Delhi District Court
Ito vs Renu Kalra on 7 September, 2013
IN THE COURT OF SH. DEVENDRA KUMAR SHARMA
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts) CENTRAL
TIS HAZARI COURTS, DELHI
ITO vs Renu Kalra
U/s 276D/277 of the Income Tax Act 1961
JUDGMENT CC No.168/4
(a)Serial no. of the case : 02401R0123212001
(b)Date of commission of offence : Assessment year 199293
(c)Name of complainant : ITO Sh. H.S. Toki
(d)Name, parentage, residence: Ms. Renu Kalra
Prop. of M/s Ridhi Enterprises
16U.B., Jawahar Nagar, Delhi
(e)Offence complained of/ proved : U/s 276D/277 IT Act
(f)Plea of accused : Pleaded not guilty
(g)Final order : Acquitted
(h)Date of such order : 07.09.13
Date of Institution of complaint: 08.03.01
Arguments heard/order reserved: 30.08.13
Date of Judgment : 07.09.13
Brief statement of the reasons for the decision:
1.The complainant Mr. H.S. Toki, the then Income Tax Officer filed the present complaint against the accused for the offences u/s 276D and 277 of Income Tax Act, 1961 (hereinafter to be referred as the Act).
2. The short facts of the case are that accused filed the return of income for the assessment year 199293 on 18.08.92 declaring an income of Rs.40,950/. The assessment was, however, completed u/s 143(3) of the Act on total income of Rs.8,90,351/.
The addition of Rs.77,337/ was made to the returned income on ITO vs Renu Kalra 1 of 11 account of inflation of purchases. The assessing officer observed that there was excess purchase of Rs.73,469/ shown from M/s Goverdhana Traders, in as much as, the accused had shown purchases from the said party at Rs. 9,43,019.40 whereas in the books of the said party as per the copy of the account received, the purchase were at Rs.8,69,580.73 only. Again it was observed that the accused had shown excess purchase of Rs.4,368/ from M/s Raja Ram Ajay Kumar, the accused has shown the purchase from the said party at Rs.1,16,251 while the books of the said party reflects Rs.1,01,883/.
The addition of Rs.7,61,937/ was added to the returned income of Rs. 7,61,937/ on account of unexplained cash deposits in bank account. The assessing officer obtained copy of bank statement from Bank of Baroda in which he observed that there were cash deposits in the Bank Account on different dates during the period from 01.07.91 to 31.03.92 amounting to Rs. 7,71,937/. As no explanation was filed, the assessing offer treated these bank deposits as unexplained and added the same to the total income. Accordingly, a demand of Rs.8,06,193/ was raised and notice u/s 156 of the Act was issued to the accused to deposit the said amount but she failed to do so. Hence, present complaint.
3. Accused was summoned. Copies of complaint and of documents were supplied. After precharge evidence, a charge for the offence punishable u/s 276B and 277 of the Act was framed against the accused to which she pleaded not guilty and claimed trial. However, during the course of arguments, it was pointed out that charge has been framed u/s 276D IT Act, though it ITO vs Renu Kalra 2 of 11 should have been framed u/s 276B of IT Act.
4. In order to substantiate the allegations against the accused, the prosecution examined the complainant Sh. H.S. Toki as PW1 and Sh. S.N. Gupta the then ITO, as PW2.
PW1 Sh. H.S. Toki was the complainant who filed the present complaint, deposed that he was posted in Ward 66 New Delhi in the month of August, 1999 to August, 2001. He issued notice to the accused for making payment of the outstanding demand as a result of assessment Ex.PW1/A. He also proved on record copy of notice issued u/s 272 of the Act Ex.PW1/B. He also deposed that CIT Delhi V issued authorization u/s 279(1) of the Act authorizing him to file the present complaint.
PW2 Sh. S.N. Gupta also deposed that during the period September, 1997 to March, 1999 he was posted in the Ward no.6 as ITO. During his tenure, he issued the notice u/s 221 and another notice u/s 131 of the Act to the accused which is Ex.PW2/1. The witness also stated that he recorded the statement of accused in which she refused to have any bank account. However, on inquiry, it was revealed that accused was having two bank accounts in her name, one saving account no.2324 with Bank of Baroda, Jawahar Nagar, Delhi and another account no.18072 with Bank of Rajasthan, Alipur Road, Delhi and proved statement of account Ex.PW2/2 pertaining to Bank of of Rajasthan. Both witnesses were cross examined at length on behalf of the accused.
5. Statement of accused was recorded u/s 313 Cr.P.C. In his statement, accused ITO vs Renu Kalra 3 of 11 admitted filing of her tax return as well as receipt of notice. However, rest of the allegations have been denied by the accused stating that books of accounts were not in in his possession and therefore, she could not produce the same. Accused also stated that she did not make any false statement as alleged. Her statement recorded by PW2, was in relation to the account of Ridhi Enterprises existing in the year 199298. She further stated that account in Bank of Baroda was nonoperative much prior to her statement and instructions were given for closing the said account. She further submits that account of Bank of Rajasthan primarily does not contain her funds and it was her mother's fund and the account was not in existence at the relevant time.
In support of her claim and contentions, accused examined two witnesses i.e Sh. Gajender Sharma, Sr. Manager from Bank of Rajasthan as DW1 and Sh. G.S. Verma, computer operator from Bank of Baroda, as DW2.
From the statement of DW1, it appears that no such account no. 18072 as alleged by PW2, exists in the exclusive name of accused in the said bank. DW1 proved on record copy of account opening form Ex.DW1/DB pertaining to account no.15943 and stated that said account is a joint account in the name of Renu Kalra and Smt. Laxmi Devi who is the primary account holder. The witness further stated that as per the banking rules, the primary account holder is the owner of the account but secondary account holder i.e accused can also handle the account.
DW2 stated that account no.2324 stands in the name of accused. He further stated that a minimum balance of Rs.200/ is required for having an operational account. As per copy of the statement of account, the last balance ITO vs Renu Kalra 4 of 11 was Rs.1.90., in view of the same, account no.2324 is not operational since 27.09.94.
6. I have given my thoughtful consideration to the submissions advanced on behalf of parties and gone through the records/written arguments filed on behalf of parties. I have also considered the relevant provisions of the Income Tax Act, 1961 and the judgments relied upon by the accused.
7. Complainant has placed reliance upon judgment reported in "2004 CRLJ 3362 titled as Prakash Nath & Ors. Vs. CIT & Anr". On the other hand accused has placed reliance upon following judgments:
1 (1990) 83 CTR 229 15 AIR 1952 SC 405 2 (1993) 115 CTR 292 16 AIR 1987 SC 735 3 (1995) 211 ITR 79 17 (2008) 296 ITR 257 (Punjab)
4. AIR 1958 SC 124 18 (2008) 113 TTJ (ASR) 586, 593 5 AIR 1949 TC 264 19 (1989) 180 ITR 280 6 AIR 1980 SC 522 20 (1990) 181 ITR 414 (AT) 7 AIR 1992 SC 240 21 AIR 1979 Supreme Court 8 (1990) Suppl. (SCC) 41 22 AIR 1977 SC 170 9 (1972) 86 ITR 70 (MYS) 23 AIR 1966 SC 43 10 AIR 1979 SC 677 24 (1988) 173 ITR 554 (Cal) 11 AIR 1991 SC 229 25 (1994) 3 SCC 569 12 (1984) 149 ITR 696 26 (2005) 273 ITR 13 (1982) 133 ITR 909 (SC) 27 94 (2001) DLT 334 14 (1988) 169 ITR (St) 13 (SC) 28 (2001) 167 CTR (MAD) 236
8. Since, entire evidence is led to prove the offence u/s 276D and 277 of IT Act and no prejudice is going to be caused to either of party, hence charge u/s 276B ordered to be read u/s 276D of IT Act.
A) The relevant provisions of section 276D as well as 277 of the Act is ITO vs Renu Kalra 5 of 11 reproduced as below: [276D. Failure to produce accounts and documents. If a person willfully fails to produce, or cause to be produced, on or before the date specified in any notice served on him under subsection (1) of section 142, such accounts and documents as are referred to in the notice, or willfully fails to comply with a direction issued to him under subsection (2A) of that section, he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine equal to a sum calculated at a rate which shall not be less than four rupees or more than ten rupees for every day during which the default continues, or with both.] [277. False statement in verification, etc. If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be rue, he shall be punishable, i. in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, 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 rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine] B) It is alleged in the complaint that the accused has willfully failed to produce the relevant documents. Accused denied this fact in her statement stating that she could not produce the relevant record before the assessing officer as same were not in her possession. This fact was also communicated to the complainant vide reply Ex.PW1/D1. In his cross examination, PW1 also admitted that accused had shown her inability regarding nonproduction of books of accounts as the same were not in her possession. Thus, he was duty bound to inquire the matter further and to issue notice to the person concerned to produce the documents. But he failed to do so. Thus, it can be safely held that accused can be held responsible for nonproduction of relevant record intentionally and willfully.
ITO vs Renu Kalra 6 of 11 However, case u/s 277 of IT Act is clearly made out against the accused from her own witness. Witness DW1 proved the bank account in the joint name of accused and Smt. Laxmi Devi. He admitted in his cross examination that amount in bank account no.18072 could be withdrawn by any of them. He further admitted that money in joint account belong both of account holder. Thus, it stands proved that accused made out a false statement before competent authority that she has no bank account in her name. Her defence that her statement was qua the period of assessment is baseless as the statement was recorded in relation to her source of income and tax evasion and the bank account was in operation at the relevant period. C) Before discussion the case on merit, it would be appropriate to see whether the present complaint is filed after obtaining a proper and valid sanction. Learned defence counsel vehemently argued that present complaint is not maintainable as the authorization dated 18.01.01 is not a valid authorization in the eyes of law. CIT had accorded sanction in a routine manner without going through the entire records. Sanction was obtained by the complainant without disclosing true fact. It is further argued that any case instituted without a proper sanction must fail because this being a manifest defect in the prosecution, the entire proceedings are rendered void ab initio. In support of claim and contentions, reliance has been placed upon the judgments mentioned (supra) in the table at sl. no. 10 to 16. It is also argued that authorization dated 18.01.01 has not been proved on record by the witnesses examined nor the prosecution has examined Mr. RK Singh, the then CIT, who ITO vs Renu Kalra 7 of 11 accorded sanction. Even none of the original documents were produced by the complainant on record. Mere bald allegation is not sufficient to prove the case against the accused.
D) These plea of the accused appears to have force. In the complaint as well as authorization letter and show cause notice, it has been mentioned that that the assessment order was passed on 24.05.95. But no assessment order of such date is on record. Even PW1 and PW2 has failed to depose on which date the assessment order was passed. However, from bare perusal of record, it appears that original assessment order was passed on 24.03.95. It is necessary for the prosecution to prove that a valid sanction had been granted by the sanctioning authority after it was satisfied that a case of sanction had been made out constituting the offence. Reliance may be placed upon the judgments reported in "AIR 1979 SC 677 titled as Mohd. Iqbal Ahmed vs. State of Andhra Pradesh". Relevant para of the judgments is reproduced for ready reference: "Incumbent on the prosecution to prove that a valid sanction had been granted by the sanctioning authority after it was satisfied that a case for sanction had been made out constituting the offence. This should be done in two ways: either (1) by producing the original sanction which itself contains the facts constituting the offence and the grounds of satisfaction or (2) by adducing evidence aliunde to show the facts placed before the sanctioning authority and the satisfaction arrived at by it. Any case instituted without a proper sanction must fail because this being a manifest defect in the prosecution, the entire proceedings are rendered void ab initio. What the court has to see is whether or not the sanction authority at the time of giving sanction was aware of the facts constituting the offence and applied its mind for the same, any subsequent fact which come into existence after the grant of sanction without wholly irrelevant. The grant of sanction is not an idle formality or an acrimonious exercise but a solemn and sacrosanct act which affords protection to the person against frivolous ITO vs Renu Kalra 8 of 11 prosecutions and must therefore, be strictly complied with before any prosecution can be launched against the person concerned"
E) The present complaint has been filed by the complainant alleging that accused willfully failed to produce the relevant records and concealed the true income by raising inflation of purchases. Accordingly, considering the facts and circumstance, assessment order dated 24.05.95 was passed tax demand of Rs.8,06,193/ was raised. As per complaint, accused challenged the tax demand so raised before the CIT. CIT(A) XII dismissed the said appeal.
Thereafter, accused preferred an appeal before the learned ITAT wherein assessment order was set aside by the learned ITAT vide order dated 28.01.2000, directing the assessing officer for passing fresh order after giving reasonable opportunity to the assessee. Thereafter, at the fag end of the case, complainant has filed copy of fresh assessment order which was passed on 28.03.02 assessing total income at Rs.8,90,351/.
From the statement of PW1, it is clear that assessment order on the basis of which present complaint was filed, was set aside by the learned ITAT. In his cross examination, PW1 has clearly admitted that he was aware the status of the assessment order at the time of filing of the present complaint. He also admitted that the assessment order has been set aside by the learned ITAT at the time of filing of the present complaint. There is no mention in the authorization/sanction regarding setting aside of assessment order in dispute. It appears from the cross examination of PW1, that at the time of obtaining authorization/sanction, aforesaid fact was never brought to the notice of CIT who accorded sanction for launching prosecution against the accused by the ITO vs Renu Kalra 9 of 11 complainant for the reason best known to him. Had this fact was brought to the notice of the concerned CIT, the complainant might have not been able to obtain sanction/authorization at that time in view of the order of learned ITAT. Furthermore, it appears from the record that while obtaining the sanction, either assessment order dated 24.03.95 and notice Ex.PW1/A were not put before sanctioning authority or the sanction was accorded without application of mind in routine manner. Had it not been so, there would have been no question of error in date of assessment order in sanction order as well as notice for payment. It appears that, the complainant was in a hurry to file the present complaint after obtaining the sanction without disclosing the true facts. Had the complainant had disclosed the true facts before the sanction authority at the time of according sanction, the fate of the case would have been different.
F) In view of the aforesaid discussions, it is clear that the complainant had concealed the true fact before the court as well as before the concerned CIT who accorded sanction and filed the present complaint after obtaining sanction which appears to have been passed in a very mechanical manner. It is well settled law that if, a litigant who comes to the court and withholds a vital document or suppresses material facts in order to get an advantage in the case can be summarily thrown out at any state of litigation. Reliance may be placed on the judgment reported in "Bharat Heavy Electrical Ltd. & Ors vs D.K. Sardana 2010(2) LRC 194 (Del)". Relevant portion of the judgment is re produced below: ITO vs Renu Kalra 10 of 11
8. At the outset, it must be submitted that a person who is invoking the jurisdiction of the Court whether civil or criminal must come to the temple of justice with clean hands. In the civil cases, the Hon'ble Supreme Court ion case titled Chengalvaraya Naidu (dead) by LR's vs Jagannath (dead) by LR's & Ors. AIR 1994 SC 853 has categorically laid that fraud or concealment of facts by a party at whatever stage it is detected will vitiated the entire proceedings. Similarly, on the criminal side also in case titled MCD v. State of Delhi & Anr. 2005 SCC (Crl.) 1322 while dealing with the question of release of an accused under Section 4 of the Probation of Offender's Act, 1960 the Apex Court has held that a litigant who comes to the Court and withholds a vital document or suppresses the material facts in order to get an advantage in the case can be summarily thrown out at any stage. It was in this background that the Apex Court observed that anybody who plays fraud on the Court can be summarily thrown out and would not be granted any relief. G) In view of the foregoing discussions, facts and circumstances and law laid down by the Hon'ble Apex Court and Hon'ble High Court, it is held that the present complaint is not maintainable being filed without obtaining proper and valid sanction. Consequently, complaint is dismissed. Accused is acquitted of charges leveled against her. However, bail bonds of accused already on record is extended in terms of section 437A for a period of six months. Case property be confiscated to the state and file be consigned to record room.
Judgment be sent to the server www.delhidistrictcourt.nic.in.
(DEVENDRA KUMAR SHARMA) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS DELHI Announced in open court on 7th September, 2013 (Total number of page 11) (One spare copy attached) ITO vs Renu Kalra 11 of 11