Delhi District Court
V.K. Gupta vs Bhawani Shankar on 28 November, 2015
IN THE COURT OF SANJAY GARG-I : SPECIAL JUDGE-IV,
(PC ACT) CBI: DELHI.
CA No. 17/2015
ID No: 02401R0388872015
V.K. Gupta
119, FIE Indl. Area,
Patpadganj, Delhi ... Appellant
Versus
Bhawani Shankar
DCIT, Central Circle-17,
Income Tax Department,
New Delhi ... Respondent
Date of Institution: 28.07.2015.
Date of Arguments: 07.11.2015.
Date of Judgment: 28.11.2015.
JUDGMENT
1. Vide this Appeal, the order impugned is the judgment of Ld. ACMM (Spl. Acts), Central, Tis Hazari vide which Appellant / accused was convicted for the offence U/s. 276 CC of Income Tax Act (IT Act) and vide order on sentence, he is sentenced to undergo S.I. for one year alongwith fine of Rs.20,000/- in default of payment of fine, S.I. for 15 days.
2. Brief facts of the case are that complainant is Dy.
CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 1 of 26Commissioner of Income Tax, Central Circle 17, Income Tax Department, Jhandewalan, New Delhi having jurisdiction over this case of accused/appellant under the Income Tax Laws. He had filed his complaint in discharge of his official duties under Sanction/Authorization accorded U/s. 279 of the I.T. Act by Shri A.D. Mehrotra, Commissioner of Income Tax (CIT), Central-II, New Delhi. The search and seizure operation U/s. 132 of the I.T. Act was conducted by the Investigation Wing of the Income Tax Department on 30.07.2009 including the premises of the accused/appellant. Notice U/s. 153 A dated 21.04.2010 was issued by ACIT, Central Circle 3, New Delhi for filing the return of income within 16 days from the receipt of the Notice. Accused/appellant has willfully failed to file his return of income within the time given. A Show Cause Notice U/s. 153 A dated 15.11.2010 was issued and served upon the accused/appellant. Thereafter, jurisdiction of the case of the accused/appellant was transferred from Central Circle-03 to Central Circle-17. Again Notice U/s. 153 A dated 06.06.2011 was issued and served upon the accused/appellant asking him to file return of income for the Assessment Year (hereinafter mentioned as AY) 2008-09 within 15 days. Accused/appellant willfully did not file any return of Income Tax.
3. A Show Cause letter dated 11.08.2011 was issued and served from Central Circle -17. Appellant filed reply dated 18.08.2011 referring to his earlier letter dated 12.10.2010 in which he has stated that return of income filed in the normal course prior to search, be treated as a return U/s. 153 A. By a Notice U/s. 153 A CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 2 of 26 of the I.T. Act, appellant was required to furnish return of income in a prescribed form duly signed and verified in accordance with the provisions of Section 140 of the I.T. Act. The normal return filed prior to search cannot be said to be the proper compliance of Notice U/s. 153 A of the IT Act. The return of income for AY 2008-09 was filed on 14.12.2011 declaring taxable income of Rs. 27,15,790/-. Assessment U/s. 153 A /143 (3) of the I.T. Act was done vide order dated 30.12.2011 at a total income of Rs. 25,97,13,590/-. The Tax demand on the basis of assessment order was Rs.14,06,55,223/-. A Show Cause Notice for launching of prosecution for AY 2008-09 U/s. 276 CC was issued by CIT to the appellant. Appellant filed reply to this Notice dated 18.03.2013, which was duly considered by CIT and same was found unsatisfactory. This clearly shows that appellant willfully did not file his Return of Income for AY 2008-09 in due time in response to the Notice issued and served U/s. 153 A on him and thus he has committed the offence punishable U/s. 276 CC of the IT Act for AY 2008-09.
4. In pre-charge evidence, complainant was examined as PW-1. Vide order on charge dated 03.02.2014 appellant was given charge for the offence punishable U/s. 276 CC of the IT Act to which he pleaded not guilty and claimed trial. In post-charge evidence, PW-1 was cross-examined by the appellant. Complainant examined another witness PW-2 Shri Rajesh Kumar, ACIT, CC-15, Income Tax Department, New Delhi. On the basis of incriminating evidence against the appellant, his statement was recorded U/s. 313 Cr.P.C. wherein he admitted to CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 3 of 26 have received the Show Cause Notices. He took the defence that the documents relied upon by Income Tax Department were not in his control & possession, same were in possession of his brother Shri S.K. Gupta with whom he was having litigation and for these reasons, these documents could not be filed by him. In defence evidence, appellant examined himself as DW-1. He examined DW-2 Shri Anil Kumar, LDC, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi.
5. Heard the arguments of Shri Yogesh Kumar Jagia, Ld. Counsel for the Appellant/accused & Shri Brijesh Garg, Ld. Counsel for the Respondent. Perused the Trial Court record and considered the various grounds raised in this Appeal.
6. The Ld. Counsel for Appellant has submitted that appellant with his brother Shri S.K. Gupta were carrying joint family business and owned six private limited Companies. In the year 2008, differences arose between the two brothers which culminated into filing of six Company Petitions by the appellant before Company Law Board, New Delhi and a FIR No. 328/08 was registered with P.S. Amar Colony, New Delhi in this regard. On 30.07.2009, Respondent carried out search operation U/s. 132 of Income Tax Act in all premises under control of Appellant and his brother and seized various documents from the residence of both the brothers as well as other business premises under their occupation and possession. It has been stated that appellant requested the respondent to provide material documents seized from the premises of his brother but respondent failed to provide copies CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 4 of 26 thereof. It has been stated that on 12.08.2009, Appellant requested respondent to provide copies of the seized material and thereafter a reminder was filed on 18.08.2009. On 19.08.2009, respondent provided part of seized material. Again on 09.10.2009, and 21.10.2009, appellant had requested respondent to provide all the material seized during search but without providing material, respondent issued Show Cause Notice U/s. 153A asking him to furnish return in respect of 'Company' for the assessment year 2008-09. It has been further submitted that since respondent did not provide copy of the seized material, appellant having left with no other option coupled with the fact that no particular form of return of income has been prescribed U/s. 153 A of the Ac, filed a letter dated 12.10.2010 requesting respondent to accept the return voluntarily filed by him U/s. 139(1) as the return in compliance of Notice U/s. 153 A of the Act. It has been stated that on 15.11.2020, respondent issued a Show Cause Notice and same was replied on 26.11.2010. Thereafter, respondent issued a fresh Notice U/s. 153 A of the Act dated 06.06.2011 directing him to file return of income within 15 days superseding first Notice dated 21.04.2010. It has been argued that since appellant has already written to the respondent to accept his Return filed U/s. 139(1) as return U/s. 153 A of Act, therefore, there was no requirement to file any other return of income. It was on 21.11.2011, respondent provided requisite record, after verifying the seized material, appellant filed return U/s. 153 A on 14.12.2011.
7. The Ld. Counsel for appellant has further urged that under the CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 5 of 26 Scheme of Income Tax Act, every person having taxable income in financial year is liable to file voluntary return of income U/s 139 (1)and in case return filed is defective, Assessing Officer U/s. 139(9) is empowered to issue Notice for removal of defect within 15 days. On failure to do so on the part of Assessee, the return so filed, is deemed to have not been filed and Assessing Officer is empowered U/s. 142 to carry out inquiry before assessment. It has been stated that Section 148 of Act provision is paramateria with Section 153 A of Act and once Notice is issued U/s. 153 A and 148 of Act, the return filed is treated as return filed U/s. 139 (1) and same procedure of assessment is followed. Ld. Counsel has vehemently argued that the filing of letter of Appellant asking the Respondent to accept return filed U/s. 139 (1) for Notice U/s. 153A of the Act is sufficient compliance of the Notice but Ld. Trial Court erred in holding that filing of declaration/letter is not proper compliance of Notice U/s. 153 A of the Act. It has been stated that Section 276 CC make out an offence only on willful failure to file return and if there is any irregularity in filing the return, same can be pointed out by Assessing Officer by issuing Notice U/s. 139(9) . It has been submitted that issuance of fresh Notice dated 06.06.2011 abates and supersedes proceedings initiated earlier in pursuance to first notice dated 21.04.2010 but the complaint has been filed based on the Notice dated 21.04.2010. It has been stated that as per the respondent, second Notice was issued only because of change of jurisdiction but as per the sanction granted U/s. 279(1), second Notice was only a reminder of the first notice. It has been stated that Ld. Trial Court has failed to take cognizance of this fact. It has been stated that under these CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 6 of 26 circumstances, delay in filing return cannot be said to be willful on the part of the appellant which is one of the necessary ingredients of Section 276 CC.
8. It has been further submitted that Notice U/s. 153 A dated 21.04.2010 and 06.06.2011 are defective and defect is beyond the scope of Section 292B of the Act. In support of his submissions, he has relied upon following judgments: -
(i) G.N. Mohan Raju Vs. The Income Tax Officer ITA No. 242 & 243 (Bang) 2013 date of decision 10.10.2014 ;
(ii) Sardar Amarjit Singh Kalra (Dead) By Lrs & Ors. Vs. Pramod Gupta (Smt.) (Dead) By LRS & Ors.,
(iii) Ram Piari (Smt.) (Dead) By LRS & Ors. Vs. Pramod Gupta & Ors (Smt.) (Dead) By LRS & Ors. & Sahib Singh Rathi & Ors Vs. Gulab Sundari (Dead ) By Lrs. & Ors. (Civil Appeal Nos. 1027-28 of 1992, 1029-30 of 1992 & 8465-66 of 2002 respectively decided on 17.12.2002 [(2003) 3 SCC 272];
(iv) Abdul Rashid Ibrahim Mansuri Vs. State of Gujarat [(2002) 2 SCC 513];
(v) S. Sundaram Pillai & Ors. Vs. V.R. Pattabiraman & Ors. Kousalaya Devi & Ors. Vs. P. Lakshminarayana Charya & Ors., Murugesa Mudaliar Vs. Selvaraj Chettiar, N.S. Dhanalakshmi Ammal Vs. B.S. Ramachari, Thahira Beevi Vs. R.A. Muthiah Nadar, M. Balakrishnana Vs. Fathima Bai & ors., K.R. Krishnan Vs. P. Bhanumati (Civil Appeal Nos. 1178 of 1984, 6211 of 1983, 1992 of 1982, 1659 of 1982, 3668 of 1982, 2246 of 1982, 4012 of 1982) [(1985) I SCC 591],
(vi) Union of India Vs. Bhavecha Machinery & Ors. ([2010] 320 ITR 263 (MP);
(vii)S.N.P. Punj Vs. Dy. Commissioner of Income Tax (Crl. M.C. No. 153/2005 & Crl. M. No. 498/2005), Maya Rani Punj & CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 7 of 26 Ors. Vs. T.V.P. Punj, Dy. Commissioner of Income Tax (Crl. M.C. No. 2480/2004 & Crl. M. No. 8366/2004), N.P. Punj Vs. Roshan Sahay, Dy. Commissioner of Income Tax (Crl. M.C. No. 774/2005) ;
(viii)Oryx Fisheries Pvt. Ltd. Vs. Union of India & Others. [(2010) 13 SCC 427] ;
(viii)Mahendra Pal Vs. State of Himachal Pradesh [(2010) 13 SCC 441] ;
(ix)Gokul Chand Vs. Income Tax Officer (In the Allahabad High Court decided on July, 25, 1994)
(ix)C.L. Batra & Anr. Vs. State [Crl. Rev. P. Nos. 792/2010, 794/2010 & 796-798/2010 decided on 23.07.2014].
(x) Commissioner of Income Tax (Central)-III Vs. Kabul Chawla date of decision is 28.08.2015 ITA 707/2014, ITA 709/2014 & ITA 713/2014 &
(x)Commissioner of Income TAX (Central)-I Vs. Chetan Gupta date of decision 15.09.2015 ITA 72/2014.
9.On the other hand Ld. Counsel for respondent has submitted that as per the Scheme of the Act, on receiving Notice U/s. 153 A, the assessee is required to strictly comply with the directions and if he fails to do so within stipulated period, respondent department has discretion after obtaining necessary sanction to prosecute the defaulting assessee, as was done in this case. It has been stated that as per Section 278 E of the Act, Court has to presume the existence of mens rea and it is for the appellant to prove the contrary and that too beyond reasonable doubt. It has been submitted that after issuance of second Notice U/s. 153 A dated 06.06.2011, the first Notice issued gets lapsed and appellant is CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 8 of 26 alleged to have violated the second Notice U/s. 153 A in the complaint. In support his submission, Ld. Counsel has relied upon following judgments: -
(i) Prakash Nath Khanna Vs. Commissioner of Income Tax [(2004) 266 ITR 0001 (SC)];
(ii) Sasi Enterprises Vs. Asstt. Commissioner of Income Tax [Crl. Appeal No. 61/2007 decided by Apex Court on 30.1.2014]; &
(iii)V. P. Punj Vs. Asstt. Commissioner of Income Tax & anr.
[202 (253] ITR 369(Delhi).
10. The offence assigned to appellant is under Section 276CC on the allegations that he failed to furnish the return of income within the stipulated time as required under Section 153-A of the Act. Section 276CC of the Act reads as follows:-
"276CC. If a person wilfully fails to furnish in due time the return of fringe benefits which he is required to furnish under sub-section (1) of section 115 WD or by notice given under sub-section (2) of the said section or section 115WH or the return of income which he is required to furnish under sub-section (1) of section 139 or by notice given under clause (I) of sub-section (1) of section 142 or section 148 or section 153A, he shall be publishable.-
(i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds twenty five 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 CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 9 of 26 months but which may extend to two years and with fine:
Provided that a person shall not be proceed against unless this section for failure to furnish in due time the return of fringe benefits under sub-section (1) of section 115WD or return of income under sub- section (1) of Section 139 (1) 0
(i) for any assessment year commencing prior to the 1st day of April, 1975; or
(ii) for any assessment year commencing on or after the 1st day of April, 1975, if -
(a) the return is furnished by him before the expiry of the assessment year; or
(b) the tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source, does not exceed three thousand rupees."
11.One of the main contention raised by Ld. counsel for the appellant is that notices issued by respondents under Section 153-A are defective and the defect is beyond the scope of Section 292B of the Act. It has been stated that the first notice Ex. PW 1/4 has directed the appellant to furnish his return of income in respect of the company for assessment year 2008-09 and second notice Ex. PW 1/5 has required the appellant to furnish return of income in respect of individual/company in which he is assessible for the assessment year 2008-09. It has been stated that notice under Section 153-A confers jurisdiction on the assessing officer, therefore, this notice needs to be specific and any ambiguity annuls the proceedings initiated in pursuance thereto.
12.Ld. counsel for appellant has further urged that after issuance CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 10 of 26 of the second notice Ex. PW 1/5, the first notice Ex. PW 1/4 and the show cause notice issued by respondent abates but sanction order Ex. PW 1/2 has called this notice as reminder notice. It has been stated that the Ld. trial court has failed to take notice of these contradictions in the case of the respondent.
13.As per PW 1, 2nd notice under Section 153A dated 6.6.2011 which is Ex. PW 1/5 was issued by the then ACIT (Central Circle-17). As per ld. counsel for respondent, as per income tax department practice to assume jurisdiction after transfer of circle, fresh notice is being issued.
14. Ld. counsel for the appellant has further submitted that the sanction under Section 279 of the Act which is Ex. PW 1/2 was given in a mechanical manner, without application of mind and due to this reason, fresh notice Ex. PW 1/5 has been considered as a reminder notice in the sanction order. Perusal of the sanction order Ex. PW 1/2 given by Commissioner Income Tax, Central-2, New Delhi, reveals that in para 2, he has termed this notice dated 6.6.2011 (Ex. PW 1/5) as the reminder notice issued to assesse. Law is settled that grant of sanction is only an administrative function and court cannot look into the adequacy or inadequacy of the material before sanctioning authority and cannot sit in appeal over the sanction order. Perusal of the sanction order Ex. PW 1/2 reveals that sanctioning authority has in depth examined all the material placed before it before grant of sanction. Merely on the basis of the fact that in sanction order, 2nd notice Ex. PW 1/6 has been mentioned as reminder notice, CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 11 of 26 entire sanction cannot be held improper and invalid.
15.It is relevant to mention here that though as per Ld. counsel for respondent, appellant has failed to comply with both notices Ex. PW 1/4 and Ex. PW 1/5 issued under Section 153-A of the Act but 2nd notice was issued after change/transfer of the circle. The prosecution of appellant had been done on the basis of 2nd notice Ex. PW 1/5. Accordingly, time for filing income tax return has to be reckoned from the date of service of 2nd notice Ex. PW 1/5.
16. The other grievance raised by appellant regrading ambiguity in the notice that whether it required the appellant to file return of his company or in his individual capacity, is ill founded and is not acceptable. As per the Act merely by reason of any mistakes of fact or omission, a notice issued under this Act can be held invalid. Section 299-B provides as follows:-
"299B 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 intend and purpose of this Act."
17.Ex. PW 1/P-1 the proceedings conducted by respondent, are admittedly attended by the appellant alongwith his Chartered CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 12 of 26 Accountant Raj Kumar Gupta, on 20.10.2009. If appellant would have been nurturing any doubt regarding the alleged ambiguity in the notice Ex. PW 1/4, he would have cleared the same from the concerned officials of the respondent. Moreover the mistake which occurred in the first notice by mentioning "to furnish return in respect of the company" was rectified in the 2nd notice Ex. PW 1/5 mentioning that he has to file return of Income tax return in respect of individual/company. In addition to that it is the admitted case of the appellant that finally return of income for the assessment year 2008-09 which is Ex. PW 1/8 in his individual capacity was filed on 14.12.2001. Hence, the appellant has failed to show if he suffered any prejudice by this alleged ambiguity as pointed out by him in the notice Ex. PW 1/5.
18.The other most important contention raised on behalf of appellant is that whether the delay in filing the income tax return can be stated as willful which is one of the important and necessary ingredient of Section 276CC. Apparently, appellant has failed to file the return in compliance to the notice under |Section 153A dated 6.6.2011 Ex. PW 1/5, as he was required to do the needful within 15 days of service of notice. The delay in filing the return should be willful on the part of the assessee. As per the requirement of Section 276CC, if his conduct was willful or he wanted to file return as required from him in compliance with Section 153A but was stopped from doing so due to some reasons beyond his control, the same has to be ascertained from the evidence led by both the parties during the trial.
CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 13 of 2619. The case of the prosecution is that appellant willfully defaulted in filing the return within the stipulated period as he was required to do in compliance with the notice Ex. PW 1/5. The Ld counsel for respondent has also pointed out that as per Section 278E, the court has to take presumption as to the culpable mental state and burden is upon the appellant to prove that he has no such mental state with respect the act charged. Section 278E is quoted below:-
"278E. (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 respect to the act charged as an offence in the prosecution. Explanation.- In this sub-section, "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."
20.To support his submissions, Ld. counsel for respondent has relied upon the observations made by Apex Court in Sasi Enterprises (supra). The ratio of this judgment is not applicable to the facts of the present case. In this case, appellant who was prosecuted under Section 276CC had sought his discharge under Section 245(2) Cr.P.C. The trial court dismissed their application, they also failed to get any relief from the High Court and they took CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 14 of 26 this matter before the Apex Court. In this case, accused were required to file return under Section 139(1) of the Act fo the particular assessment years but they did not bother to file the returns before the end of the respective assessment years nor they had filed any return at the outer statutory limit prescribed under Section 139(4) of the Act. On their failure to file the mandatory return under Section 139, they were subjected to the best judgment assessment under Section 144. In pursuance to that they were given notices under Section 142 and under Section 148 of the Act for necessary compliance but they again failed to do so.
21.In the present case the appellant is accused of not filing return for the assessment year 2008-09. It is not the case of the respondent that as per facts of this case after the search and seizure operation under Section 132 of the Act on 30.7.2009 notices under Section 153A was issued to him requiring him to file return within the stipulated period. The relevant portion of Section 153A are quoted below:-
"153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151, 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 persons 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 CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 15 of 26 within six assessment years, referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting foth such other particulars as may be prescribed and the provisions of this Act shall, so far as may, apply accordingly as if such return were a return required to be furnished under Section 139;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made:
.................
................"
22.To support his contentions, Ld. counsel for respondent has relied upon V. P. Punj (supra), where the court has observed that as per Section 278E of the Act, the court has to presume the existence of mens rea. It is for the appellant to prove the contrary and that too beyond reasonable doubt. The allegations against appellant are that he deliberately defaulted in filing the return as required under notice Ex. PW 1/5 and the plea taken by him of non-supply of documents is flimsy and without any basis. I agree with the contention raised by Ld. counsel for the appellant that burden of proof casted on the appellant can be discharged through different modes, one he can rely on the material available in prosecution case. In addition to that he can elicit answer from the prosecution witness through cross-examination to dispel any such doubt. He may also adduce other evidence when he is called upon to enter in his defence. [Reliance is placed on Abdul Rashid Ibrahim Mansuri (supra)]. The other judgment relied upon by appellant is S. Sundram Pillai (supra) where word CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 16 of 26 "Willful" has been defined as follows:-
"Willful must be intentional, deliberate, calculated and conscious, with full knowledge of illegal consequences flowing therefrom."
23.The bare reading of Section 278E reveals that the presumption to be drawn against appellant is not absolute and the same is rebutable. To rebut the presumption, appellant is required to prove that he has no such mental state with respect to the act, charged as an offence in that prosecution.
24.As discussed in above paras, the time has to be reckoned from the date of service of notice dated 6.6.2011 Ex. PW 1/5 on the appellant. Before that another notice Ex. PW 1/4 dated 21.4.2010 also under Section 153A was given to the appellant which has been taken as lapsed because of the issuance of fresh notice Ex. PW 1/5. To discharge the onus that he had no such mental state for not filing return in compliance with the notice Ex. PW 1/5, the defence taken by appellant is that number of documents were seized by respondent during the search operation but despite repeated requests, the complete documents were not furnished as a result of which he was unable to furnish fresh return for the assessment year 2008-09. PW-1 during his cross-examination has admitted that the personal documents as well as business documents belonging to the appellant were seized from the premises of S. K. Gupta (brother of appellant). PW-2 has deposed that suo moto copies of the seized material are not supplied to the assessee, only those copies of seized material CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 17 of 26 are supplied which assessee has asked in the application. If no document is asked in the application, the same are not supplied. As per PW-2 copies of the seized documents asked for has been supplied to AR/CA of appellant on 19.8.2009 which has been acknowledged by him at point "B" on letter Ex. PW 2/2. Ex. PW 2/1 is the letter dated 12.8.2009 moved on behalf of appellant requesting the respondent for supplying of the copies of the seized material. Admittedly by respondent, photo copies of documents VA-1 to VA-17 were received by CA on behalf of appellant. The relevant question to be considered is if these were entire record or the relevant record supplied to appellant which he may have required to file fresh return for the assessment year 2008-09. PW-2 has admitted during his cross-examination that he cannot tell exact number of papers of documents seized during the search but the same can be found mentioned upon the panchnama. He has admitted that no copy of the panchnama has been filed in this case. He has further stated that he cannot tell nature of the documents mentioned as VA-1 to VA-17 provided to appellant through his AR and to whom they were related. He cannot tell if the documents supplied were relevant for the appellant or not. The number of pages seized from the appellant's premises were more than 3000. As per record no document belonging to appellant seized from the premises of S. K. Gupta were provided to the appellant as no such request was made. He admitted that letter dated 21.11.2011 was issued to appellant along with documents seized from S. K. Gupta, providing the documents as mentioned in the said letter Ex. PW 2/D1.
CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 18 of 2625.It is a matter of common sense and prudence that appellant already having filed his return for the assessment year 2008-09 being asked under notice Ex. PW 1/5 (under Section 153A) to file fresh return for the same assessment year, needs to see the documents seized during search dated 30.7.2009. In absence of seized record, he cannot be condemned for willfully committing default of not filing the mandatory return as required under Section 153A. The rival contentions have come from both the parties regarding the documents VA-1 to VA-17 provided to appellant on 19.8.2009 vide letter Ex. PW 2/2. As per Ld. counsel for appellant seized documents were running into thousands but only some documents were provided rendering the appellant incapable to file fresh return. On the other hand, Ld. counsel for the respondent has submitted that relevant documents were provided to appellant but he deliberately defaulted in filing the return within the stipulated time.
26.One thing is clear that as admitted by PW-2 vide letter Ex. PW2/D-1 dated 21.11.2011 respondent has provided further documents to appellant. The panchnama (seizure memo) was the other relevant document to disclose the number of documents seized during the search but same has not been filed during the trial by the respondent. If documents Ex. VA-1 to VA-17 were constituting major part of documents seized or was just few in number, only comparison with the said panchnama would have thrown light on it. On account of non-production of panchnama, the contention raised by appellant that only few documents, out CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 19 of 26 of the seized documents were provided vide letter Ex. PW 2/2, has to be believed.
27.In addition to sending a request for supplying copies of seized material which is Ex. PW 2/1, while deposing as DW-1 appellant has filed other correspondence done by him with the respondent seeking copy of the seized documents. Ex. DW 1/A is letter written on behalf of appellant dated 9.10.2009 requesting the respondent to provide copies of panchnama and annexure. Ex. DW 1/B is the postal receipt vide which this letter was sent to respondent. Ex. DW 1/C is another letter dated 20.5.2010 written on behalf of appellant requesting the respondent for extension of time for filing the return under Section 153A mentioning that since photo copies of some relevant seized material and statements are still to be obtained which will be required for compilation of return. Ex. DW 1/D is the letter dated 27.4.2010 written on behalf of the appellant bearing stamp of the respondent containing request for inspection and photo copy of seized material and for providing copies of the statement of various persons recording during search and during post search period. Ex. DW 1/E, DW 1/F and DW 1/G are other letters written by appellant dated 12.6.2013, 19.6.2013 and 17.10.2012 respectively to respondent, bearing stamps of receiving of respondent, requesting for supply of copies of the seized material.
28.During cross-examination, DW-1 has admitted that vide letters Ex. DW 1/E, 1/F and 1/G, copies of certain documents were asked for the purpose of disposal of appeal and not for filing the CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 20 of 26 return of income. He has further admitted that vide order sheet dated 20.10.2009 (Ex. DW 1/P-1) Raj Kumar Gupta, his CA was asked to collect copies of seized material including cloning of hard disk/CPU. Further few lines of cross-examination of DW-1 are very relevant and could be decisive in determining if appellant had sufficient knowledge about the seized documents during search from his premises before hand when he received notice Ex. PW 1/5. The relevant lines are reproduced as follows:-
"It is further correct that details in respect to the seized material were called from you vide letter dated 30.10.2009, after supplying the copies of the seized material as has been asked. Copy of the said letter is Ex. DW 1/P2. Vol. The address mentioned in the letter Ex. DW 1/P2 on which letter has been marked to be supplied does not belong to me nor I have any relation with that address nor I have received the said letter. "
29. As per Ex. DW 1/P-1 on 20.10.2009, Sh. Raj Kumar Gupta, CA of the appellant was present before the officer of respondent and he was asked to come on 21.10.2009 for cloning of hard disk/CPUs, for copy of annexure A-1 (X-I), copy of ledger account and copies of other documents required. This document also bears signature of the appellant but what happened on 21.10.2009, the entire case of the respondent is silent to this effect.
30.Now coming to the cross-examination of appellant as DW-1, reproduced above, from the bare reading of first sentence, it appears that he has admitted to have received this letter Ex. DW CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 21 of 26 1/P-2 vide which all details in respect of the seized material were called from him after supplying the copies of the seized material. Ex. DW 1/P2 contains the details of various documents seized and asking the appellant to explain the various queries put by respondent to him as well as his brother S. K. Gupta and other family members. The subject mentioned on this documents is "page wise explanation of the seized documents, loose papers and hard disk etc".
31.It appears that the details of the entire seized material and various questioned entries in the seized record as mentioned on Ex DW 1/P2 would have given almost exact idea to the appellant about the seized material. But appellant has further voluntered and clarified that he has not received the letter Ex. DW 1/P-2 and address mentioned on the letter does not belong to him. Prosecution has failed miserably to establish if letter Ex. DW 1/P-2 was served upon the appellant or his AR. The two prosecution witnesses PW-1 and PW-2 are also silent on this aspect. It is only during cross-examination of the appellant that this letter Ex. DW 1/P-2 has been put to him. If this letter was served in person to appellant or was sent by post, respondent was required to prove it on record but it has failed to do so. Similarly, in view of the order sheet Ex. DW 1/1 dated 20.10.2009, AR of the appellant was supposed to get copies of the material seized on 20.10.2009 but what happened on 21.10.2009, absolutely, no evidence has come on record. The various letters Ex. DW 1/A, DW 1/C and DW 1/D explains the bona fide of the CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 22 of 26 appellant wherein he has demanded copies of the relevant seized material from the respondent but what response was given by the respondent to these letters of the appellant, entire prosecution case is silent on this aspect.
32. The other important plea raised by Ld. counsel for the appellant is that he was not having cordial relations with his brother S. K. Gupta, due to which reason he could not be aware about the documents seized during search dated 30.10.2009 from the office of his brother S. K. Gupta. To prove that appellant has examined DW-2 Anil Kumar, LDC of Company Law Board, Paryavaran Bhawan, CGO Complex, Lodhi Road. He has filed copies of the petitions Ex. DW 2/A to 2/F. Apellant as DW-1 has also deposed that he had registered FIR bearing no. 328/2008 under Sections 420/465/467/468/ 471/506/409/477A/120- B/109/34 IPC PS Amar Colony against his brother S. K. Gupta. The factum of lodging of FIR by appellant against his brother S. K. Gupta and their inter se dispute has not been disputed by the respondent as no such suggestion denying this dispute has been put to appellant during his cross-examination as DW-1. What documents S. K. Gupta was possessing and seized by the respondent during search, the appellant was not having any way to get any inkling about it.
33.Coming to the notice Ex. PW 1/5 for non-compliance of which appellant has been prosecuted, as already discussed, prior to notice Ex. PW 1/5, another notice Ex. PW 1/4 was issued to the appellant under Section 153A asking him to file fresh return for CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 23 of 26 the assessment year 2008-09. As per respondent, 2nd notice was only issued due to change of circle and for assuming jurisdiction in this case by the concerned officer in the changed circle. But change of circle do not wash away the various correspondence done by the appellant with the respondent-department requesting repeatedly to supply the seized material/documents. The changed circle, i.e. central circle 17 might have received the case file pertaining to this case along with all the letters, as discussed above, written by appellant seeking supply of seized material/documents. It was duty incumbent upon the Assistant Commissioner of Income Tax Central Circle 17 who issued fresh notice Ex. PW 1/5 to have seen that request made by appellant seeking seized material should have been complied with or should have been denied after application of mind. Principles of natural justice also require that appellant should have been provided with the details of the material seized during search dated 30.7.2009 and only then it would have been expected from him to file fresh return for the assessment year 2008-09.
34.Another contention raised by Ld. counsel for the appellant is that filing letter to accept return filed under Section 139(1) is sufficient compliance of Section 153A of the Act and even if delay happened in filing return as required by notice under Section 153- A, it was mere irregularity of filing the declaration dated 13.1.2010. I do not subscribe to this contention because as per requirement of Section 153A, the person whose premises has been searched is required to furnish return for the assessment year as directed, afresh. It cannot be termed as irregularity as CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 24 of 26 Section 276CC make this non-compliance of Section 153A as an offence for which minimum punishment prescribed is six months.
35.In view of the aforesaid reasons, it is held that the appellant has been able to rebut the presumption of culpable mental state under Section 278E against him by establishing on record that after the search of his premises, he made all possible efforts by repeatedly writing to the respondent to provide him seized material so that he could file fresh return as desired from him under notice under Section 153A. The omission on the part of the appellant to qualify for the offence as prescribed under Section 276CC is required to be "willful". As already discussed, since the appellant made all efforts repeatedly writing letters to the respondent for providing copies of seized material enabling him to file fresh return for assessment year 2008-09, the alleged omission on the part of the appellant cannot be said to be "willful". Accordingly, the conviction of the appellant vide the impugned judgment is set side by accepting this appeal.
36.The appellant is directed to furnish bail bond with one surety in the sum of Rs. 20,000/- in compliance of Section 437-A Cr.P.C. on 2.12.2015.
37. The trial court record along with copy of this judgment be sent back.
38. The appeal file be consigned to record room.
CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 25 of 26 Announced in open court (SANJAY GARG-I)
on 28th day of November, 2015 SPECIAL JUDGE-IV, CBI (PC Act)
TIS HAZARI COURTS,DELHI
CR No. 17/2015 V. K.Gupta Vs. Bhawani Shankar Page 26 of 26