in the said petition, raising objections to grant the reliefs. In and by the impugned order, the said petition was dismissed. Hence, this Criminal Revision Petition has been filed.
3. In this Criminal Revision Petition, the Respondent had filed a counter, reiterating the averments made in the complaint and contending as under:-
a) The Petitioners have sought to mark 45 documents, which included the Income Tax returns, order copies of the Madras High Court, documents under Section 179 of the Income Tax Act, 1961, notices under Section 13(2), net worth certificates of the Petitioners and the annual reports from 2017-2019. Document Nos.1 to 34 are the Income Tax returns of the Petitioner/A1 Company, A2 and A3 for the assessment years 2009-
10 to 2018-19. But, the Petitioners have been convicted for the assessment year 2012-2013 and the IT Returns for the assessment year 2012-2013 have been marked before the Court. Thus, the Income Tax returns of the previous years and the preceding years have no relevance or bearing on the case, as the convictions pertains only to the assessment year 2012-2013.
b) The conviction was not based on the amount of concealment, but was for willful attempt to evade the payment of taxes under Sections 276C(2) and 278B of the Income Tax Act, 1961. Hence, the net worth certificates in Document Nos.42 to 44 have no relevance to the case. Document http://www.judis.nic.in No.45 is the annual report for the assessment year 2017-2018, which 6 states that Petitioner/A2 and the Petitioner/A3 are till date in charge of the day today affairs of the Petitioner/A1 Company and hence, the contention of the Petitioner/A2 that the Petitioner/A3 is not in charge of the affairs of the Petitioner/A1 Company is not acceptable.
c) Document Nos.35 to 40 are the documents relating to proceedings in the Writ Petition filed before this Court, which relates to fixing of the liability on the Directors for recovery proceedings pertaining to the assessment proceedings and recovery of taxes and hence, they have also no relevance to the case. Document No.41 pertains to the SARFAESI proceedings and hence, it has also no relevance to be marked as an exhibit.
d) The accused even under proceedings under Section 313 of Cr.PC did not choose to examine any witness and to mark any documents, though those documents were very much available with them and before the lower appellate court, no reason has been given as to why the said documents were not produced and marked during the trial. The documents are sought to be marked only to fill up the lacuna and to protract the proceedings. Hence, the present exercise initiated by the Petitioner/Accused for filing additional evidence does not have any relevance to the case on hand and accordingly, this Criminal Revision Petition is to be dismissed.
4. This court heard the submissions of the learned counsel on either side.
5. The learned counsel for the Petitioners would submit that the Trial Court has http://www.judis.nic.in failed to taken into consideration the necessity and requirement for marking 7 the documents by way of additional evidence. The Petitioners had been convicted for the offences under Sections 276C(2) and 278B of the Income Tax Act, 1961 and that the allegation against the Petitioners is that they wilfully concealed the short term capital gains and long term capital gains and that the Petitioners, finding that the documents are necessary to bring out facts and to bring out the inference that the Petitioners did not have wilful intention or mens rea to conceal the income, have intended to mark these documents as additional evidence at the time of appeal.
6. The learned counsel for the Petitioners would further submit that Section 391 of Cr.PC provides taking further evidence at the time of trial and since it being an exceptional circumstance, the Petitioners have filed the petition and that the Petition was not filed at a belated stage and that the Petition was filed during the presentation of the appeal before the Appellate Court, however, the Appellate Court, on wrong assumptions that the Petition has been filed to protract the matter and to delay the delivering judgement, had dismissed the Petition. She would further submit that the documents sought to be filed as additional evidence do not change the nature of the case, since all these documents sought to be relied on and to be let in as additional evidence are statutory documents, which are already available with the appropriate authority Income Tax Department and that the Appellate Court failed to see that it is a concept of justice which ought to prevail and that the Petition has to be allowed to secure the ends of justice.
7. The learned counsel for the Petitioners would further submit that the documents listed at S.Nos.1 to 34 are all the income tax returns of the http://www.judis.nic.in 8 Petitioners for the period from 2007-2008 to 2018-2019 and that the documents listed at S.Nos.35 to 40 are the documents relating to proceedings before this Court in Writ Proceedings, challenging the liability fixed on the Directors and that the document listed as S.No.41 is the notice issued under Section 13(2) of the SARFAESI Act to prove that the properties of the Petitioners were attached and taken possession and sold by the Bank and the Petitioners have not earned any gains out of the sale. She would further submit that the documents are necessarily required to prove that the Petitioner had obtained any gain out of sale by those documents, necessitating the Petitioners to pay the capital gain and that the documents listed as S.Nos.42 to 44 are net worth certificates of the Petitioners to show that they do not have individual properties and that the document No.45 is the Annual Report to prove that the Petitioner/A3 was not the Director during the relevant period. She would submit that the documents have not been produced before the Trial Court due to inefficiency and inadvertence of the person who had conducted the case and it had been done out of carelessness and ignorance and that the documents need to be marked as additional evidence for elucidation of truth in the interest of justice. She would further submit that by letting in additional documents as additional evidence will not adversely affect the case of the Prosecution, however, the Appellate Court, without appreciating the necessity of marking the additional documents, had erroneously dismissed the Petition in an arbitrary manner stating that no valid reasons have been stated and she would further submit that the doctrine of finality of judicial proceedings does not stand annulled or http://www.judis.nic.in 9 affected in any way by reason of exercise of power under Section 391 of Cr.PC since the same avoids de nova trial.
8. In support of her contentions, the learned counsel for the Petitioners would rely on the decisions reported in AIR 2004 SC 346 (Zahira Habibulla H. Sheikh and another Vs. State of Gujarat), AIR 1965 SC 1887 (Rajeswar Prasad Misra Vs. State of WB), 2001 4 SCC 759 (M/s.Rambhau Vs. State of Maharashtra), 2002 1 SCC 655 (Shailendra Kumar Vs. State of Bihar) and 2019 SCC Online SC 72 (Brig.Sukhjeet Sing Vs. State of UP).
9. Per contra, the learned Special Government Pleader for the Respondent, while reiterating the contentions made in the counter, would submit that if it is claim of the Petitioners/ accused that the Petitioner/A3 is not in charge of the day today affairs of the Petitioner/A1 Company, the Petitioner/A3 would have filed a petition for discharge and that by their own documents, the Annual Report discloses that the Petitioner/A3 was in charge and responsible for the day today affairs of the Petitioner/A1 Company and that the present exercise initiated by the Petitioners/Accused for filing additional evidence does not have any relevance to the case on hand and she would seek for dismissal of this Criminal Revision Petition.
10.At this juncture, the learned counsel for the Petitioners would further submit that Section 391(4) of Cr.PC provides for taking further evidence under this Section subject to the provision of Chapter XXII as if it were an enquiry and that the Respondent has got full opportunity of cross examining the Petitioners with regard to the documents sought to be marked by the Petitioners.
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11.I have given my careful and anxious consideration to the rival contentions put forward by either side and thoroughly scanned through the entire materials available on record.
12.At the outset, it is apposite to refer to Section 391 of Cr.PC as under:-
“391. Appellate Court may take further evidence or direct it to be taken.
(1) In dealing with any appeal under this Chapter, the Appellate Court, if it thinks additional evidence to be necessary, shall record its reasons and may either take such evidence itself, or direct it to be taken by a Magistrate, or when the Appellate Court is a High Court, by a Court of Session or a Magistrate.
(2) When the additional evidence is taken by the Court of Session or the Magistrate, it or he shall certify such evidence to the Appellate Court, and such court shall thereupon proceed to dispose of the appeal.
(3) The accused or his pleader shall have the right to be present when the additional evidence is taken.
(4) The taking of evidence under this section shall be subject to the provisions of Chapter XXIII, as if it were an inquiry.”
13.As per Section 391 of Cr.PC, the Appellate Court, if it thinks additional evidence is necessary, shall record its reasons and take such evidence itself. In this case on hand, the Petitioners/Accused have been charged under Sections 276C(2) read with 278B(3) of the Income Tax Act, 1961 for having wilfully failed to pay the penalty and having deliberately failed to admit the capital gains arising from the transactions done by the Company.
14.It is the contention of the learned counsel for the Petitioners that these documents were available with the Petitioners and that they were also available with the Respondent, however they were left out to be marked due to oversight and mistake of their counsel. These documents are essential for arriving at a conclusion that the Petitioners did not have mens rea to http://www.judis.nic.in suppress the income and that they have not suppressed any capital gains 11 earned by them. These documents are also essential to show that at no point of time, earlier or during the period of offence, the Petitioners have committed the offences under the provisions of the Income Tax Act, 1961, however, they have been left out without being marked. The power to take additional evidence is with an object to appropriately decide the appeal by the Appellate Court to secure the ends of justice and the documents sought to be marked are only to aid to arrive at a just decision and not to change the course or nature of the evidence earlier let in by the Prosecution. She would submit that the Respondent was well aware of these documents and that these documents were also in the custody of the Respondent and that they are not new documents created for the purpose of the appeal. She would submit that wide discretion is conferred on the Appellate Courts and that the fair play requires that the documents have to be marked as additional documents to avoid failure of justice. She would submit that no prejudice will be caused to the Prosecution by marking those documents since the Appellants are not coming with a new case and that the documents as stated earlier have to be marked only to prove that the accused did not have any mens-rea and that they have not suppressed any extraneous income or avoided paying capital gains.
15.In 2019 SCC Online SC 72 (Brig.Sukhjeet Singh Vs. State of UP), it was held in paragraphs 14 to 16 as under:-
“14. Power to take additional evidence under Section 391 is, thus, with an object to appropriately decide the appeal by the Appellate Court to secure ends of justice. The scope and ambit of Section 391 Cr.P.C. has come up for consideration before this Court in Rajeswar Prasad Misra v. State of West Bengal, AIR 1965 SC 1887. Justice http://www.judis.nic.in 12 Hidayatullah, speaking for the Bench held that a wide discretion is conferred on the Appellate Courts and the additional evidence may be necessary for a variety of reasons. He held that additional evidence must be necessary not because it would be impossible to pronounce judgment but because there would be failure of justice without it. Following was laid down in Paragraph Nos. 8 and 9:— “8. ……………………………….Since a wide discretion is conferred on appellate courts, the limits of that courts' jurisdiction must obviously be dictated by the exigency of the situation and fair play and good sense appear to be the only safe guides. There is, no doubt, some analogy between the power to order a retrial and the power to take additional evidence. The former is an extreme step appropriately taken if additional evidence will not suffice. Both actions subsume failure of justice as a condition precedent. There the resemblance ends and it is hardly proper to construe one section with the aid of observations made by this Court in the interpretation of the other section.
9. Additional evidence may be necessary for a variety of reasons which it is hardly proper to construe one section with the aid of observations made to do what the legislature has refrained from doing, namely, to control discretion of the appellate court to certain stated circumstances. It may, however, be said that additional evidence must be necessary not because it would be impossible to pronounce judgment but because there would be failure of justice without it. The power must be exercised sparingly and only in suitable cases. Once such action is justified, there is no restriction on the kind of evidence which may be received. It may be formal or substantial. It must, of course, not be received in such a way as to cause prejudice to the accused as for example it should not be received as a disguise for a retrial or to change the nature of the case against him. The order must not ordinarily be made if the prosecution has had a fair opportunity and has not availed of it unless the requirements of justice dictate otherwise………………………….”
15. This Court again in Rambhau v. State of Maharashtra, (2001) 4 SCC 759 had noted the power under Section 391 Cr.P.C. of the Appellate Court. Following was stated in Paragraph Nos. 1 and 2:— “1. There is available a very wide discretion in the matter of obtaining additional evidence in terms of Section 391 of the Code of Criminal Procedure. A plain look at the statutory provisions (Section
391) would reveal the same……………………
2. A word of caution however, ought to be introduced for guidance, to wit: that this additional evidence cannot and ought not to be http://www.judis.nic.in 13 received in such a way so as to cause any prejudice to the accused.
It is not a disguise for a retrial or to change the nature of the case against the accused. This Court in the case of Rajeswar Prasad Misra v. State of W.B. in no uncertain terms observed that the order must not ordinarily be made if the prosecution has had a fair opportunity and has not availed of it. This Court was candid enough to record however, that it is the concept of justice which ought to prevail and in the event, the same dictates exercise of power as conferred by the Code, there ought not to be any hesitation in that regard.”
16. From the law laid down by this Court as noted above, it is clear that there are no fetters on the power under Section 391 Cr.P.C. of the Appellate Court. All powers are conferred on the Court to secure ends of justice. The ultimate object of judicial administration is to secure ends of justice. Court exists for rendering justice to the people.”
16.In 2004 4 SCC 158 (Zahira Habibulla H.Sheikh and another Vs. State of Gujarat), it was held as under:-
“49. There is no restriction in the wording of Section 391 either as to the nature of the evidence or that it is to be taken for the prosecution only or that the provisions of the section are only to be invoked when formal proof for the prosecution is necessary. If the appellate court thinks that it is necessary in the interest of justice to take additional evidence, it shall do so. There is nothing in the provision limiting it to cases where there has been merely some formal defect. The matter is one of discretion of the appellate court. As reiterated supra, the ends of justice are not satisfied only when the accused in a criminal case is acquitted. The community acting through the State and the Public Prosecutor is also entitled to justice. The cause of the community deserves equal treatment at the hands of the court in the discharge of its judicial functions.
17.In AIR 1965 SC 1887 (Rajeswar Prasad Misra Vs. State of WB), it was held as under:-
“10. Additional evidence may be necessary for a variety of reasons which it is hardly proper to construe one section with the aid of observations made to do what the legislature has refrained from doing, namely, to control discretion of the appellate court to certain stated circumstances. It may, however, be said that additional evidence must be necessary not because it would be impossible to http://www.judis.nic.in 14 pronounce judgment but because there would be failure of justice without it. The power must be exercised sparingly and only in suitable cases. Once such action is justified, there is no restriction on the kind of evidence which may be received. It may be formal or substantial. It must, of course, not be received in such a way as to cause prejudice to the accused as for example it should not be received as a disguise for a retrial or to change the nature of the case against him. The order must not ordinarily be made if the prosecution has had a fair opportunity and has not availed of it unless the requirements of justice dictate otherwise. Commentaries upon the Code are full of cases in which the powers under Section 428 were exercised. We were cited a fair number at the hearing.
Some of the decisions suffer from the sin of generalization and some others from that of arguing from analogy. The facts in the cited cases are so different that it would be futile to embark upon their examination. We might have attempted this, if we could see some useful purpose but we see none. We would be right in assuming the existence of a discretionary power in the High Court and all that we consider necessary is to see whether the discretion was properly exercised.”
18.In 2001 4 SCC 759 (Rambhau and another Vs. State of Maharashtra), it was held thus:-
“4. Incidentally, Section 391 forms an exception to the general rule that an appeal must be decided on the evidence which was before the trial court and the powers being an exception shall always have to be exercised with caution and circumspection so as to meet the ends of justice. Be it noted further that the doctrine of finality of judicial proceedings does not stand annulled or affected in any way by reason of exercise of power under Section 391 since the same avoids a de novo trial. It is not to fill up the lacuna but to subserve the ends of justice. Needless to record that on an analysis of the http://www.judis.nic.in 15 Civil Procedure Code, Section 391 is thus akin to Order 41 Rule 27 of the Civil Procedure Code.
19.In this case, the Petition under Section 391 of Cr.PC had been filed by the Petitioners even at the time of presentation of the appeal. These documents sought to be marked as additional evidence are not new documents and they are documents relating to filing of returns with the Respondent in respect of earlier years and the copies of which are also available with the Respondent. By marking of these documents, the nature or course of the case will not be altered. The documents have not been produced before the Trial Court due to inefficiency or inadvertence of the person who conducted the case. Where the documents were left out to be marked due to carelessness and ignorance, it could be allowed to be marked for elucidation of truth, in the interest of justice, by exercising powers under Section 391 of Cr.PC. The intention of Section 391 of Cr.PC is to empower the Appellate Court to see that the justice is done between the prosecutor and the prosecuted in the interest of justice. This Court is of the opinion that the Petitioners should be allowed to let in additional evidence subject to provisions of Chapter XXIII of Cr.PC in the presence of the Respondent/ complainant and his counsel.
20.In the result, this Criminal Revision Petition is allowed. The impugned order dated, 29.08.2019 made in Crl.MP.No.66 of 2019 in Crl.A.No.535 of 2018, by the I Additional District Sessions Judge, Coimbatore, is set aside. Crl.MP.No.66 of 2019 under Section 39 of Cr.PC is allowed. The A.D.JAGADISH CHANDIRA, J.
Srcm http://www.judis.nic.in 16 Petitioners/Appellants shall appear before the Appellate Court within ten days from the date of receipt of a copy of this order and after their appearance, the Appellant Court shall fix an early date for recording additional evidence as sought for in Crl.MP.No.66 of 2019. The court below shall complete recording of additional evidence subject to the provisions of Chapter XXIII of Cr.PC, as expeditiously as possible, in the presence of the Respondent/ complainant and his counsel. The Respondent's counsel may cross examine the Petitioners/ Appellants on the same day or any other date fixed by the Appellate Court. Thereafter, the Petitioners/ accused shall complete arguments on the date fixed by the Appellate Court and the appeal shall be disposed of within a period of one month after completion of recording of additional evidence.
20.11.2019 Index:Yes/No Web:Yes/No Speaking/Non Speaking Srcm To:
1. The Assistant Commissioner of Income Tax, Corporate Circle, Income Tax Office, 67A, Race Course Road, RS Puram, Coimbatore 641002
2. The Additional District Sessions Judge, Coimbatore.
3. The Public Prosecutor, High Court, Madras Crl.RC.No.951 of 2019 http://www.judis.nic.in