Patna High Court
Lal Bahu Tiwari And Anr. vs State Of Bihar on 2 March, 1990
Equivalent citations: 1990(38)BLJR1276, 1990CRILJ1997
ORDER Bhuvaneshwar Prasad, J.
1. This application under Section 397 and 401 of the Code of Criminal Procedure, 1978 (short 'the Code') is directed against the order dated 7-4-1986 passed by Shri K. B. Verma, Special Judge, Purnea in Special Case No. 59/84 under Section 7 of the Essential Commodities Act (in the short 'the Act') by which the learned Special Judge had rejected the prayer of the petitioners to stop the proceeding against them and to release them under the provisions of Section 258 of the Code.
2. It appears that on 16-8-1984 the Assistant District Supply Officer, Sadar (herein-after called the (Supply Officer), Purnea visited the business premises of the petitioner No. 1 in his absence at about 11 a.m. petitioner No. 2 was present at that time in the shop. On physical verification a shortage of 2 kilograms of rice and 11 litres of Kerosene oil was found. It was further detected that though on 14-8-1984 essential commodities were sold to the consumers no cash memo was issued to any of them. Also on 16-8-1984 on the day of inspection, 27 consumers were already supplied commodities by 11 a.m. but no cash memo was issued in them. It was further detected that through cash memo Nos. 20 to 25 dated 14-8-1984 only sugar was shown to be sold to the consumers but the sale register of the said date disclosed that 55 kilograms of rice was also sold to them but no cash memo was issued for the same. Accordingly the Supply Officer lodged the first information report at Khajanchi Hat Police Station against the petitioners.
3. In this application it has been contended that from the perusal of the prosecution report it would appear that only minor irregularities were found at the time of inspection. It is well known that the licensee has to complete the accounts at the close of the business hours. A shortage of 2 kilograms of rice is only natural and is not even 1/2% of the total quantity of 15 quintals of rice lifted on 13-8-1984. As regards, the shortage of 11 liters of K. oil is concerned it has been contended that no physical verification was properly done by the Supply Officer to find out the shortage. So far as the non-issuance of the cash memos to some of the consumers on 14-5-1984 and to 27 consumers on the date of inspection, on 16-5-1984, is concerned it has been submitted that the volumes of cash memos had exhausted on 14-8-1984 during the business hours and as such the cash memos could not be supplied to the consumers. So far the allegation that 55 Kgs of rice to six consumers was supplied on 14-8-1984 without any cash memo, it has been contended that this happened on account of the fact that the cash memos had exhausted after they were issued to the consumers on their purchasing the sugar on the same day. Order for printing of fresh cash memos was given to the Printing Press.
4. On the basis of the above allegations the the learned Collector, Purnea drew up a confiscation proceeding under Section 6A of the Act against the petitioners (Case No. 123/ 84-85). The petitioners had submitted their show cause before the learned Collector and after hearing them the learned Collector by his order dated 25-3-1985 was pleased to drop the confiscation proceeding. Thereafter, on 18-12-1985 a petition was filed on behalf of the petitioners before the learned Special Judge to stop the criminal proceeding against them under Section 258 of the Code on the ground that the confiscation proceeding was already dropped by the learned Collector. The learned Special Judge, however, by his impugned order was pleased to reject this petition by holding that the effect of the order of the learned Collector will be considered at the time of awarding the sentence.
5. The petitioner have contended that the impugned order is bad in law and wrong on facts. No offence against the petitioners has been made out in view of the fact that the confiscation proceeding started against them on the basis of the same allegations has since been dropped. As such the continuance of the criminal proceeding is not proper. Since the trial before the learned Special Judge was held under the summary procedure, the case against the petitioners could have been dropped under Section 258 of the Code. On these grounds it has been contended that the impugned order be set aside and the criminal proceeding against the petitioner be dropped. On behalf of the petitioners a supplementary affidavit has also been filed with Annexures 1 to 4. Annexures 1 is the order dated 25-3-1985 passed by the learned Collector in confiscation proceeding Annexures 2 to 4 are the letters issued by the Government of Bihar in the Department of Supply and Commerce to the District Magistrate of the State. These annexures will be taken up for consideration at the appropriate place.
6. Shri Madhav Roy, learned counsel for the petitioners has seriously contended before me that the Collector had already passed the order under Section 6A of the Act according to which the confiscation proceeding against the petitioners was dropped. This confiscation proceeding was started on the basis of the prosecution report submitted in the present case by the Supply Officer. In this view of the matter, it was his submission that the prosecution of the petitioners under the provisions of Section 7 of the Act is no longer maintainable since a statutory authority (the Collector) has already found that the allegations made against the petitioners were not correct and accordingly he had dropped the confiscation proceeding. Shri Roy, learned counsel has very seriously contended that in view of the fact that a statutory authority had already dropped the confiscation proceeding against the petitioners; on the basis of the self-same allegations their criminal prosecution under the provisions of Section 7 of the Act would not lie. On this ground it was his submission that the learned Special Judge should have dropped the criminal proceeding against the petitioners in exercise of his powers under Section 258 of the Code. It has further been submitted that the proceeding before the learned Special Judge was in the nature of summary proceeding in which the procedure as prescribed for the trial of the summons cases has to be followed. In this view of the matter Shri Roy contended that the provisions of Section 258 of the Code are attracted, according to which the learned Court could for the reasons to be recorded, stop the proceeding against the petitioners at any stage without pronouncing judgment. In this connection he has also referred to Section 262 of the Code according to which, in summary trials, the procedure as prescribed for the the trial of the summons cases is required to be followed except for the fact that no sentence of imprisonment for a term exceeding three months can be passed.
7. In view of these submissions of Shri Roy it has to be found out whether the criminal case instituted under Section 7 of the Act has to be dropped on the ground that the confiscation proceeding started on the basis of the self-same allegations was dropped by the Collector under the provisions of Section 6A of the Act. In other words, the question for determination would be whether Special Judge exercising his jurisdiction under the provisions of the Act and the Code is obliged to accept the findings of the Collector only by him under Section 6A of the Act.
8. I have given my anxious consideration to this question raised by Shri Roy learned counsel for the petitioners. I have, however, no manner of doubt that the answer to this question would be in negative for the reasons mentioned below.
9. Before proceeding any further I would like to briefly refer to Annexure 1 which is the order of the Collector dated 25-3-1985. As per this order the learned Collector was pleased to drop the confiscation proceedings under Section 6 A against the petitioners. It is on the basis of this order that the petitioners have contended that the criminal case against them for their prosecution under Section 7 of the Act should also be dropped. In this order dated 25-3-1985 the learned Collector had taken a note of the allegations against the petitioners with respect to (1) shortage of two kilograms of rice and (2) 11 litres of kerosene oil. Learned Collector held that the shortage of 2 kilograms of rice was negligible. He however did not accept the explanation of the petitioners with regard to shortage of 11 liters of Kerosene oil. In spite of it he held that this shortage was not such so as to warrant confiscation proceeding. So far as the allegation non-issuance of the cash memos was concerned the learned Collector simply noted the explanation of the petitioners in this regard nut did not pass any order accepting the same. The concluding paragraph of his order runs as follows:--
"Since the shortage is negligible and it does not warrant any confiscation proceeding. The matter is dropped."
From this it would appear that the learned Collector, before dropping the confiscation proceeding did not even take into consideration the allegation of non-issuance of the cash memos which alone was sufficient for the prosecution of the petitioners under Section 7 of the Act. Still the learned counsel for the petitioners has submitted that their prosecution should be dropped on the basis of such slip-shod findings of the learned Collector.
10. It may be mentioned here that Section 6A in the Act has been substituted by Bihar Amendment. It provides that where any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto, it shall be reported without any unreasonable delay to the Collector of the District in which such essential commodity is seized and the Collector may, if he thinks it expedient so to do, inspect or cause to be inspected such essential commodity, whether or not the prosecution is instituted for the contravention of such order and the Collector, if satisfied that there has been a contravention of the order, may order confiscation of the essential commodities so seized. So far as Section 7 of the Act is concerned it provides that if any person contravenes any order under Section 3 he shall be punishable with imprisonments for various terms as mentioned in this section. A comparison of Section 6A and Section 7 of the Act will go to show that while under 6A the Collector gets the jurisdiction in those cases where any essential commodity is seized in pursuance of an order made under Section 3 of the Act, under the provisions of Section 7 a person becomes liable to punishment if he contravenes any order made under Section 3 of the Act. Section 12-AA of the Act relates to the power to try summarily such offences that arise for the contravention of any order made under Section 3 of the Act and it also prescribes the procedure for the same. From this it would appear that if the Collector while acting under the provisions of Section 6A of the Act is a statutory authority the same is the case with the Special Judge while trying a case under Section 7 of the Act. Both being statutory authorities the findings of one statutory authority in absence of any such law cannot be said to be binding on the other statutory authority namely the Special Judge exercising his judicial discretion in the matter while trying an offender under the provisions of Section 7 of the Act. It is well settled principle of law that a judicial authority, which obviously the Special Judge is, has to exercise his judicial discretion in the trial of an offender under the provisions of Section 7 of the Act on the basis of the materials placed before him in the course of the trial. The law never contemplates that a judicial authority should surrender its discretion in the matter to the Collector exercising the power under Section 6A of the Act and is obliged, under law, to blindly follow the findings of the Collector in this regard. In other words, the law never contemplates that if the Collector in exercise of his power under Section 6A of the Act holds that the confiscation is not proper, invariably, the Special Judge while trying an offender under Section 7 of the Act will be bound by this finding by the Collector. If the contentions of Shri Roy is accepted for a moment it will mean that the Special Judge has to surrender his discretion in the matter to the discretion exercised by the Collector under Section 6A of the Act and has to be solely guided by its finding in this regard. This can never be the import of Sections 6A and 7 of the Act.
10A. In this connection a reference may be made to Section 6D which runs as follows:--
6-D:-- Award of confiscation not to interfere with other punishments."--
"The award of any confiscation under this Act by the Collector shall not prevent the infliction of any punishment to which the person affected thereby is liable under this Act."
This also shows that the award of any confiscation under this Act by the Collector shall not prevent the infliction of any punishment to which the person affected thereby is liable under this Act. If this is true, then the converse may also be true namely that if the Collector decides to release the seized goods for the reasons recorded by him it will not mean that the offender cannot be prosecuted and punished under the provisions of Section 7 of the Act. Also a reference may be made to Sub-section (5)(c) of Section 6A of Bihar Amendment. Section 6A(3) provides that the foodgrains seized under the provisions of Subsection (1) has to be sold through fair price shops at the price fixed by Central Government or the State Government, as the case may be. Sub-section (5) provides that where any essential commodity is sold, as aforesaid, the sale proceeds thereof, after deduction of all expenses of the sale or auction, as the case may be shall be paid to the owner thereof or the person from whom it is seized, in the case of prosecution of the owner in respect of which an order of confiscation has been made under this section and where the person concerned is acquitted. This shows that an order of confiscation and the sale of the confiscated articles can be made under the provisions of Section 6A against the owner who is standing his trial under Section 7 of the Act and in case of his acquittal the sale proceeds can be paid to the owner thereof or the person from whom it is seized. This also shows that the findings of the Collector with respect to confiscation and sale will not be binding on the Court trying the offender under Section 7 of the Act and the Court can come to an independent finding and acquit the offender. It may further be noticed that the first proviso to Section 6A(1) shows that the order of confiscation can be passed by the Collector without prejudice to any action which may be taken under any other provisions of this Act. These are some of the instances to show that Section 6A and Section 7 of the Act are independent provisions and while under Section 6A the order of confiscation can be passed by the Collector if he is satisfied that there has been a contravention of the order under Section 7 of the Act a person is liable to punishment to various terms of imprisonments if it is found that he has contravened any order made under Section 3. Section 7(1)(b) provides that any property in respect of which the order has been contravened shall be forfeited to the Government. This also shows that the Special Judge while trying an offender under Section 7 of the Act can order for the forfeiture to the Government any property in respect of which the order has been contravened. So while Section 6A relates to the confiscation of the goods by the Collector, if he is satisfied that there has been a contravention of the order made under Section 3 of the Act, Section 7 provides that apart from the various terms of the imprisonments to which the offender may be liable, even the property in respect of which the order has been contravened shall be forfeited to the Government. From this it would also appear that under Section 6A of the Act the power is given to the Collector for confiscation of the Essential Commodity for contravention of the order made under Section 3. Under Section 7 power is given to the criminal Court to punish a person who contravenes the order made under Section 3. Thus the two jurisdictions are different. Under Section 6A the Collector can only confiscate the commodity. He cannot convict a person for contravention of the order and sentence him to imprisonment. Under Section 7 a Magistrate can convict a person and sentence him to imprisonment. He cannot confiscate the essential commodity. He can only forfeit it. Merely because the Collector had not chosen to confiscate the essential commodity under Section 6A, it does not mean that the Special Judge cannot convict a person under Section 7 for the contravention of the order made under Section 3. This has been so held in the case of A. Krishnaiah v. State, 1981 Cri LJ 577 (Andh Pra).
11. It is clear that the confiscation proceedings are quite independent of and unconnected with taking cognizance of the offence for the purpose of punishing contravention of the Act or orders made thereunder. So if the confiscation proceedings under Section 6A are dropped it has no effect on the criminal proceeding from the stage of taking cognizance. This view finds support from the case of Ramesh Chandra Garabadu v. State, 1986 Cri LJ 645 (Orissa). However, the converse would not be true as held in the case of Ashok Kumar v. State of U. P., 1984 All LJ 876 that if the accused is acquitted in the criminal proceeding during the pendency of confiscation proceeding in appeal, then an order holding that it will have no effect on confiscation proceeding on the basis of its being independent and separate is erroneous. Its effect will render all confiscation proceedings without jurisdiction.
12. To sum up, a reading of Section 6A itself shows that the prosecution is not barred. It specifically provides that when an essential commodity is seized in pursuance of an order made under Section 3 and, whether or not the the prosecution is instituted for the contravention of such order, the Collector may direct the essential commodity so seized to be produced before him. Similarly Clause (c) of Sub-section (3) of Section 6A provides that where in a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been made under this section, if the concerned persons is acquitted he shall be paid the sale proceeds. It only means that the sale proceeds should be paid even when that person is prosecuted for contravention of the order and when he is acquitted even though there was an order of confiscation by the Collector. A reading of Section 6-D makes it clear that the order of any confiscation by the Collector shall not prevent the infliction of any punishment to which the person affected thereby is liable under this Act. Under Section 7 of the Act, if a person contravenes the order made under Section 3, he can be punished with imprisonment. Therefore, in view of Section 6D the I order of the confiscation under the Act by the Collector does not prevent infliction of the punishment under Section 7. Evidently, therefore, it would appear that the power exercisable under Section 6A of the Act is summary in nature in the sense that it is to be exercised for the limited purpose, namely, for confiscation or release of the seized goods. Section 6A of the Act does not envisage a regular trial and it has nothing to do with the merits of the criminal case even though confiscation itself may have penal consequences.
13. Learned counsel for the petitioners has placed reliance on a number of decisions. It will take up for consideration his submissions made on the basis of those reported decisions. He has also placed reliance on the case of Uttam Chandra v. I.T.O., (1982) 133 ITR 909 (SC). This was a case with respect to filing of returns under the Income-tax Act, 1961. Registration of a partnership firm under this Act had been granted and the firm was assessed for several years as a registered firm. For the Assessment year 1969-70, the Income-tax Officer cancelled the registration on the ground that the firm was not genuine. This he had done on the basis of the statement of one of the partners namely Smt. Janak Rani who alleged that the signatures appearing on the records were not hers and that she was not a partner. The Income-tax Appellate Tribunal on an appraisal of materials on record found that Smt. Janak Rani was a partner of the firm and the firm was genuine. It accordingly set aside the cancellation order of the Income-tax Officer. In the meantime, the Income-tax Officer initiated the prosecution of the partners of the firm under Section 277 of the Income-tax Act for having filed false returns and the Punjab and Haryana High Court, in a revision petition for quashing the prosecution against the firm, held that the Tribunal's finding was riot binding on the criminal Court and cannot be a bar to the prosecution proceeding and that the same may be produced before the criminal Court if admissible as evidence. An appeal was filed before the Hon'ble Supreme Court by Special Leave. It was observed by the Hon'ble Supreme Court as follows:--
"Heard counsel, Special Leave granted. In view of the finding recorded by the Income-tax Appellate Tribunal that it was clear on the appraisal of the entire material on the record that Smt. Janak Rani was a partner of the assessee firm and that the firm was a genuine firm, we do not see how the assessee can be prosecuted for filing false returns. We, accordingly, allow this appeal and quash the prosecution. There will be no order as to costs."
14. Learned counsel for the petitioners has contended that the Hon'ble Supreme Court had quashed the criminal prosecution in the said case on the basis of the fact that the Income-tax Appellate Tribunal had recorded a finding that Smt. Janak Rani was a partner of the firm and the firm was genuine. In other words, it was his submission that the findings of the Appellate Tribunal with respect to the genuineness of the firm and Smt. Janak Rani being its partner was accepted by the Hon'ble Supreme Court and accordingly the prosecution was quashed.
15. As against it, learned counsel for the State has submitted that this decision of the Hon'ble Supreme Court in the case of Uttam Chandra (1982-133 ITR 909) (Supra) is quite distinguishable as in that case the only question to be considered was whether the firm was genuine or not and there was no penalty proceeding. Accordingly to learned counsel their Lordships of the Supreme Court had quashed the prosecution in the facts of that case and had not laid down any bald law that a person cannot be prosecuted under the provision of the Income-tax Act if statutory authority under this Act had recorded an order in his favour. In this connection, he has drawn my attention to the case of P. Jayappan v. S. K. Perumal, (1984) 149 ITR 696: (AIR 1984 SC 1693). In this case a search was conducted in the premises of the petitioner resulting in the seizure of several documents and account books which revealed suppression of purchase of chicory seeds, the existence of several Bank Accounts, Fixed Deposits, Investment in the names of his wife and daughter and several Bank Accounts not disclosed in the statement filed by him along with original return for the assessment year 1977-78 in which he had disclosed an income of Rs. 13,380/-. It may be stated here that the return filed by the assessee for the year 1977-78 had been accepted even before this search. In course of search it was found that the assessee had submitted a wrong return showing only purchase of chicory seeds of the value of Rs. 65,797/- as against Rs. 2,15,729/- as per the seized accounts. There were several other wrong statements in the accounts. On the basis of the allegations that the petitioner had deliberately filed a false return and had kept false accounts with intention of using them as genuine evidence for the assessment proceeding a complaint was filed against him in the Court of Additional Chief Judicial Magistrate (Economic Offences), Madurai for taking action against him for offences punishable under Section 276(C) and Section 277 of the Act and under Sections 193 and 196 of the Indian Penal Code. Similarly three other complaint petitions were filed against him in respect of three succeeding assessment years before the same Magistrate. Thereafter the assessee filed four separate petitions under Section 482 of the Code before the High Court requesting to quash the said proceedings contending that the launching of the proceeding in each of the four cases was premature on the ground that the reassessment proceeding started against him under the Act had not been completed. The High Court dismissed all those four petitions. Accordingly the assessee filed a petition before the Supreme Court under Article 136 of the Constitution for leave to appeal against the above said four orders of the High Court. In this case the decision of the Supreme Court in the case of Uttam Chandra (Supra) also came up for consideration and interpretation before the Supreme Court. It was submitted that there was no other legal bar for the institution of the proceedings except that in the event of the assessee being exonerated in the reassessment proceeding the prosecution may have to be dropped. It was observed as follows (Para 5 of AIR 1984 SC 1693):--
"It is true that, as observed by this Court in Uttam Chandra v. I.T.O., (1982) 133 ITR 909 the prosecution once initiated may be quashed in the light of finding favourable to the assessee recorded by an authority under the Act subsequently in respect of the relevant assessment proceedings but that decision is no authority for the proposition that no proceeding can be initiated at all under Section 276(C) and Section 277 as long as some proceeding under the Act, in which there is a chance of success of the assessee is pending. A mere expectation of success in some proceeding in an appeal or reference under the Act cannot come in the way of institution of the criminal proceeding under Section 276(C) and Section 277 of the Act. In the 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 proceeding in the light of an order passed under the Act. It does not 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 authority in the proceeding under the Act that he has not deliberately made any false statement or that he has not fabricated any material evidence, the conviction of the person would invariably follow in the criminal court."
16. From this authoritative pronouncement of the Hon'ble Supreme Court in which the ratio of decision in the case of Uttam Chandra (1982-133 ITR 909) (Supra) has also been explained, it becomes clear that in criminal cases all the ingredients of the offence in question has to be established in order to secure the conviction of the accused and all that the criminal court is required to do is 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 proceeding. The Supreme Court has proceeded to clarify that it will 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. It further observed that the decision of the Supreme Court in the case of Uttam Chandra (Supra) will only mean that a prosecution initiated against the assessee may be quashed in the light of a finding favourable to the assessee recorded by an authority under the Act subsequently in respect of the relevant assessment proceeding but this decision will not be an authority for the proposition that no proceeding can be initiated at all under Section 276(C) and Section 277 as long as some proceeding under the Act in which there is a chance of success of the assessee is pending. As stated above the return filed by the assessee disclosing an income of Rs. 13,380/- was accepted by the authorities. However, a search was conducted and on the basis of the seizure of several incriminating documents it was found that the assesseee had deliberately filed a false return and kept false accounts for using them as genuine evidence. Under such circumstance, the Hon'ble Supreme Court had proceeded to clarify the position of law as quoted above. In view of this authoritative pronouncement of the Hon'ble Supreme Court there can be no manner of doubt that the submission made by learned counsel for the petitioners to the contrary cannot be accepted.
17. Shri Madhav Rai, learned counsel for the petitioners has, however, placed reliance on the case of Banwari Lal Satyanarain v. State of Bihar 1990 Pat LJR 107 : (1990) 1 BLJR 5 : (1990 Tax LR 170). This is Single Bench decision of this Court. It was also a case under Income-tax Act, 1961. In this case also the Presiding Officer, Special Court (Economic Offences) for trial of the cases relating to economic offences had refused to discharge the petitioners from the charge under Section 276-B of the Income-tax Act as well as to quash the entire prosecution against them. It appears that in the said case petitioner No. 1 was a partnership firm and petitioners Nos. 2 to 5 were its partners. In the course of assessment proceeding for the assessment year 1977-78 it transpired that the accused persons did not deduct income tax under Section 194-A of the Income-tax Act in time and the same resulted in non-payment of tax within the prescribed time to the credit of the Central Government. The amount of interest payable to seven different persons by the petitioner-firm was credited to their respective accounts on 29-3-1977 but the income-tax thereon was deducted on 29-7-1977 and the same was paid to the credit of the Central Government on 1-8-1977, whereby two months' default was committed by the assessee in payment of the income-tax deducted or to be deducted at source. A penalty proceeding was initiated under Section 201 read with Section 221 of the Act and the Income-tax Officer imposed a penalty of Rs. 1418 besides interest amounting to Rs. 113 total being Rs. 1531. On appeal the learned Appellate Assistant Commissioner reduced the penalty to Rs. 500/-. The petitioners preferred a revision before the Commissioner of Income-tax, Patna under Section 264 of the Income-tax Act. During the pendency of the said revision application a complaint petition was filed before the Chief Judicial Magistrate, Muzaffarpur on 30-3-1984 by the Income-tax Officer for the prosecution of the petitioners under Section 276-B of the Income-tax Act stating therein the aforesaid facts. On the same day the learned Chief Judicial Magistrate took cognizance of the offence and summoned the petitioners to face their trial. In course of the trial before the Special Court three witnesses were examined on behalf of the complainant and were cross-examined before framing of the charge. Thereafter, on 17-1-1986 the petitioners filed a petition before the court for their discharge on the ground that the revision application arising out of the penalty proceeding was pending before the Commissioner of Income-tax. Subsequently, on 13-2-1986, the Commissioner of Income-tax allowed the revision application and deleted the penalty in its entirety accepting the explanation of the petitioners for not deducting and paying the income-tax deducted at source within time to the credit of the Central Government since the petitioners could not receive the Commission Agent's account in time and the Munim of the petitioners was lying ill as a result of which the delay was caused in finalisation of the accounts. Accordingly, the Commissioner of Income-tax was satisfied that the petitioners had proved to his satisfaction that the default was for good and sufficient reason and he deleted the penalty. In paragraph 4 of this judgment the order of the Commissioner of Income-tax has been quoted from which it would appear that it was pleaded before him that no reasonable opportunity of being heard was given to the petitioners before the imposition of penalty. In the result the learned Income-tax Commissioner allowed the revision application and deleted the penalty in its entirety.
18. A perusal of Section 201(1) of the Income-tax Act shows that if any person in the cases referred to in Section 194-A does not deduct or after deducting fails to pay the tax as required by or under this Act he shall without prejudice to any other consequences which he may incur be deemed to be an assessee in default. This also shows that the assessee can be declared to be in default under the provisions of Section 201(1) of this Act and may be liable to the payment of interest and also to the penalty as will appear from Section 201(1-A) and Section 221(1) of the Income-tax Act the defaulter also exposes himself to other consequences, which he may incur. One such consequence, as will appear from Section 276-B, would be rigorous imprisonment for varying terms depending on the amount of tax which he failed to deduct and pay. From this also it would appear that in the case of default the assessee may be faced with two consequences namely (1) payment of interest or/and penalty and (ii) rigorous imprisonment for a term.
19. On behalf of the State it has been submitted that in the said case three witnesses were examined and cross-examined before charge before the Special Court for trial of the cases relating to economic offences and as such under this circumstance also no order of discharge of the accused could be passed under Section 245 of the Code on the basis of a finding recorded by the Commissioner of Income-tax deleting the penalty imposed on the assessee after being satisfied that the default was for good and sufficient reasons.
20. In this connection, learned counsel for the State has drawn my attention to Section 245 of the Code which runs as follows:--
245. When accused shall be discharged --(1) If, upon taking all the evidence referred to in Section 244, the Magistrate considers, for reasons to be recorded, that no case against the accused has been made out which, if unrebutted, would warrant his conviction, the Magistrate shall discharge him.
(2) Nothing in this section shall be deemed to prevent a Magistrate from discharging the accused at any previous stage of the case if, for reasons to be recorded by such Magistrate, he considers the charge to be groundless.
He has also referred to paragraph 5 of the judgment in the case of Banwarilal Satyanarayan (1990 Tax LR 170) (Patna) (supra) from which it would appear that in the said case the petitioners had filed an application under Section 245 of the Code before the Special Court for their discharge. It was this petition that was rejected by the Special Court. Learned A.P.P. has submitted that he is pointing out the various infirmities in this judgment of the learned single Judge in order to show that the findings recorded therein are incorrect. In view of his submissions I have no alternative but to notice them in context of the decision of this court in the above mentioned case.
21. It was pointed out that from Section 245 it would appear that the order of discharge under sub-section (2) can be passed only at any previous stage of the case namely before taking of all such evidence as referred to in Section 244 of the Code. In the case of Banwarilal Satyanarayan (1990 Tax LR 170) (Patna) (Supra) it appears that three witnesses had already been examined and cross-examined before charge. Under this circumstance it has been submitted that the assessee could have been discharged within the provisions of Section 245(1) of the Code only if the court came to the conclusion that no case against the accused was made out which, if unrebutted, would warrant his conviction. This will require the appraisal of the evidence adduced before the court. The provisions of sub-section (2) of Section 245 will only be attracted at a stage before the adducing of all such evidence as referred to in Section 244 if the Magistrate considers the charge to be groundless. Even this consideration by the Magistrate has to be based on the allegations made against the accused before him. The Magistrate is required to exercise his judicial discretion in the matter and, for the reasons to be recorded, at any previous stage of the case, that is before the adducing of all such evidence, if the Magistrate thinks that the charge is groundless he may discharge the accused. Here the expression "groundless" will simply mean that if the Magistrate holds on the basis of the allegations made before him that the charge against the accused on the basis of the materials available on record has got no substance he can record a finding that the same is groundless and in a situation like this it will be open to him to discharge the accused under Section 245(2) of the Code even at any previous stage of the case. The word "groundless" in this sub-section is not capable of any precise definition. In arriving at the conclusion whether the charge is "groundless" or not the Magistrate is required to act judiciously and not capriciously. The discretion under sub-section (2) cannot be exercised arbitrarily. The word "charge" mentioned under sub-section (2) has been used in the sense of an accusation or allegation of an offence. In other words it has been submitted that the finding of the charge to be groundless under Sub-section (2) of Section 245 has to be based on the materials available on record before the Magistrate on the basis of the allegation made before him. In the case of Banwarilal Satyanarayan (supra), however, it appears that three witnesses were examined and cross-examined before charge before the learned Special Judge and as such the accused of the case could only be discharged in terms of Section 245 of the Code and not otherwise. As a matter of fact the application for discharge was filed under this very section. Under this circumstance, it has been submitted that the assessee in the said case could not have been discharged under Section 245 of the Code by the Special Judge on the ground that the learned Commissioner of Income-tax was satisfied that the default was for good and sufficient reason and that he deleted the penalty imposed on him. I find force in this contention.
22. Learned counsel for the State has further drawn my attention to Section 276-B of the Income-tax Act according to which if a person without reasonable cause or excuse fails to deduct or after deducting fails to pay the tax as required by the provisions as mentioned in the section he will be liable to rigorous imprisonment for a term. It was the submission of learned counsel that the expression "without reasonable cause or excuse" will mean that it will have to be proved by the assessee that he had some reasonable cause or excuse for having failed to discharge the liability under this section. It was his submission that, no doubt, the initial onus will be on the prosecution to show that the failure of the assessee was without reasonable cause or excuse, which would be inferred from the conduct of the assessee. However, he has pointed out that the moment the prosecution alleges that the failure of the assessee was without reasonable cause or excuse the onus is discharged in as much as it will be within the special knowledge of the assessee to state whether his failure was without reasonable cause or excuse or not. According to him, how could the prosecution know whether the assessee has any reasonable cause or excuse for his failure to pay the tax as required under this section. Since the reasonable cause or excuse is within the special knowledge of the assessee the moment the prosecution will allege that the failure of the assessee was without any reasonable cause or excuse and would base his allegation on the facts and circumstances of the case the onus will shift to the assessee to show the reasonable cause or excuse which would be within his special knowledge. In this connection, learned counsel for the petitioners has also drawn my attention to Section 106 of the Evidence Act according to which when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. Whatever may be the case, it is not for me here to accept or reject this submission of learned counsel for the petitioners. It appears that it was precisely for this reason that the expression "without reasonable cause or execuse" was deleted from this section by Taxation Laws (Amendment & Misc. Provisions) Act, 1986 and Section 278AA was inserted in the Act. According to this new section it has been held that notwithstanding anything contained in the provisions of Section 276-B no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure. It appears that the legislature in its wisdom has introduced this section noting the unhelpful wordings of the original Section 276-B. Thus while on one hand" without reasonable cause or excuse" has been omitted from Section 276-B the onus was cast on the person proceeded against to prove that there was reasonable cause for his failure to act according to this section by virtue of the newly introduced Section 278AA.
23. Learned counsel for the petitioners has also drawn my attention to S. 279(1-A) of the. Income-tax Act which lays down that a person shall not be proceeded against for an offence under Section 276-C or Section 277 in relation to assessment for an assessment year in respect of which the penalty imposed or imposable on him under Clause (iii) of Subsection (1) of Section 271 has been reduced or waived by an order under Section 273 of the Act. It was his submission that on the basis of this provision in the cases covered by it the revenue is completely debarred from launching prosecution and since the offence under Section 276-B is not enumerated in Section 279(1-A) it cannot be said that the revenue is debarred from launching the prosecution against the assessee merely because the penalty has been deleted on merit. I find force in this contention as by the simple logic it would appear that if really the legislature intended that the prosecution of the assessee under Section 276-B would also be barred if the penalty imposed on him has been reduced or waived what could be the reason for the non-inclusion of Section 276-B also in Section 279(1-A) of the Act?
24. These submissions of learned counsel for the petitioners are, however, besides the mark. It is not for me in the present case to consider the findings of the learned single Judge on these points in the case of Banwarilal Satyanarayan (1990 Tax LR 170) (Patna) (Supra) and to hold that when the authorities under the Income-tax Act had decided the matter on merit the assessee could not be prosecuted under Section 276-B and the ratio laid down in the case of P. Jayappan (AIR 1984 SC 1693) (Supra) does not run counter to the law laid down in the case of Uttam Chandra (1982-133 ITR 909) (SC) (Supra). However, in the earlier part of the judgment I have analysed the decisions of the Hon'ble Supreme Court in those two cases and I have come to a conclusion which is different from the conclusion arrived at by the learned single Judge on this point in the case of Banwarilal Satyanarayan (Supra). With utmost respect I would like to say that the findings of the learned single Judge on this point do not appear to be warranted by law. However, in view of the authoritative pronouncement by the Hon'ble Supreme Court in the case of P. Jayappan (Supra) I have got no manner of doubt that even in a situation as obtaining in the present case, the criminal prosecution of the petitioners will not be barred.
25. In this case a reference may be made to the case of Laxmi Narayan Saw v. State of Bihar, 1985 BLT (REP) 56. This is a single Bench decision of the Ranchi Bench of this court. Its paragraph 3 runs as follows:--
"The District Magistrate, Giridih, by his judgment and order dated February 6, 1978 came to the conclusion that the discrepancies were natural inasmuch as the goods have been purchased by the petitioners on the very date on which the search was made and the same could not be entered into the Books of Accounts. He relied on a decision of this court in which it has been held that the dealers in foodgrains are entitled to complete their Books of Accounts up to date up to 10 AM on the next date. In view of this the District Magistrate allowed the show cause of the petitioners and the proceeding for confiscation of the seized goods was dropped. It was on this ground that on a parity of reasoning the prosecution for offence under Section 7 of the Act was also found not sustainable and the same was accordingly quashed. As pointed in the case of P. Jayappan (AIR 1984 SC 1693) (supra) the findings of the District Magistrate under the provisions of Section 6A will undoubtedly be a piece of evidence to be taken into consideration by the court in the trial of the offender."
However, this decision appears to be vague inasmuch as a decision of this court on which the reliance has been placed has not been specified. Also in view of the decision of the Supreme Court in the case of P. Jayappan (supra) it cannot be held on the basis of this decision of the Ranchi Bench that if the confiscation proceeding is dropped against the petitioners their criminal prosecution will also be quashed. This decision has also been reported in 1985 Pat LJR 63(1) (NOC) (BW). I have already taken into consideration this decision of Ranchi Bench and no further comment is necessary.
26. Learned counsel for the petitioners has placed reliance on the case of Nathu Lal v. State of M.P. AIR 1966 SC 43 : (1966 Cri LJ 71). According to this decision it has been held that mens rea is an essential ingredient of a criminal offence. It was further held that an offence under Section 7 of the Essential Commodities Act for breach of Section 3 of Madhya Pradesh Foodgrains Dealers Licensing Order, 1958 necessarily involves a guilty mind as an ingredient of an offence. In this case however as will appear from the facts that the accused, who was dealer in the foodgrains, had made an application for a licence under the above mentioned order and had also deposited the requisite licence fee. There was, however, no intimation to him that his application was rejected. He purchased foodgrains from time to time and submitted the returns to the Licensing Authority showing the grains purchased by him. The Inspector checked the godowns of the accused and found that the accused had stored foodgrains in excess of the quantity permitted by Section 3 of the Order without holding the licence. It was under this circumstance that when the accused was prosecuted under Section 7 of the Act the case ended in his acquittal on the ground that he had no guilty mind. This judgment of the trial court was reversed on an appeal by the High Court resulting in the conviction of dealer. On appeal it was held by the Supreme Court that on the facts of the case the conviction of the accused should be set aside since he was under a bona fide impression that the licence in regard to which he had made an application was issued to him though not actually sent to him and it was under this impression that he had stored the grains. The fact that the Licensing Authority did not communicate him the rejection of his application confirmed the accused belief. It was, therefore, a case of storage of foodgrains under a bona fide belief that the accused could legally do so. It was held by the Supreme Court under the facts of the said case that the accused could not, therefore, be said to have intentionally contravened the provisions of Section 7 of the Act and the order made under Section 3 of the Act. From the facts stated above, it would appear the case against the accused was of an exceptional nature inasmuch as throughout he was acting in a bona fide manner and even the Licensing Authority or the Inspector was treating his action bona fide. There was total lack of guilty conscience or mens rea which is an essential ingredient of a criminal offence.
27. Learned counsel for the petitioners has also placed reliance on the case of Kishorilal v. Additional Collector, Kanpur, AIR 1969 All 159 : (1969 Cri LJ 449). Here in this case also it has been held that the consideration of mens rea of the bona fide of a dealer is relevant while passing an order of forfeiture of foodgrains under Section 6A. It was further held that the provisions of Sections 6A and 7 are in pari materia and in this case also the reliance was placed on the case of Nathulal (1966 Cri LJ 71) (SC) (supra).
28. That facts of the present case are, however, quite different: in the present case not only the shortage of rice and K. Oil was found but it also appeared that both on 14-8-1984 and again on 16-8-1984 the consumers were supplied with essential commodities by the petitioners without any cash memo. In the confiscation proceeding also as will appear from Annexure-1 the finding of the learned Collector does not throw any light with respect to the allegation made against the petitioners for non-issuance of the case memos to the customers. As a matter of fact the order of the Collector appears to be silent on this point and no finding has been given by him with respect to this allegation of non-issuance of cash memos. He simply held that since the shortage was negligible it does not warrant any confiscation. It appears that the learned Collector had not applied his judicial mind to the allegations made against the petitioners even while disposing of the matter under Section 6A of the Act. Obviously such a perfunctory finding of the Collector under Section 6A of the Act cannot, in any view of the matter so far as the legal position is concerned, be said to lead to dropping of the criminal prosecution of the petitioners under Section 7 of the Act. In this connection my attention has also been drawn to Annexure-2 which is a letter issued from the Civil Supplies and Commerce Department of Government of Bihar according to which if a shortage is detected only to the extent of 2% in the stock no case against the dealer should be instituted without firstly asking for a show cause. In the same way Annexure-3 is also a letter issued from the same Department of the Government according to which the leakage of 1% of K. Oil will be exempted from the category of shortage. So far as Annexure-4 is concerned this is a letter from Food and Civil Supplies and Commerce Department of Government of Bihar in which a direction was issued to the District Magistrate that the licence of a dealer should not be cancelled on technical grounds without asking for a show cause. The annexures are, therefore, not of much assistance to the petitioners inasmuch as they simply go to show the guidelines issued to the different Collectors to act in a particular manner in a given situation. They can be adduced as evidence in the course of trial to show that no case against the petitioners was made out. However, at this stage they cannot be said to be a ground for quashing their criminal prosecution.
28A. Learned counsel for the petitioners has also placed reliance on the case of Lal Chand v. State, reported in 1984 BLJ 518. This is a single Bench decision of this court. In this case also a confiscation proceeding under Section 6A was initiated in which it was found by the Collector that the accused had not violated the provisions of the Act. It was accordingly held that his prosecution under Sections 3 and 7 on the same fact will amount to an abuse of the process of the court and was thus liable to be quashed. This decision of learned single Bench of this Court can no longer be said to be a good law in view of the authoritative pronouncement by the Hon'ble Supreme Court in the case of P. Jayappan (AIR 1984 SC 1693) (supra).
29. From the detailed discussions made above, I find no merit in this application. It is accordingly dismissed. The order of stay passed by this Court on 7-5-1986 stands automatically vacated. Let the trial of the petitioners proceed before the learned court below.