Delhi District Court
Ito vs . Arun Kochhar on 16 May, 2015
IN THE COURT OF SH. DEVENDRA KUMAR SHARMA
ADDL. CHIEF METROPOLITAN MAGISTRATE (Spl. Acts) CENTRAL
TIS HAZARI COURTS, DELHI
ITO VS. Arun Kochhar
CC NO. 141/4
ORDER ON CHARGE
Date of Institution:27.04.2011
Date of order:16.05.2015
1.By this order, I will decide the point of charge in the above complaint case which are filed against the accused persons for non filing of return for the financial years 200203 with the complainant. This is the first case pending in this Court relating to "Black Money" in foreign bank account.
2. To be brief, the facts of the case are that an information was received from the Central Board of Direct Taxes (for short "CBDT") vide letter dated 24.03.2009 stating therein that the assessee/accused is a beneficiary of the bank account no. 0142774 opened in the name of M/s Urvashi Foundation, Vaduz in LGT Bank, Liechtenstein in which an amount of $ 17, 95,414.84/ was deposited. Upon receiving the said information it was found that accused has not filed his return of income for the assessment year 200203 as required u/s 139(1) of the Income Tax Act (for short "Act"). Thereafter a notice u/s 148 of the Act dated 26.03.2009 was issued after recording the ITO VS. Arun Kochhar 114 reasons thereof through registered post and a copy of the notice was also affixed on 27.03.2009. The accused is having income tax permanent account number with the address of Gurgaon, Harayana and a notice u/s 148 of the Act dated 30.03.2009 was also issued by the ITO Ward 3 Gurgaon, Haryana which was served by way of affixation on 30.03.2015. In respect of the said notices one Mr. Anil Sood, CA attended the proceedings at Delhi and Gurgaon and filed written reply dated 04.05.2009 and 06.05.2009 alongwith power of attorney in his favour/ in favour of Mr. Vinod Bindal. Thereafter the case of the accused was centralized. Another notice u/s 143(2) of the Act and notice u/s 142 (1) of the Act dated 01.09.2009 were issued but of no avail. Thereafter fresh notices were issued and AR of the accused attended the proceedings but no return was filed. He was asked to file the copy of the bank account in India and copy of passport. Personal attendance of the accused was also solicited to record his statement. However, AR of the accused filed only a copy of the Bank account no. 504/939003 with City Bank Delhi. Thereafter a detailed letter dated 16.11.2009 was issued intimating him about the information received in respect of the bank account aforesaid wherein the address of the accused is shown of 584, Sarita Vihar New Delhi, Nationality as Indian and domicile of India. A reply dated 16.11.2009 through Mr. Vinod Bindal was filed by the accused stating that accused was American citizen during the relevant assessment year. Again copy of the reasons recorded for issue of notice u/s ITO VS. Arun Kochhar 214 148 and copy of the information available with the department was given to the AR of the accused on 26.11.2009. AR was again asked to submit the copy of the passport for preceding four years to the year under the consideration but the same was not provided. Hence, the status of the accused was held to be resident and ordinary resident (R & OR) for the AY 200203 in terms of Section 6 of the Act in the assessment order. The accused has also failed to furnish the proof of US $ 17,95,415.84/ declaring to the IRS authorities of USA and even willfully not provided the social security no. provided to him in USA. Therefore, the entire aforesaid income of US $ 17,95,415.84/ (Rs. 8,77,23,967/ @ Rs. 48.86 per $) deposited in the aforesaid bank account of which accused was sole beneficiary was treated to be undisclosed income of the accused earned in India during the AY 200203 in terms of Section 69 A of the Act. The accused has also failed to give source of deposit of $ 7000/( Rs. 3,42,020/) in his City Bank Account in Delhi to the satisfaction of the assessing officer and this amount was also treated as unexplained money in terms of Section 69A of the Act. The assessment of the accused was framed vide order dated 21.12.2009 and the tax demand payable including interest comes to Rs. 7,71,84,436/ and a notice of demand dated 21.12.2009 u/s 156 of the IT Act was sent. Though, the accused has challenged the Assessment Order but pendency of appeal is no bar for launching prosecution in view of circular F No. 285/90/2008IT (Inv) dated 28.01.2011. Hence, a show cause notice dated ITO VS. Arun Kochhar 314 31.01.2011 for launching prosecution for AY 200203 u/s 276 C (1) & 276CC of the Act was given. Reply was sent vide letter dated 08.02.2011 but was not found satisfactory as accused has wilfully not declared his income in the foreign bank account as well as in Indian Bank and willfully did not file his return of income as required u/s 139(1) of the Income Tax Act, 1961 for Assessment Year 200203 in due time in response to the notices issued and served and thus, committed offence punishable u/s 276 C(1) and 276CC of the Income Tax Act. Hence, the present complaint.
3. The accused was summoned. The accused was exempted from his personal appearance through counsel by the order dated 20.11.2013 by the Hon'ble High Court during the pendecy of the appeal before the Income Tax Appellate Tribunal and thereafter the matter was fixed for precharge evidence.
4. Total six witnesses were examined in pre charge evidence.
(a) Complainant Sh. Tejinder Kumar, examined himself as PW1 deposing moreover the same facts as alleged in the complaint. This witness has proved his complaint as Ex.PW1/1, the sanction for prosecution as Ex.PW1/2, list of witnesses as Ex.PW1/3, the letter dated 24.03.2009 received from the CBDT as Ex. PW1/4, Copy of bank statement received alognwith a letter of LGT Bank as Ex. PW1/5, Notice u/s 143 (2) of the Act dated 01.09.2009 as Ex. PW1/6, notice u/s 142(1) dated 14.09.2009 of the ITO VS. Arun Kochhar 414 IT Act alongwith questionnaire as Ex. PW1/7, another notice u/s 142(1) of IT Act dated 05.10.2009 as Ex. PW1/8, copy of the statement of account with City Bank Delhi as Ex. PW1/9, letter dated 16.11.2009 as Ex. PW1/10, copy of the order of the Hon'ble High Court dated 04.05.2010 as Ex. PW1/11, Show cause notice dated 31.01.2011 as Ex. PW1/12 and its reply dated 08.02.2011 as Ex. PW1/13.
(b) Ms. Priyanka Singh was examined as PW2 who deposed that she received the official information from CBDT. She issued a notice u/s 148 of the IT Act for AY 200203 which is Ex. PW2/1, of which accused filed his reply through AR on 04.05.2009 which is Ex. PW2/2. She also recorded her reasons u/s 147 of the IT Act vide Ex. PW4/3.
(c)Sh. K.V.K. Singh was examined as PW4 who deposed that notices Ex. PW1/6, PW1/7 & PW1/8 were issued by him. He further issued the letter dated 14.11.2009 Ex. PW1/10 and after considering all the details/documents and after giving due opportunities to the accused, he framed the assessment for AY 200203 vide order dated 21.12.2009 which is Ex. PW4/1. The tax computation form creating the demand is Ex. PW4/2. He also issued the demand notice u/s 156 of the Act Ex. PW4/3. He further deposed that during the assessment proceedings the accused was confronted with the statement of foreign bank account in LGT Bank but accused denied stating that he is a NRI. Though in the account opening form of the said bank accused has declared himself as citizen of India and resident of F584, Sarita Vihar, New Delhi. The ITO VS. Arun Kochhar 514 assessment order was challenged in appeal before the CIT but appeal was dismissed vide order dated 10.05.2011 vide Ex. PW4/4.
(d) Mrs. Bulbul Sen was examined as PW3 who passed the order 127 of the IT Act dated 06.08.2009 Ex. PW3/1.
Mr. Rajeev Ratan was examined as PW5 who deposed that he issued notice u/s 148 of IT Act dated 30.03.2009 Ex. PW5/1. Ms. Meeta Nambiar was examined as PW6 who deposed that she passed order u/s 127 of IT Act dated 07.08.2009 Ex. PW6/1. All the witnesses were cross examined at length.
5.I have given my thoughtful consideration to the submissions advanced on behalf of parties and I have perused the record carefully. I have also gone through the written arguments filed on behalf of the parties.
6.The threefold contention was raised on behalf of the accused for his discharge. Firstly, it was argued that the complainant failed to bring on record any evidence to show that the alleged amount in the complaint was earned by the accused in India from undisclosed sources and was deposited in LGT Bank during the financial year 200102. Rather without prejudice to rights of the accused it was contended that even if for the sake of argument it is assumed that said amount was deposited by the accused or in the name of the accused, from the bare perusal of Ex. PW1/13 at page no. 74 of the paper book, it is clear that said amount was not deposited during the financial year 200102 as is the case of the complainant and this fact was also admitted by PW4 in his cross examination. It was further argued that the entire assessment order is ITO VS. Arun Kochhar 614 based upon the said statement of account but the appeal was dismissed by the CIT(Appeal) holding that the said statement of account is unauthenticated and uncertified. Thus, the complainant itself is blowing hot and cold at the same time against the accused and matter is still subjudice before the ITAT and despite specific direction of the Hon'ble High Court to dispose of the appeal, same has not been disposed of yet. It was next contended that the amount shown in the City Bank, Delhi is in non resident external account which can be opened only by the non resident Indian and the amount of $ 7000/ was lying within permissible limit which is not taxable in view of the Foreign Exchange Management (Deposit) Regulations 2000. It wans next contended that the accused is a persons of Indian origin and a citizen of USA holding American passport bearing no. 037138123 since 14.09.1999 and has no business connection or place of business in India nor carried out any business in India. The copy of the passport already on record at page no. 79 of paper book farming part of Ex. PW1/12 shows that accused had resided only for 27 days during the AY 200203, whereas he should have stayed at least sixty days as per requirement u/s 6(1) of the IT Act. The said fact is also apparent from the bank statement of City Bank Ex. PW1/9. Thus, it has been prayed that there is no material available on record to frame the charge against the accused and therefore, accused may kindly be discharged.
7.On the other hand it was argued on behalf of the complainant that prima facie there is sufficient material to frame the charges against the accused for willful ITO VS. Arun Kochhar 714 attempt to evade tax by not disclosing the true and correct amount and by not filing of the income tax return in compliance of the notices issued to file return for the financial year 200102 after receiving the information through CBDT of accused having foreign bank account and amount lying there vide Ex. PW1/4 and Ex. PW1/5. It was fuether argued that accused is having permanent account no. issued by the Gurgaon Income Tax Authorities and despite asking to furnish his social security number provided in USA, he did not supply the same willfully. The accused is the sole beneficiary of the amount lying in the name of the trust M/s Urvarshi Foundation which amount was never disclosed to the tax nor accused has disclosed the source of said income nor he disclosed that this income was disclosed to the Tax Authorities at USA if his contention for the sake of argument is believed to be true that he is non Resident Indian. The accused himself has shown as Indian in particulars given/ declared in his LGT bank account. The accused did not disclose the taxable income for the assessment year 200203 intentionally despite being ROR and thus, it was prayed that charge may kindly be framed against the accused.
8.For ready reference the provision u/s 278E of I.T. Act is reproduced as under: "[278E. Presumption as to culpable mental state.(1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with ITO VS. Arun Kochhar 814 respect to the act charged as an offence in that prosecution.
9. From the bare perusal of aforesaid provision, it is clear that there is presumption of culpable mental state on the part of accused and it is for the accused to prove the contrary.
10. It is well settled law regarding consideration at the stage of framing of charge that the Court has power to shift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against accused has been made out. It is held that when the material placed before the court discloses great suspicion against the accused which has not been properly explained, the court will be justified in framing charge. The judge should not make a roving inquiry into the pros and cons of the matter and weight the evidence as if he was conducting a trial. If on the basis of materials on record a court could come to the conclusion that commission of the offence is a provable consequence, a case of framing of charge exists. To put it differently, if the courts were to think that the accused might have committed the offence it can frame a charge, though for conviction the conclusion is required to be that accused has committed the offence. At the stage of framing of a charge probative value of the materials on records cannot be gone into, the material brought on record by the prosecution has to be accepted as true at that stage. The truth, veracity and effect of the evidence which has prosecutor proposes to adduce are not to be ITO VS. Arun Kochhar 914 meticulously judged. Nor is any weight to be attached to the provable defence of the accused. It is not obligatory for the judge at that stage of the trial to consider in any detail and weight in a sensitive balance whether the facts, if proved, would be incompatible with the innocence of the accused or not. The standard of test and judgment which is to be finally applied before recording a finding regarding the guilt or otherwise of the accused is not exactly to be applied at this stage of deciding the matter. At this stage the court is not to see whether there is sufficient ground for conviction of the accused or whether the trial is sure to end in his conviction. But at the initial stage, if there is a strong suspicion which leads the court to think that there is ground for presuming that the accused has committed an offence, then it is not open to the court to say that there is no sufficient ground for proceeding against the accused. While deciding the question of framing of charge in a criminal case, the court is not to apply exactly the standard and test which it finally applies for determining the Guilt or otherwise. This being the initial stage of the trial, the court is not supposed to decide whether the materials collected by the Investigating Agency provides sufficient ground for conviction of the accused or whether the trial is sure to culminate in his conviction. What is required to be seen is whether there is strong suspicion which may lead to the court to think that there is ground for presuming that the accused has committed an offence. I have carefully gone through the record. In this regard this court is supported ITO VS. Arun Kochhar 1014 with law laid down by the Hon'ble Apex Court and Hon'ble High Court reported as "Union of India vs Prafulla Kumar, AIR 1979 Supreme Court 366, State of Maharashtra and others vs Som Nath Thapa and other JT 1996 (4) SC 615, State of Bihar vs Ramesh Singh, AIR 1997 SC 2018:
(1997 CRI LJ 1606), Umar Abdula Sakoor Sorathia vs. Intelligence Officer Narcotic Control Bureau JT 1999 (5) SC 394, Kalu Mal Gupta vs. State 2000 I AD Delhi 107.
11. The legal proposition qua the framing of charge is well settled and has been quoted in a catena of decisions. In the judgment of R.S. Nayak vs. A.R. Antulay and another passed in CA No.658 of 1985 dated 17.04.1986 it has been observed that: "The Cr.P.C. Contemplates discharge of the accused by the Court of Session under Section 227 in a case triable by it; cases instituted upon a police report are covered by Section 239 and cases instituted otherwise than on police report are dealt with in section 245. The three sections contain somewhat different provisions in regard to discharge of the accused. Under Section 227, the trial Judge is required to discharge the accused if 'he considers that there is not sufficient ground for proceeding against the accused.' Obligation to discharge the accused under Section 239 arises when 'the Magistrate considers the charge against the accused to be groundless.' The power to discharge is exercisable under Section 245(1) when "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.....". It is a fact that Section 227 and 239 provide for discharge being ordered before recording of evidence and the consideration as to whether ITO VS. Arun Kochhar 1114 charge has to be framed or not is required to be made o the basis of the record of the case, including documents and oral hearing of the accused and the prosecution or the police report, the documents sent along with it and examination of the accused and after affording an opportunity to the two parties to be heard. The stage for discharge under Section 245, on the other hand, is reached only after the evidence referred to in Section 244 has been taken. Notwithstanding this difference in the position there is no scope for doubt that the stage at which the Magistrate is required to consider the question of framing of charge U/s 245(1) is a preliminary one and the test of "prima facie" case has to be applied. In spite of the difference in the language of the three sections and legal position is that if the trial Court is satisfied that a prima faice case is made out, charge has to be framed."
12. Thus, in the light of aforesaid settled proposition of law and in the light of provision u/s 278E of the Act, now it is to be seen as to whether any prima facie case is made out against the accused for framing of the charge and whether there is a grave suspicion or not. No doubt perusal of the statement of account forming part of Ex. PW1/4 prima facie indicates that as on 31.12.2000 the opening balance amount was $ 17,42,195.53/. However, an interest of $ 1440.83/ was credited to the account of the LGT Bank during the period 01.01.2001 to the period 31.12.2001. The said interest was credited during the financial year 200102 and since the statement of account was produced on behalf of the accused through his AR, the accused has special knowledge of the fact himself as to when this amount was ITO VS. Arun Kochhar 1214 exactly credited. There is no dispute that an amount of $ 7000/ was lying in the bank account of the accused with City Bank Delhi. Further, there is no explanation as to why any account would be opened in the name of the trust of which the accused is the sole beneficiary in a foreign country known as tax heaven. There is no denial on behalf of the accused that he did not file the income tax return within stipulated period/ as directed in the notices given to the accused. Neither accused has appeared for his explanation in person. Thus, from the above said facts there rises grave suspicion against the accused as accused did not furnish the details of his social security number at USA, as to how he came into possession of statement of account of LGT Bank when he had no concern with the Bank Account or the amount lying therein. His status as of NRI is a matter of trial and these issues can be decided only after leading the evidence by both the parties after fullfleged trial. There is also presumption against the accused of the culpable mental state in not filing the return within the stipulated period and not disclosing the amount to the Tax Authorities at India or in USA. Of course the presumption is rebuttable but at this stage the Court is bound to presume the culpable mental state in non filing of the return and non disclosing of the taxable income to the tax lying in India as well as in foreign bank account in the facts and circumstances discussed hereinabove.
12. Thus, in the light of above said discussion, this court is of the opinion that there is sufficient material available on record to frame charge ITO VS. Arun Kochhar 1314 against the accused as he has failed to file income tax return despite service of statutory ntoice and further failed to disclose the taxable income in India as well as the amount lying in LGT Bank in the name of Trust M/s Uravarshi Foundation of which he is sole beneficiary with a view to willfully attempt to evade tax and thus prima facie committed the offence 276C(1) and 276CC r/w 278E of the Income Tax Act.
13. Since accused is exempted through counsel till the disposal of the appeal pending before the ITAT, by the order of Hon'ble High court the complainant is hereby directed to take steps to get the appeal decode before the next date of hearing to expedite the framing of formal charge against the accused.
14. Considering the pendency of appeal before the ITAT since the year 2011 and specific direction by the Hon'ble High court to decode the appeal which has direct bearing upon the merits of the present case the matter be put up for framing of formal charge on 13.07.2015.
Announced in open court on 16th May , 2015 (DEVENDRA KUMAR SHARMA) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS, DELHI ITO VS. Arun Kochhar 1414