Delhi District Court
Ito vs Vk Gupta on 26 June, 2015
IN THE COURT OF SH. DEVENDRA KUMAR SHARMA
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts) CENTRAL
TIS HAZARI COURTS, DELHI
ITO vs VK Gupta
U/s 276CC of Income Tax Act
CC No.42/4
JUDGMENT
(a)Serial no. of the case : 02401R0222062013
(b)Date of commission of offence : Assessment Year 200809
(c)Name of complainant : Sh. Bhawani Shankar,
DCIT, Central Circle17,
Income Tax Department, New Delhi
(d)Name, parentage, residence: V.K. Gupta,
119, FIE Indl. Area,
Patpadganj, Delhi
(e)Offence complained of/ proved : U/s 276CC of Income Tax Act
(f)Plea of accused : Pleaded not guilty
(g)Final order : Convicted
(h)Date of such order : 26.06.2015
Date of Institution of complaint: 02.05.2013
Arguments heard/order reserved: 25.06.2015
Date of Judgment: 26.06.2015
Brief statement of the reasons for the decision:
1. The complainant Sh. Bhawani Shankar, the then Deputy Commissioner of
Income Tax, filed the present complaint against accused for the offence punishable u/s 276CC of the Income Tax Act (for short the 'Act'), 1961 pertaining to Assessment Year (for short AY) 200809 with the allegations that accused failed to file return of income in response to notice u/s 153A of the Act within time given in the said notice.
ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 1 of 21
2. The warp and woof of the case are that a search u/s 132 of the Act was conducted on 30.07.2009 in the case of M/s Standard Watch Group of cases including premises of the accused. Certain incriminating documents were found and seized from the premises number S511, Greater Kailash PartII, New Delhi, occupied by Sh. S.K. Gupta, brother of accused. Accused as well as his brother are residing in the same premises on different floors. Thereafter, a notice u/s 153A of the Act dated 21.04.2010 (Ex.PW1/4) was issued and served to the accused asking him to file return of income within 16 days but he failed to do so. Thereafter, a show cause letter dated 15.11.2010 was issued to the accused. After transfer of jurisdiction, again a notice u/s 153A dated 06.06.2011 (Ex.PW1/5) was issued to the accused to file his return of income within 15 days but in vain. Thereafter, a show cause letter dated 11.08.2011 (Ex.PW1/6) was issued to the accused. In response, accused filed reply dated 18.08.2011 (Ex.PW1/7) stating therein that the return of income filed in the formal course prior to search, be treated as return in compliance of notice u/s 153A of the Act. As per notice u/s 153A of the Act, accused was required to furnish return of income in prescribed form duly signed and verified in accordance with the provisions of section 140 of the Act and normal return already filed prior to search can not be treated as return in proper compliance of notice u/s 153A of the Act. Thereafter, the assessment u/s 153A/143(3) of the Act was framed at a total income of Rs.259713590/ and tax demand notice u/s 156 of the Act at Rs.140655223/ was issued. Thereafter, a show cause notice for launching prosecution for AY 200809 u/s 276CC of the Act ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 2 of 21 was issued by CIT. Accused filed reply to the said show cause notice which was found unsatisfactory. Hence, present complaint.
3. Accused was summoned. Copies of complaint and of documents were supplied. After precharge evidence, charge was framed against the accused u/s 276CC of the Act, to which he pleaded not guilty and claimed trial.
4. In order to substantiate the allegations, the complainant Sh. Bhawani Shankar examined himself as PW1 and Sh. Rajesh Kumar the then ACIT as PW2.
In his evidence, PW1 reiterated the facts of the complaint and proved on record relevant documents i.e complaint Ex.PW1/1, sanction to launch present prosecution Ex.PW1/2, list of witness Ex.PW1/3, notice u/s 153A of the IT Act issued by then ACIT Sh. VM Mahidhar as Ex.PW1/4, another notice u/s 153A of the Act dated 06.06.2011 issued by then ACIT Rajnish Yadav as Ex.PW1/5, letter dated 11.08.2011 issued by the then DCIT Sh. PD Taneja as Ex.PW1/6 and reply dated 18.08.2011 filed by the accused through its AR/CA M/s Raj Kumar and Associates as Ex.PW1/7. The witness also stated that the return of income for AY 200809 was filed on 14.12.2011 in the prescribed form duly signed and verified by the accused but much after the time given in the notices u/s 153A of the Act. PW1 also proved on record the return of income filed on 14.12.2011 as Ex.PW1/8, assessment order framed by the then DCIT Sh. PD Taneja as Ex.PW1/9, tax demand notice issued u/s 156 of the Act as Ex.PW1/10 along with computation form, show cause notice issued by then CIT Sh. AD Mehrotra as Ex.PW1/11 and its reply filed by accused through his ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 3 of 21 AR as Ex.PW1/12.
PW2 Sh. Rajesh Kumar deposed that the copies of seized documents were supplied to the accused on 19.08.2009 on his application moved through AR/CA vide letters dated 12.08.2009 and 18.08.2009 Ex.PW2/1 and Ex.PW2/2 over which acknowledgment of receipt of documents was given by Sh. RK Gupta, AR/CA of the accused. Both witnesses were cross examined extensively.
5. Statement of accused was recorded u/s 313 Cr.P.C read with section 281 Cr.P.C. In his statement, accused admitted search conducted at his premises and receipt of notice u/s 153A of the Act but denied the allegations of nonfiling of return in time willfully. Accused stated that the documents were not in his control and possession and the same were in possession of his brother Sh. SK Gupta with whom he is/was having litigation and for this reason, the said documents could not be filed. Accused also disputed the sanction stating that the sanction granted is defective and no case is made out against him.
6. In support of claim and contentions, accused VK Gupta examined himself as DW1 and Sh. Anil Kumar, LDC from CLB as DW2.
In his evidence, accused deposed that he has been doing business along with his brother SK Gupta and they have been running six companies. Accused further stated that he was looking after the production and marketing departments and his brother Sh. SK Gupta was looking after the work of legal related to Govt. and Semi Govt and tax matters. In the year 2008, he came to ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 4 of 21 know that his brother Sh. SK Gupta was doing manipulation in company records. Then he demanded all records and documents, both personal and those of companies but he did not supply the same. Then he filed six company cases against his brother in Company Law Board which are still pending. He also relied upon copy of FIR no.328/08(mark B) PS Amar Colony registered against his brother SK Gupta and stated that the documents demanded by the ITO were not in his possession at the relevant time and the same were recovered later from the premises of Sh. SK Gupta.
DW2 Sh. Anil Kumar proved on record photocopies of the petitions No. 24(ND)/2008 to 29(ND)/2008 as Ex.DW2/A to Ex.DW2/F. On 02.03.2015 accused moved an application u/s 315 Cr.P.C which was allowed and accused again examined himself as DW1. He placed reliance upon the documents i.e office copy of the letter dated 09.10.2009 along with postal receipt as Ex.DW1/A and Ex.DW1/B, copy of the letter dated 20.05.2010 filed with the complainant department for extension of time to file the return as Ex.DW1/C, copy of the letter dated 27.04.2010 for inspection and photocopy of seized material and statements of persons recorded as Ex.DW1/D, letter dated 17.10.2012 for supply of certain documents mentioned in the assessment orders and seized from premises of Sh. SK Gupta as Ex.DW1/E, letter dated 12.06.2013 demanding the same documents as Ex.DW1/G, letter dated 19.06.2013 for supply of seized documents as Ex.DW1/F and letter dated 21.11.2011 through which documents were supplied to the accused as Ex.DW1/H. Accused further stated that because of nonsupply of the ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 5 of 21 information being sought by him, he could not file the return as directed by notice u/s 153A of the Act Ex.PW1/4 and Ex.PW1/5. Accused also stated that failure to file return in stipulated time was not willful and was only because of nonsupply of documents by the department.
7. I have given my thoughtful consideration to the submissions advanced on behalf of parties and gone through the records/case laws filed on behalf of the parties. I have also gone through the written arguments filed on behalf of the accused and considered the relevant provisions of the Act. A) The relevant provisions of section 276CC of the Act is reproduced below for ready reference: [276CC. Failure to furnish returns of income. If a person willfully fails to furnish in due [the return of fringe benefits which he is required to furnish under subsection (1) of section 115WDE or by notice given under subsection (2) of the said section or section 115WH or] time the return of income which he is required to furnish under subsection (1) of section 139 or by notice given under [clause (i) of subsection (1) of section 142] or [section 148 or section 153A], he shall be punishable, i. in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; ii. in any other case, with imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. B) (i) Present complaint was filed by the complainant u/s 276CC for not filing the return of income for the AY 200809 in compliance of notice u/s 153A of the Act within time given in the said notice. However, accused denied the allegations stating that nonfiling of return in compliance of notice u/s 153A of ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 6 of 21 the Act within time was due to circumstances beyond his control. In the written submissions filed on 20.05.2015, apart from several other arguments, it was contended that no case is made out against the accused as none of the prosecution witnesses have deposed in their statements that the conduct of the accused was "willful" which is the basic ingredient of section 276CC of the Act. It is further contended that no willfulness or mens rea could be attributed to the accused as he was not in capacity to file the return as demanded since neither the documents seized from his premises nor the documents pertaining to accused recovered/seized from premises of his brother Sh. S.K. Gupta with whom accused was having criminal, civil and company litigations at the relevant time, were provided to the accused by the complainant department. Further, there is no willful default or any mens rea on the part of the accused in not submitting the return in time as he was prevented from doing so on account of his books of account lying seized with the complainant department. Accused has also placed reliance upon the letters Ex.DW1/A, Ex.DW1/C, Ex. DW1/D to Ex.DW1/H. It is also contended that the burden to prove the case has been on shoulders of prosecution who has miserably failed to show that the delay was willful. No cogent or reliable evidence has been brought to prove that the conduct of the accused was willful.
(ii) In the additional written arguments, learned defence counsel has solely and vehemently disputed the notice Ex.PW1/4 and Ex.PW1/6 contending that the notices issued u/s 153A of the Act, are faulty, defective, vague and invalid. As per said notices, accused was directed to file return of company and not in ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 7 of 21 individual capacity but name of company was not mentioned in the entire notice nor it was addressed to any principal officer of any company. It is also contended that in the assessment order dated 30.12.2011, it is specifically mentioned that a notice u/s 153A of the Act was issued to the assessee on 21.04.2010 and served upon the assessee. There is no whisper about any other notice in the entire assessment order Ex.PW1/9 which reflects that entire assessment as well as the prosecution was launched on the basis of notice u/s 153A Ex.PW1/4. In support of claim and contentions, reliance is placed upon the following judgments:
(a) State of Orissa vs Mohd. Illiyas (2006) 1 SCC 275
(b) Director of Enforcement vs MCTM Corpn.(P) Ltd (1996) 2 SCC 471)
(c) ITO vs Tauras Equipment P. Ltd (1979) 118 ITR 982, 984 (AII)
(d) Gujrat Travancore Agency vs CIT (1989) 177 ITR 455458 (SC)
(e) Union of India vs Prakash Mehra [(1999) 107 Taxman 71, 74 (Bom)]
(f) Lal Saraf vs State of Bihar (1991) 235 ITR 116, 118(Pat)
(g) Narayan vs Union of India [1994]208 ITR 82 (MP)]
(h) ITO vs Autofil, (1990) 184 ITR 47, 50 (AP)
(iii) It is further contended that the notice u/s 153A of the Act Ex.PW1/4 is addressed to accused asking him for furnishing return for company for which accused is assessable. No name of company is mentioned in the Ex.PW1/4 rendering it vague as the company is a juristic person and the notice ought to have been addressed to particular company whose return was required to be filed. It is further contended that accused has stake in six companies and thus, it is impossible to figure out as to which company, the notice pertains. Likewise another notice Ex.PW1/6 issued u/s 153A of the Act is also vague as the meaning of Mark " / " remains unexplained in the document. The mark " / "
ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 8 of 21 has been explained in English language as "slash" meaning "or". No name of the company is mentioned in the notice. Both the notices which form the basis of prosecution of accused are faulty being vague and have been issued in mechanical manner. Accused was never asked to file his return in compliance of notices u/s 153A of the Act.
(iv) It is further contended that notice Ex.PW1/6 is invalid as fresh notice can only be issued by AO only when some fresh material is available on records and in the present case only jurisdiction was transferred and no de novo enquiry was started and there was no reasons recorded for issuance of fresh notice. The status in respect of which return is being asked for, is not clear in the notice rendering it vague and invalid since the return of income in respect of the individual/company is being called for. However, use of the words "in which you are assessable" along with company reflects that the said notice, though not specific, was intended for some company name which was again not mentioned and was not directed to the principal officer of any company. Learned defence counsel also relied upon the following judgments in support of claim and contentions:
(a) Madan Lal Aggarwal vs CIT (1982) 50 CCH 0528 All HC
(b) CIT vs Ram Das deokinandan Prasad (2005) 148 Taxman 203 (All)
(c) P.N. Sasikumar and Ors vs CIT (1988) 170 ITR 80 Ker
(d) Gokul Chand vs Income Tax Officer (1995) 125 CTR All 146
(e) Bhagwan Devi Sarogi vs ITO (1979) 118 ITR 906 (Cal)
(f) CIT vs Kurban Hussain Ibrahimji Mithiborwala 1973 CTR (SC) 545
(g) Monga Metals (P) Ltd. vs. ACIT (1999) 18 CCH 0156 All Trib
(v) In this matter, after search and seizure of incriminating documents, ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 9 of 21 letters dated 05.10.09 and 13.10.09 was issued. Accused also wrote letters dated 12.08.2009 and 18.08.2009 Ex.PW2/1 and Ex.PW2/2 for supply of photocopy of seized documents to prepare reply/queries sought by the complainant department. Both these letters were filed on behalf of accused through his AR/CA Sh. Raj Kumar and the copy of the seized materials were supplied to CA Sh. Raj Kumar against acknowledgment on the letter Ex.PW2/2. After that, a letter dated 30.10.2009 Ex.DW1/P2 was sent to accused seeking pagewise explanation of the seized documents, loose papers and harddisk etc.. Thereafter, a notice u/s 153A of the Act Ex.PW1/4 was issued to the accused. Again a notice u/s 153A of the Act Ex.PW1/6 was issued to the accused due to transfer of jurisdiction. Again letter dated 11.08.2011 Ex.PW1/6 was issued to the accused to file return of income but accused failed to do so. Only then accused filed reply dated 18.08.2011 Ex.PW1/7 to notice Ex.PW1/6 stating therein that the return u/s 153A of the Act should be treated as filed in view of assessee letter dated 12.10.2010 filed on 13.10.2010. Accused also sent a letter dated 18.03.2013 for dropping the proceedings stating therein the factor which led his inability to prepare the return in time. Letter dated 09.10.2009 Ex.DW1/A reflects regarding dispute between accused and his brother, pendency of litigation before CLB and that relevant documents and information is within his reach. Letter dated 20.05.2010 Ex.DW1/C is for extension of time to file return. Letter dated 27.04.2010 Ex.DW1/D is for inspection and supply of photocopy of seized materials. Letters dated 17.10.2013, 12.06.2013 and 19.06.2013 Ex.DW1/G, ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 10 of 21 Ex.DW1/E and Ex.DW1/F respectively are for supply of copies of seized material/information for appeal. From bare perusal of these letters, it is clear that through these letters accused sought certain information and copy of seized documents for filing explanation/reply to the letters written by department or for filing appeal and not for filing return in compliance to notice u/s 153A of the Act.
(vi) Further, in his cross examination in defence evidence, accused has clearly admitted that letter Ex.DW1/C was written for extension of time for filing return of income and in this letter, the name of his brother Sh. SK Gupta or the documents seized from his premises, were not referred. Accused further admitted that through letters Ex.DW1/E, Ex.DW1/F and Ex.DW1/G, copies of certain documents seized, were asked for the purpose of appeal and not for filing the return of income. From the letter Ex.PW2/2, it is clear that which ever documents sought by the accused, were supplied to him through his AR/CA Mr. Raj Kumar. All these facts clearly reflect the malafide intention and willful mens rea on the part of the accused despite having been supplied the copy of relevant documents.
(vii) From the pleas of the accused, it appears that he wants to take unfair advantage of technicality. Albeit, the notice Ex.PW1/4 does not reflect the designation of the accused and name of the company but it was sent to the accused at his residential address to file return of the company, yet, the accused can not be allowed to take advantage of such technicality. Till filing the present complaint, several communications took place between ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 11 of 21 department and the accused. If there was any confusion regarding the name of company, he ought to have written letter seeking clarification on this point.
Accused have written several letters seeking information and copies of seized documents. Accused has not shown any doubt or confusion in any of the letters regarding name of the company meaning thereby that he was well aware of the fact that he was supposed to file his individual return. Even in his reply Ex.PW1/7, he had replied that earlier return filed u/s 139 of the Act be treated to be return in compliance of notices u/s 153A of the Act. C) (i) Section 292B of the Act contemplates that return of income, etc. not be invalid on certain grounds. Section 292B of the Act is reproduced for ready reference: "[292B. Return of income, etc, not to be invalid on certain grounds. No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act".
(ii) The provision was enacted by Tax Laws (Amendment) Act, 1975 with effect from 1st October, 1975. The aforesaid provision has been enacted to curtail and negate technical pleas due to any defect, mistake or omission in a notice/summons/return. In this case, it is admitted position of fact that notice Ex.PW1/4 was issued at correct address and same was duly received by the accused. Search was also conducted at the premises of the accused. Thus, ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 12 of 21 merely on the ground that the notice Ex.PW1/4 does not mention the name of the company, it can be said to be defective one. In "Commissioner Of Income Tax vs M/S Jagat Novel Exhibitors" decided on 8th February, 2012 In Income Tax Appeal Nos. 7/2006, 2/2006, 3/2006, 4,2006, 5/2006, 8/2006, 10/2006, 11/2006, 17/2006 & 22/2006, it has been held by the Hon'ble High Court of Delhi that technical objections, without substance and when there is effective compliance or compliance with intent and purpose, do not come in the way or affect the validity of the assessment proceedings. Further, in the case of "Balchand Vs. ITO (1969) 72 ITR 197 (SC)", it was held by the Hon'ble Supreme Court that in construing a statutory notice, extraneous evidence may be looked into to find out whether the technical defects or lacuna had any effect on the validity of the notice. The facts had revealed that though there were defects in drafting the preamble of the notice, it did not affect its validity as the notice itself clearly informed the assessee that he had to file a return of income for the relevant year.
(iii) Section 142(1), 148 and 153A of the Act are reproduced below in order to better appreciation the plea of the accused.
142. Enquiry before assessment. (1) For the purpose of making an assessment under this Act, the [Assessing Officer] may serve on any person who has made a return [ under section 115 WD or section 139] or in whose case the time allowed under subsection (1) of section 139] for furnishing the return has expired] a notice requiring him, on a date to be therein specified;
[(i) Where such person has not made a return [within the time allowed under subsection (1) of section 139 or before the end of the relevant assessment year] to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 13 of 21 be prescribed, or].
* * * [148. Issue of notice where income has escaped assessment. [(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assesee a notice requiring him to furnish within such period, [***] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:].
* * * [153A. Assessment in case of search or requisition. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
* * *
(iv) Bare perusal of aforesaid sections clearly show that provision of section 148 is not akin to the provision of section 142(1) and 153A of the Act. If section 142(1) and section 153A of the Act are read together, their provisions appear to be akin. In this case, after search and seizure of incriminating documents, certain correspondences took place between accused and department and ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 14 of 21 thereafter notice u/s 153A of the Act Ex.PW1/4 was issued to the accused to file return within time given in the said notice. Thereafter, consequent upon change of jurisdiction of the case, again notice Ex.PW1/6 was issued to the accused. Though, the said notice was not required to be issued again. Even if the notice u/s 153A of the Act Ex.PW1/6 was issued, same is not fatal to the prosecution case. This fact finds further corroboration as these technical objections were raised only after the conclusion of trial. During the cross examination of witness PW1 and PW2, no suggestion was ever given that since notice u/s 153A was vague or was only in respect of company, therefore, accused could not comply the same. Had it been so, the accused would not have replied to treat his earlier return as return in compliance of notice. Moreover, in the present case, accused belatedly filed his return in individual capacity. This fact itself shows that he was having no confusion about the intent of notice. Further, accused failed to show that any prejudice was caused because of nonmentioning of fact in notice Ex.PW1/4 that return was to be filed of in individual. Instead, it is clear from his own reply Ex.PW1/7 and other correspondences that it was clear to him since beginning that he was supposed to file his individual return after search. It is respectfully observed that the case laws relied by the accused is not applicable to the peculiar facts and circumstances of the present case as these judgments are in respect of notice u/s 148 and 158BC of the Act and present case is in respect of notice u/s 153A of the Act.
ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 15 of 21 D) (i) It is further contended that the sanction Ex.PW1/2 is bad in law. The sanction order was passed in mechanical manner without application of mind because the CIT, despite, having knowledge of the fact of litigations between accused and his brother neither gave an opportunity for personal hearing nor called for records of litigations to satisfy himself of the said fact brought by the accused. It is further contended that the prosecution failed to examine the CIT who accorded sanction in the matter despite ample opportunity. It is also contended that the prosecution produced only two witnesses who deposed only on the basis of record and they have no personal knowledge of case and the witness who was having personal knowledge, have not been examined. The prosecution failed to examine any officer mentioned in the list of witnesses. Despite erroneous and invalid notices u/s 153A of the Act, none of the witness who issued the notice nor the CIT who accorded sanction have been examined to prove the sanction. The onus to prove the case was on prosecution in which the prosecution miserably failed. In support of claim and contentions, reliance is placed upon following judgments:
(a) Commissioner of Customs vs Dina Aruna Gupta 2011(6) AD(Delhi 676
(b) Harjeet Singh vs State 1998 (76) DLT 511
(c) Gopalji Shaw vs ITO (1988) 173 ITR 554, 559 (Cal)
(d) Narain vs State of Punjab AIR 1959 SC 484
(ii) The pleas of the accused does not have any force. Nonexamination of all prosecution witnesses mentioned in the list of witnesses, is not fatal to the prosecution case. The case of the complainant department is documents based and both prosecution witnesses have deposed only on the basis of ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 16 of 21 documents/records available with the complainant department. It is prerogative of the prosecution to examine entire or limited number of witnesses. There is no hard and fast rule to examine each and every witnesses if the prosecution case is supported by the already examined witnesses. So far as the validity of the sanction order is concerned, perusal of sanction order Ex.PW1/2 reflects that the sanction was given by a due application of mind. The Sanction Authority has given a brief narration of the entire facts before granting sanction and has further gone on to recite in Ex.PW1/2 that the sanction has been accorded after due application of mind. Law is settled that the grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute and hyper technical approach should not be adopted to test its validity.
(a) In Supt. Of Police (CBI) v. Deepak Chowdhary , it has been ruled that:
(SCC p.226, para 5) "5... The grant of sanction is only an administrative function, though it is true that the accused may be saddled with the liability to be prosecuted in a court of law. What is material at that time is that the necessary facts collected during investigation constituting the offence have to be placed before the sanctioning authority and it has to consider the material. Prima facie, the authority is required to reach the satisfaction that the relevant facts would constitute the offence and then either grant or refuse to grant sanction."
(b) In C.S. Krishnamurthy vs. State of Karnataka it has been held as follows :
(SCC p.87, para 9) "9... sanction order should speak for itself and in case the facts do not so appear, it should be proved by leading evidence that all the particulars were placed before the sanctioning authority for due application of mind.
In case the sanction speaks for itself then the satisfaction of the ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 17 of 21 sanctioning authority is apparent by reading the order."
(c) In R. Sundararajan v. State, while dealing with the validity of the order of sanction, two learned judges have expressed thus: (SCC p.752, para 14) "14.... it may be mentioned that we cannot look into the adequacy or inadequacy of the material before the sanctioning authority and we cannot sit as a court of appeal over the sanction order. The order granting sanction shows that all the available materials were placed before the sanctioning authority who considered the same in great detail. Only because some of the said materials could not be proved, the same by itself, in our opinion, would not vitiate the order of sanction. In fact in this case there was abundant material before the sanctioning authority, and hence we do not agree that the sanction order was in any way vitiated."
(d) In State of Karnataka vs. Ameerjan it has been opined that : (SCC p.277, para 9) "9.... an order of sanction should not be construed in a a pedantic manner. But, it is also well settled that the purpose for which an order of sanction is required to be passed should always be borne in mind. Ordinarily, the sanctioning authority is the best person to judge as to whether the public servant concerned should receive the protection under the Act by refusing to accord sanction for his prosecution or not."
(e) In Kootha Perumal v. State it has been opined that the sanctioning authority when grants sanction on an examination of the statements of the witnesses as also the material on record, it can safely be concluded that the sanctioning authority has duly recorded its satisfaction and, therefore, the sanction order is valid."
(iii) The plea of the accused that certain letters and notice u/s 153A of the Act Ex.PW1/6 have not been mentioned in the sanction order, does not have any substance. The narration of events for granting of a sanction for prosecution which has been detailed in the sanction order clearly indicates the reasons for grant of such sanction. The sanction order Ex.PW1/2 contains details of the entire case of complainant, and thus sanction order can not be said to have been passed without application of mind. Thus, the sanction order Ex.PW1/2 is proper and valid sanction and it has been proved as per law. ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 18 of 21
(iv) In the judgment reported in 'AIR 2004 Supreme Court 4552', it has been held that:
"18. One of the significant terms used in Section 276CC is 'in due time'. The time within which the return is to be furnished is indicated only in sub section (1) of Section 139 and not in subsection (4) of Section 139. That being so, even if a return is filed in terms of subsection (4) of Section 139 that would not dilute the infraction in not furnishing the return in due time as prescribed under subsection (1) of Section 139. Otherwise, the use of the expression 'in due time' would lose its relevance and it cannot be said that the said expression was used without any purpose. Before substitution of the expression "clause (i) of subsection (1) of Section 142' by Direct Tax Laws (Amendment) Act, 1987 w.e.f. 141989 the expression used was "subsection (2) of Section 139". At the relevant point of time the assessing officer was empowered to issue a notice requiring furnishing of a return within the time indicated therein. That means the infractions which are covered by Section 276CC to nonfurnishing of return within the time in terms of subsection (1) or indicated in the notice given under subsection (2) of Section 139. There is no condonation of the said infraction, even if a return is filed in terms of subsection (4). Accepting such a plea would mean that a person who has not filed a return within the due time as prescribed under subsections (1) or (2) of Section 139 would get benefit by filing the return under Section 139(4) much later. This can not be certainly be the legislative intent. Likewise, in this case also, after search u/s 132 of the Act conducted in the group company in which accused was one of the director, the notice u/s 153A of the Act was issued to file his return within time prescribed in the notice but he failed to do so. Thereafter, the notice u/s 142(1) of the Act was issued to the accused file his return despite that he failed to file the return in time given in the said notice."
E) Section 278E of the Income Tax also raises presumption as to culpable mental state of the accused to establish that failure was not willful. The relevant provision is reproduced as below: [Section 278E. Presumption as to culpable mental state. (1) In any prosecution for any offence under this Act which requires 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 ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 19 of 21 that he had no such mental state with respect to the act charged as an offence in that prosecution.
Explanation. In this subsection, "culpable mental state" includes intention, motive or knowledge of a fact, or belief in, or reason to believe, a fact.
(2) For the purpose of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.] 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 respect to the act charged as an offene in that prosecution. 'Culpable mental state' includes intention, motive or knowledge of a fact or belief in , or reason to believe a fact. In this case, accused is not firm on his stand and has been changing his defence time to time and failed to discharge the presumption that there was no willful intention in late filing of return.
The act of the accused shows that he was not willing to file the return for the reasons best known to him and filed the highly belated return after several correspondences made by the complainant department. Admittedly, accused has filed the return for the AY 200809 on 14.12.2011 much after the due date of filing of the return as directed through notices u/s 153A of the Act and accused failed to rebut the presumption that delay in filing the return was not willful and therefore, adverse inference is bound to be drawn against the accused that he has failed to file return of income willfully within stipulated period.
ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 20 of 21
8. Keeping in view the facts and circumstances of the case and aforesaid discussions, this court is of the considered opinion that the prosecution has been successful in proving its case against the accused beyond reasonable doubt. Thus, it is held that accused was under obligation to file the return of income for the AY 200809 within stipulated period/within period given in notice u/s 153A of the Act but he failed to furnish the same within prescribed period and accordingly accused is held guilty and convicted for the offence punishable u/s 276CC of the Income Tax Act.
Put up on 29.06.2015 at 12.30 pm for arguments on sentence.
(DEVENDRA KUMAR SHARMA) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS DELHI Announced in open court on 26th June, 2015 (Total number of page 21) (One spare copy attached) ITO vs VK Gupta U/s 276CC of Income Tax Act CC No.42/4 21 of 21