Kerala High Court
Income-Tax Officer vs Kerala Oil Mills And Anr. on 8 July, 1986
Equivalent citations: [1986]162ITR292(KER)
JUDGMENT K. Sreedharan, J.
1. These appeals between the same parties relate to one and the same question of law. Therefore, I consider it advantageous to dispose of them by a common judgment.
2. The respondents were prosecuted by the Income-tax Officer for offence punishable under Section 277 of the Income-tax Act and Sections 193 and 196 of the Indian Penal Code. The allegation made against the respondents is that they filed false accounts before the Income-tax Officer to evade payment of tax. The assessment years in relation to which the proceedings were initiated are 1966-67 and 1969-70.
3. The complaints in all these cases were filed before the Chief Judicial Magistrate's Court, Alleppey, on October 6, 1972. They were entertained by that court as C. C. No. 277 of 1972, C. C. No. 278 of 1972 and C. C. No. 279 of 1972. They were subsequently renumbered by the Judicial First Class Magistrate's Court, Ambalapuzha, as C. C. Nos. 387 of 1980, 388 of 1980 and 389 of 1980. The learned Magistrate acquitted accused Nos. 1 and 3 under Section 248(1) of the Code of Criminal Procedure. The second accused passed away during trial; so the charge against him abated. Aggrieved by the said acquittals, the complainant has preferred these Appeals Nos. 378 of 1982, 379 of 1982 and 391 of 1982 respectively.
4. Learned counsel appearing for the respondents challenges the maintainability of the complaint before the trial court. According to learned counsel, the complaint was one not maintainable, that it ought to have been dismissed on the sole ground that the said defect cannot be cured and that the appeal must be dismissed without going into the merits of the case. The argument of counsel is that the complaint regarding offence under Sections 193 and 196 of the Indian Penal Code should have been filed by the court before which the offence was alleged to have been committed or by some other court to which that court was subordinate. The court for the purpose of this proceeding is the Income-tax Officer, B-Ward, Alleppey. So, the Income-tax Officer, B-Ward, Alleppey, ought to have filed the complaint. The complaints in all the three cases were filed by the Income-tax Officer, Special Circle, Ernakulam. The Income-tax Officer Special Circle, Ernakulam, was not the court in which the offence was alleged to have been committed. Therefore, it is argued that the complaints were filed by an incompetent person and so the same must be dismissed.
5. Learned counsel appearing for the appellant meets the above argument by stating that the cases relating to the respondents were transferred by the Commissioner of Income-tax to the Income-tax Officer, Special Circle, Ernakulam, in exercise of the powers under Section 127 of the Income-tax Act, 1961, and that P.W. 1, the Income-tax Officer, Special Circle, is the court in relation to the respondents' cases and so the complaints filed by P.W. 1 are maintainable.
6. Section 136 of the Income-tax Act provides that any proceeding before an income-tax authority shall be deemed to be a judicial proceeding for the purpose of Section 196 of the Indian Penal Code and that every income-tax authority shall be deemed to be a civil court for the purpose of Section 195 of the Code of Criminal Procedure. So an Income-tax Officer before whom a proceeding under the Income-tax Act is pending is deemed to be a civil court for the purpose of Section 195 of the Code of Criminal Procedure. Section 127 of the Income-tax Act authorises the Commissioner of Income-tax to transfer any case from one Income-tax Officer to any other Income-tax Officer. The Explanation to the said section reads as follows :
"In this section and in Sections 121, 123, 124 and 125, the word 'case', in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year."
7. The Explanation makes it clear that when a case is transferred from one officer to another, all proceedings under the Income-tax Act will stand transferred. A prosecution for offence under Sections 193 and 196 of the Indian Penal Code can never be considered as a proceeding under the provisions of the Income-tax Act. So it is argued that the transfer of the case of the respondents to P.W. 1 will not authorise him to launch a complaint before the criminal court because the offence alleged was not committed before the court of P.W. 1 but before some other court.
8. The assessment could be completed according to law by the officer having proper jurisdiction over the case. Returns and documents were filed before such an officer. That officer under the above-mentioned provisions of the Income-tax Act is deemed to be a civil court. By filing returns and accounts before that court if it appears that an offence under Section 193 or 196 of the Indian Penal Code has been committed, the complaint has to be filed by that court. In this view, the short question that arises for consideration is whether the respondents did commit an offence under Sections 193 and 196 of the Indian Penal Code by filing returns before P.W. 1.
9. P.W. 1 was the Income-tax Officer, B-Ward, Alleppey, for the period from December 20, 1968, to middle of April, 1970. The respondents filed their returns before the Income-tax Officer, B-Ward, Alleppey. Returns were filed on November 28, 1966, December 1, 1966, and January 31, 1970. By order dated April 10, 1970, P.W. 1 was transferred and posted as Income-tax Officer, B-Ward, Salary Circle, Ernakulam. He continued in that post till he was transferred as Income-tax Officer, "C" Ward, Ernakulam, by order dated June 30, 1970. P.W. 1 worked in that post till August 23, 1970. On August 20, 1970, the Commissioner of Income-tax transferred and posted P.W. 1 as Income-tax Officer, B-Ward, Company Circle, Ernakulara. He worked in that post till July 23, 1972. Thereafter, by order dated July 18, 1972, the Commissioner posted P.W. 1 as the Income-tax Officer, Special Circle, Ernakulam. He assumed that office on July 24, 1972 and was continuing there when he filed complaints in these cases on October 6, 1972. In exercise of the powers under Section 127(1) of the Income-tax Act, the Commissioner of Income-tax transferred the case relating to the respondents from the file of the Income-tax Officer, B-Ward, Alleppey, to the Income-tax Officer, B-Ward, Company Circle, Ernakulam, by a notification dated December 9, 1970. Thus P.W. 1 got the cases of the respondents transferred to his file. Subsequently by another notification dated July 26, 1972, the Commissioner transferred the case to the Income-tax Officer, Special Circle, Ernakulam. P.W. 1 was thus seized of the case relating to the respondents.
10. The allegation against the respondents is that they filed false returns before the Income-tax Officer and fabricated false accounts for the purposes of being used in the assessment proceedings. These returns and the supporting documents were filed before the Income-tax Officer, B-Ward, Alleppey. So the offence was committed in a proceeding before the Income-tax Officer, B-Ward, Alleppey, who is deemed a civil court. It is that court that has to file the complaint in writing as contemplated by Section 195(1)(b)(i) of the Code of Criminal Procedure. That court has not filed the complaint. P.W. 1 has filed the complaint because the case has been transferred to him by the Commissioner of Income-tax. Then the question is whether by that transfer P.W. 1 could get jurisdiction to file the complaint.
11. At the time of the argument, it has been admitted by counsel appearing on either side that assessment orders in relation to the impugned returns were passed prior to July 26, 1972, when the cases were transferred to P.W. 1, Income-tax Officer, Special Circle, Ernakulam. When the proceedings end in a final order of assessment, it cannot be said that the case is pending. Even otherwise, the prosecution has no case that the respondents committed any offence under Section 193 or 196 of the Indian Penal Code by filing any false documents before the Income-tax Officer, Special Circle. Ernakulam. In CIT v. Bidhu Bhusan Sarkar [1967] 63 ITR 278, the Supreme Court considered the scope of the Explanation to Section 5(7A) of the Indian Income-tax Act, 1922. Their Lordships observed (at p. 287) :
" The Explanation to Section 5(7A) makes it clear that the word ' case ', in relation to any person whose name is specified in the order of transfer means all proceedings under the Act in respect of any year which may be pending on the date of the transfer, and also includes all proceedings under the Act which may be commenced after the date of the transfer in respect of any year. The word ' case ' is thus used in a comprehensive sense of including both pending proceedings as well as proceedings to be instituted in future. Consequently, an order of transfer can be validly made even if there be no proceedings pending for assessment of tax and the purpose of the transfer may simply be that all future proceedings are to take place before the officer to whom the case of the assessee is transferred. "
12. From the above, it is clear that the transfer can have effect only in respect of proceedings under the Income-tax Act. So, the officer to whom the case is transferred can continue proceedings under the provisions of the Income-tax Act. The proceedings in these cases do not arise under the provisions of the Income-tax Act, but they are proceedings in connection with offences punishable under the Indian Penal Code. The transfer of the case to the file of P.W. 1, Income-tax Officer, Special Circle, Ernakulam, will not empower him to prosecute the respondents for offences under Section 193 or 196 of the Indian Penal Code because those offences, if at all committed, were not before the court of the Income-tax Officer Special Circle, Ernakulam, but were before the Income-tax Officer, B-Ward, Alleppev. The offences were not committed against P.W. 1 personally but against the court of the Income-tax Officer, B-Ward, Alleppey. This view is well supported by the decision in Kuldip Singh v. State of Punjab, AIR 1956 SC 391. From the above discussion, it follows that the court before which the offence under Sections 193 and 196 was committed should file the complaint as contemplated by Section 195(1)(b)(i) of the Code of Criminal Procedure. No superior court can by an order of transfer of the case to another court confer jurisdiction upon the transferee court to file a complaint. Thus, the Commissioner could not transfer the case of the respondents to the file of P.W. 1 while holding a different office so as to confer jurisdiction on him to file a complaint under Section 195 of the Code of Criminal Procedure. Any authority to which the Income-tax Officer, B-Ward, Alleppey, was subordinate could have filed the complaint. The income-tax authorities have not considered this aspect of the matter and they proceeded as if the offence committed by the respondents is one against the court of P.W. 1 in his individual capacity. Since the Income-tax Officer, Special Circle, Ernakulam, was neither the original court before which the offence was committed nor the superior court to which the Income-tax Officer, B-Ward, Alleppey, was subordinate, the complaints filed in these cases are incompetent and hence not maintainable.
13. The result, therefore, is that these appeals fail. They are accordingly dismissed.