Madras High Court
R. Kannappan And K. Chandrasekaran vs State By Deputy Superintendent Of ... on 13 December, 2007
Author: S. Ashok Kumar
Bench: S. Ashok Kumar
ORDER S. Ashok Kumar, J.
1. These two Criminal Revision Cases are filed against the dismissal of the Crl. M.P. Nos. 253 and 252 of 2004 respectively, dated 31.5.2005, filed under Section 239 Cr.P.C., to discharge the revision petitioners from the charges levelled against them under Sections 120B, 465 and 201 IPC.
2. The case of the prosecution is that A.1 K. Sundarmoorthy, who was formerly Divisional Engineer, Highways Rural Road Division, Paramakudi was charged under Section 13(2) r/w Section 13(1)(e) of the Prevention of Corruption Act and under Section 120B 201, 465 and 471 IPC or acquiring pecuniary resources and properties worth Rs. 35,23,736.73 disproportionate to his known sources of income during the check period between 1.12.1990 and 24.11.1995.
3. A.2, K. Chandrasekaran, revision petitioner in Cr.R.C. No. 412 of 2005, is the brother of A. 1 who was working as Deputy Director of Agriculture Information, Madurai, charged under Sections 120B, 465 and 201 IPC. A.3, revision petitioner in Cr.R.C. No. 411 of 2005 is friend of A.1, who is also charged under the same Sections.
4. The genesis of charge sheet is that Witness No. 2, R. Govindarajan, IRS and his team of Income Tax Department Officials said to have conducted a raid in the house of A.1 on 24.11.1995 and seized cash of Rs. 20,66,637/-, fixed deposit receipts in his name and in the name of his son in various banks to the tune of Rs. 13,79,305/- and other documents including a sale agreement signed by A.2 as joint owner of the property in favour of A.3 dated 20.11.1994. The said agreement shows a sum of Rs. 14 Lakhs was received as advance from A.3. The said sale agreement contains the signature of A.2. Though according to A.2, the agreement is dated one year ahead of the raid by the I.T. Officials and cannot be termed as a forged document, according to the prosecution, the said sale agreement was created only to screen A.1 from legal punishment. It is also the case of A.2 in the discharge petition that the name of A.2 does not even find a place in the FIR and there is no material on record to prove conspiracy, forgery and screening of the evidence of A.2. Further, the 161(3) Cr.P.C., statements shows that there is no whisper about the involvement of A.2. It was also canvassed that there is no nexus or material to establish that the offences committed by A.2 and A.2 are in the course of the same transaction and thus the charges as against A.2 are groundless and he is entitled for discharge.
5. As regards A.3, the charge is that the sale agreement dated 20.11.1994 entered between A.1 and A.2 on the one hand and A.3 on the other is a fabricated document created by all the accused. But, according to A.3, the prosecution has not collected any material to show that Rs. 14 lakhs shown in the said deed never changed hands from A.3 to A.1. The other defence is that the statements recorded under Section 161(3) Cr.P.C., fro the purchasers of the jewels would show as if the receipts for the purchase of jewels from A.1 were created only subsequent to the check period in which case the prosecution cannot club the transactions said to have happened during the check period and after check period as both formed different transactions happened during different periods. So clubbing of these different transactions in a single trial is against law. Even in Section 164 Cr.P.C., statement this petitioner (A.3) has reiterated that he paid Rs. 14 lakhs to A.1 for the purchase of a portion of the Shop from him. Thus according to A.3, there is no prima facie case made out as against this petitioner and the charges are groundless and cannot be framed against him and pleaded for discharge.
6. However, the learned Special Judge for Prevention of Corruption Act, Ramanathapuram, dismissed both the Criminal Miscellaneous Petitions filed by A.2 and A.3 under Section 239 Cr.P.C., to discharge them, holding that there are sufficient materials available on record to show prima facie case existing as against these accused to frame charges to proceed with the trial of the case. As against the said finding, the present two Revisions are filed by A.2 and A.3.
7. Mr. AR.L. Sundaresan, Learned Senior Counsel appearing for the revision petitioners contended that originally on the basis of the raid, the respondent registered a case in FIR No. 1/97 only as against A.1 alone and thereafter charge sheet was laid implicating these petitioners as well The substance of the charge sheet is that the check period was 1.12.1990 to 24.11.1995. The value of assets as on 1.12.1990 was Rs. 19,950/- only. As on 24.11.1995 value of assets was Rs. 41,43,089.02 and the income from known sources during the check period was Rs. 9,81,716.65 and expenses of A.1 during the period was assessed at Rs. 3,82,314 and hence A.1 could have saved only a sum of Rs. 5,99,402.65 and thus the disproportionate assets was Rs. 35,23,736.37. It is the precise case of the prosecution that A.1 to A.3 have entered into conspiracy and created a document purported to be a sale agreement to make it appear that A.1 received Rs. 14 lakhs from A.3 as advance towards the sale price of a shop jointly owned by A.1 and A.2 at Cumbum. It was further alleged that A.1 and A.3 have created false receipts showing sale of jewels for Rs. 1,92,260/- and thereby caused disappearance of evidence and A.1 and A.3 have furnished false information tot he investigating Officer and the Income Tax Officials and before the Court under Section 164 Cr.P.C.
8. Learned Senior Counsel contended that as against the assessment order which was passed by the Assessing Authority treating the assets in the hands of A.1 as his undisclosed income and levying tax and penalty thereon A.1 had preferred appeal in IT (SS) A. No. 28/Mds/97 and IT (SS) A No. 29/Mds/97, and the said appeals were disposed of by the Income Tax Appellate Tribunal, Chennai by order dated 25.8.2006 allowing the appeals and setting aside the order of assessment and penalty. The Tribunal has accepted the explanation of A.1, A.2 and A.3 that under the agreement of sale dated 20.11.1994 a sum of Rs. 14 lakhs was given by A.3 to A.1 and A.2 as sale advance and has also accepted the explanation of A.1 for the cash that was seized and the entire undisclosed amounts have been accounted for. Consequent to the ITA Tribunal's order in the above appeals, the Income Tax Department also refunded the tax and penalty which was wrongly imposed.
9. It is further contended by the learned Senior Counsel that both the sources namely receipt of Rs. 14 lakhs as sale advance and Rs. 1,92,260/- as price of jewels sold has been accepted by the Income Tax Appellate Tribunal and hence it cannot lie in the mouth of prosecution to allege that petitioners have created false documents and are guilty of the offences charged.
10. Further the sale agreement dated 20.11.1994 was found by the Income Tax Authorities even at the time of raid itself and as such it was a true and natural document. Therefore, the ingredients for the offence under Section 120B, 465 and 201 IPC have not been made out against the petitioners. It is also contended that the prosecution has not even alleged that A.2 and A.3 have abetted or conspired with A.1 in acquiring wealth disproportionate to his known sources of income. Hence, the offence under Section 120 B is not attracted.
11. As regards the alleged offence of forgery punishable under Section 465 IPC is concerned, it is submitted that Section 463 IPC defines forgery as dishonestly creating a false document. Creation of a false document is defined under Section 464 IPC and therefore the offences will stand attracted only when a person makes a document to make it appear as if it was made by some one else. In other words, only if a person creates a document as if it was a document executed by someone else, then only the offence will be attracted. Here there is no such allegation. A.2 and A.3 have not made a document to make it appear as if it was executed by somebody else. They own the document and the document was available even at the time of the income tax raid. Hence Section 465 IPC by no stretch of imagination would stand attracted, which is also conceded by the learned Public Prosecutor.
12. As regards the offence under Section 201 IPC is concerned, the petitioners have neither screened, nor made any evidence to disappear. To attract Section 201, there should be concealment of evidence by the accused. Here, the petitioners have not been alleged to have concealed any evidence and there is no evidence of false information either. Hence the offence under Section 201 IPC is also not made out on the basis of the materials available on record.
13. Lastly, it is submitted by the learned Senior Counsel that when A.1 has satisfactorily explained the lawful sources to the Income Tax Authorities, it is not open to the prosecution to reject the same and lay the charge. At any rate, A.2 and A.3 are not even remotely involved under the Prevention of Corruption Act.
14. In support of the contentions, the learned Senior Counsel relied upon the following decisions:
i) Vol. 265 ITR 562 K.C. Builder's case
ii) 1982 (2) SCC 543 Uttamchand's case
iii) 2006 Crl.L.J. 319 Inbasagaran's case
iv) 2007 MLJ (Crl) 86 G. Malliga's case
v) 2007 MLJ (Crl) 100 K. Ponmudi's case
15. There are three accused. A. 2 and A. 3 have preferred these two revision petitions. A.1 is the public servant, working as Divisional Engineer in the Highways Department. Though A.2 is an officer in Agricultural Department, he was not charged in the capacity as public servant, but abettor of A.1 and A.3.
16. The case of the prosecution in short is that on 24.11.1995, the Income Tax Department officials conducted a raid in the house of A.1 where Rs. 20 lakhs of cash was recovered besides assets worth Rs. 18,97,642/- was unearthed. The disproportionate assets for the check period between 1.12.1990 and 24.11.1995 was arrived at Rs. 35,23,736.37. In the charge it is stated that the assets before the check period was 19,950/- only. The assets includes even the movables, like fans, furniture etc., It is unfortunate that the respondent Police have come to the conclusion that the total value of the assets of a Divisional Engineer and his brother, an Agricultural Officer was only Rs. 19,950/- prior to the check period, which must be patently false. According to the charge, at the end of the check period the total value of assets was Rs. 41,43,089.02 and the income from known sources during the check period was Rs. 9,81,716.65 and expenditure of A.1 during th period was assessed at Rs. 3,82,314/- and hence A.1 could have saved only a sum of Rs. 5,99,402.65 and thus the disproportionate assets was Rs. 35,23,736.37.
17. As rightly contended by Mr. A.R.L. Sundaresan, learned Counsel appearing for the revision petitioners even at the time of raid the sale deed dated 20.11.1994 was found by the Income Tax Authorities and seized. The date of raid is 24.11.1995, which means the sale deed was executed nearly one year prior to the date of raid. The accused could not have anticipated even one year earlier that one year later the Vigilance and Anti Corruption Department would raid their house and seize the documents. As per the sale agreement, Rs. 14 lakhs was paid as cash by A.3 in favour of A.1 and A.2 for sale of a portion of the shop belonging to A.1 and A.2.
18. It is also the well settled principle of law that if the accused persons give acceptable and plausible explanation for the alleged disproportionate wealth, then the offence alleged against them could not be held as proved. To support his contention, the learned senior counsel relied on the order of the Income Tax Appellate Tribunal C-Bench, Chennai, in I.T.(SS) A. No. 28/Mds/97, dated 25.8.2006 for the block assessment years 1986-87 to 1996-97, which was filed by A.1 in the charge sheet. In the said assessment order, the sale agreement entered into between A.1 and A.2 with A.3 has been accepted as genuine. As per the assessment order, the following details in order to explain the source of cash found in a sum of Rs. 20,66,637 has been accepted by the Income Tax Appellate Tribunal.
Interest on FDRs Rs. 5420/-
Interest on FDRs assessable in A.Y 96-97 Rs. 26073/-
Sale proceeds of jewellery Rs. 192000/-
Loan from brother Venkittu Rs. 400000/-
Income from house propety Rs. 60000/-
Agricultural Income (own lands) Rs. 200000/-
Agricultural Income (Trust lands) Rs.1200000/-
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Total Rs.2083493/-
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19. In the said order, in Paragraph 7, it is stated that out of 2.33 acres of agricultural land owned by A.1, A.1 has received lumpsum amount as accumulations derived in the recent period, since they were leased out all these years for the lump sum amount as loan or lease advance. It is also not in dispute as seen from the above said order, that though it was claimed that Rs. 12 lakhs was received as agricultural income from the 11.47 acres of agricultural land owned by private religious trust, it is clear that as per the certificate issued by the Agricultural Development Officer and also in income certificate from the said authority estimating the net income from the lands is at about R.4 lakhs per annum. The Income Tax Appellate Tribunal has also accepted the sale of plantain and paddy to the tune of Rs. 4,20,962/- in October 1996 to certain parties.
20. The Income Tax Appellate Tribunal in its order, in Paragraph 9 concluded as follows:
9. It could be seen that the Assessment Officer has disbelieved the assessee's version that the amount seized is out of accumulation of agricultural income after expenses over the years and the amounts given by two of the brothers for starting the business. The brothers have accepted the advances made by them and they have also established their resources. WE are o the opinion that the document seized from the assessee's premises did not give rise to any undisclosed income and as such merely on the basis of jottings and certain writings on loose papers, it cannot be inferred that the investments were of the assessee and of any income had accrued from that. We, therefor,e hold that there was no corroboratory material in possession of the Revenue to hold that the amount seized was undisclosed income of the assessee. The Id.DR has not given any adverse comments on the assessee's explanation as well as the documents filed in support thereof. In the paper book filed by the assesseee's counsel he has tendered complete and proper explanation in respect of the amount of Rs. 20,83,493/- seized from the asssessee's residence and the documents in support of assessee's explanation are also available in the paper book. Furthermore, the assessee's explanation was not considered in the right perspective and the addition in question has been made merely disbelieving and also rejecting the explanation and evidences adduced by the assessee. In the circumstances and in view of the peculiar facts of the present case, we hold that there was no basis for treating the amount as undisclosed or unexplained income for the block period....
10. Under the peculiar circumstances and in the light of the explanation as borne out from the assessee's arguments, we are satisfied that the revenue has failed to make any case against the assessee that the sum of Rs. 20,66,337/- seizsed from the assessee's residence, could have been treated as unexplained or undisclosed income of the assessee of the block period. The addition so made is, therefore, directed to be deleted.
21. According to the learned Senior Counsel appearing for the revision petitioners, when once the Income Tax Department accepts the returns filed by the accused as assessees, then the prosecution has miserably failed to bring home the guilt of the accused beyond all reasonable doubts. In Vol. 265 ITR 562 K.C. Builder's and Anr. v. Assistant Commissioner of Income Tax the Hon'ble Supreme Court has held thus:
Where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment and, therefore, in such a case no penalty can survive and the penalty is liable to be cancelled. Ordinarily, penalty cannot stand if the assessment itself is set aside.... The finding of the Appellate Tribunal was conclusive and he prosecution could not be sustained since the penalty was cancelled following the Tribunal's order and no offence survived under the Income-tax Act thereafter. Therefore, quashing of the prosecution was automatic. Instead, allowing the trial to proceed further would be an idle and empty formality.
22. In Uttamchand's and Ors. v. Income Tax Officer Central Circle, Amristsar, a Three Judges Bench of the Hon'ble Apex Court held that when once the Tribunal found the existence of the firm to be genuine, then the assessee cannot be prosecuted for filing false returns and the prosecution must be quashed.
23. In 2006 Crl.L.J. 319 D.S.P. Chennai v. K. Inbasagaran the Hon'ble Supreme Court reiterated that when once the accused offered explanation which is plausible and justifiable, then the accused cannot beheld guilty of the corruption charges. In the said decision it has been held as follows:
10. ...The Income-tax department has assessed all this money in her hands and assessment order has been passed by the Income-tax Officer and in the appeal it has been affirmed. In short, in fact all the money which has been recovered at the house of the accused in cash, in kind and the documents of properties purchased at various parts in Karnataka and Tamil Nadu she has owned it. Therefore, the wife has taken the full responsibility of this black money and owned the same.
14. Learned Counsel for the respondent also submitted that under Section 132(4) of the Income-tax Act, the order of the Income Tax Officer has been confirmed in appeal and all money owned by the wife has been assessed against her. It was also submitted that finding of Income Tax authority and confession of DW-12 Vijaya Inbasgaran have been accepted. Therefore, it is a judicial finding and on the same a criminal prosecution cannot be lodged. In support thereof learned Counsel for the respondent invited our attention in the case of K.C. Builders and Anr. v. Assistant Commissioner of Income Tax Reported in .
15. We have heard both the learned Counsel at length. The basic question that emerges in the present case is whether the accused could be saddled with all the unaccounted money at his hand or not. It is the admitted position that both the husband and wife were living together. The wife was running three concerns though those concerns were running in loss. Yet she could manage to earn black money by selling goods without bills and amassed this wealth without disclosing the same to the Income-tax authority and when the raid was conducted she disclosed the unaccounted money and accepted herself for being assessed by the Income-tax Department. Therefore, in this context, the question arises whether the joint possession of the premises by the husband and wife and the unaccounted money which has been recovered from the house could be said to be in exclusive possession of the accused. There is no two opinion in the matter that the initial burden has to be discharged by the prosecution....
16. Now, in this background, when the accused has come forward with the plea that all the money which has been recovered from his house and purchase of real estate or the recovery of the gold and other deposits in the Bank, all have been owned by his wife, then in that situation how can all these recoveries of unaccounted money could be laid in his hands. The question is when the accused has provided satisfactorily explanation that all the money belonged to his wife and she has owned it and the Income-tax Department has assessed in her hand, then in that case, whether he could be charged under the Prevention of Corruption Act. It is true that when there is joint possession between the wife and husband, or father and son and if some of the members of the family are involved in amassing illegal wealth, then unless there is categorical evidence to believe, that this can be read in the hands of the husband or as the case may be, it cannot be fastened on the husband or head of family. It is true that the prosecution in the present case has tried its best to lead the evidence to show that all these moneys belonged to the accused but when the wife has fully owned the entire money and the other wealth earned by her by not showing in the Income-tax return and she has accepted the whole responsibilities, in that case, it is very difficult to hold the accused guilty of the charge. It is very difficult to segregate that how much of wealth belonged to the husband and how much belonged to the wife. The prosecution has not been able to lead evidence to establish that some of the money could be held in the hands of the accused. In case of joint possession it is very difficult when one of the persons accepted the entire responsibility. The wife of the accused has not been prosecuted and it is only the husband who has been charged being the public servant. In view of the explanation given by the husband and when it has been substantiated by the evidence of the wife, the other witnesses who have been produced on behalf of the accused coupled with the fact that the entire money has been treated in the hands of the wife and she has owned it and she has been assessed by the Income-tax Department, it will not be proper to hold the accused guilty under the Prevention of Corruption Act as his explanation appears to be plausible and justifiable. The burden is on the accused to offer plausible explanation and in the present case, he has satisfactorily explained that the whole money which has been recovered from his house does not belong to him and it belonged to his wife. Therefore, he has satisfactorily accounted for the recovery of the unaccounted money. Since the crucial question in this case was of the possession and the premises in question was jointly shared by the wife and the husband and the wife having accepted the entire recovery at her hand, it will not be proper to hold husband guilty. Therefore, in these circumstances, we are of the opinion that the view taken by the High Court appears to be justified and there are no compelling circumstances to reverse the order of acquittal....
24. In this case the assets in the hands of the accused acquired during the check period as well as prior to the check period has not been properly assessed by the Investigating Officer and not taken into account in the final report. In 2007 MLJ (Crl) 86 G. Malliga's case v. State, rep. by DSP V & AC, Cuddalore Detachment, Cuddalroe this Court has held as follows:
25. The ingredients to be proved to establish a charge under Section 13(1)(e) are discussed in various judgments of the High Courts and Supreme Courts. In M. Krishna Reddy v. State Deputy Superintendent of Police, Hyderabad , the Supreme Court has held as follows:
It is not the mere acquisition of property that constitutes an offence under Section 5(1)(e) but it is the failure to satisfactorily account for such possession that makes the possession objectionable as offending the law. To substantiate a charge under Section 5(1)(e) of the Act, the prosecution must prove the following ingredients, namely (1) the prosecution must establish that the accused is a public servant,(2) the nature and extent of the pecuniary resources or property which were found in his possession (3) it must be proved as to what were his known sources of income, i.e., known to the prosecution and (4) it must prove, quite objectively, that such resources or property found in possession of the accused were disproportionate to his known sources of income. Once the above ingredients are satisfactorily established, the offence of criminal misconduct under Section 5(1)(e) is complete, unless the accused is able to account for such resources or property. In other words, only after the prosecution has proved the required ingredients, the burden of satisfactorily accounting for the possession of such resources or property shifts to the accused.
26. In a case of this nature, where allegations are made against the public servant that he had assets disproportionate to the known sources of his income, the duty of the Investigating Officer is as follows:
(i) The Investigating Officer should assess the value of the assets of the public servant immediately prior to the check period with relevance to the tax Returns of the concerned person and also loans and other incomes available to the person and also about the liability of the person prior to the check period.
(ii) he actual income during the check period and the expenditure actually incurred by the public servant should be calculated without any inflation and on a reasonable basis.
(iii) he total income during the check period and assets prior to the check period must be taken together as the total assets of the public servant from which the actual expenditure and amounts saved either by cash or by properties must be deducted from the total amount and see whether there is much disproportion to the known sources of income of the public servant and the assets on his hand. While making the calculation regarding the value of the properties and expenditure a reasonable margin has to be given this way or that way to find out the truth. Such kind of procedure to be adopted only by an unbiased Investigating Officer. There should be no suppression of income or under estimation of the income of the accused or inflation of the expenditure or inflation of the assets of the accused.
(iv) he Investigating Officer should not suppress any of the income, by way of loan or gift while considering the income of the public servant.
(v) Similarly after finding out that there is any disproportionate wealth in the hands of the public servant beyond his known sources of income, the accused must be given an opportunity to explain the same. Failure to give an opportunity to the accused to explain the same is fatal to the prosecution.
27. ...In Vedagiri In re 1985 M.L.J (Criminal) 151, it is held as follows:
Under Section 5(1)(e) of the Act, it is not merely the possession of the property disproportionate to the known sources of income that constitute an offence, but it is the failure to satisfactorily account for such possession that makes the possession objectionable and offending the law. In other words, two phases are contemplated in the investigation, firstly the discovery of the existence of property disproportionate to the source of income openly known to the investigation machinery, and secondly the scrutiny of the explanation that the public servant might offer in disclosing other source of legal income or in any other manner. Therefore, for an offence under Section 5(1)(e) of the Act the Investigating Officer has necessarily to satisfy himself that the concerned public servant has not satisfactorily accounted for the possession of pecuniary resources or property, found by the Investigating Officer disproportionate to his own source of income. It is thus obvious that the Investigating Officer should give an opportunity to the person investigated against to explain the disproportion found by him.
28. In Gunjit Singh v. The State (1996(4) Crimes 1, the Delhi High Court has held as follows:
(i) In a case under Prevention of Corruption Act documents the original sale agreement and letter of attornment seized by prosecution during investigation - At no stage prosecution doubted or disputed genuineness of any of these documents & rather placed reliance on the same - Public Prosecutor had called upon appellant to admit or deny those documents - Documents became authentic & contents thereof became substantive evidence - Observation of trial court that genuineness of these documents was in doubt was erroneous.
(ii) Prevention of Corruption Act, 1947-Section 5(1)(e) - Prosecution for appellant, an inspecting Assistant Commissioner of Income Tax, in possession of pecuniary resources disproportionate to his known source of income - Documents produced by prosecution amply proved that appellant by entering into sale transaction of his house had received Rs. 7,50,000/- as advance - That amount if taken into consideration fully accounted for appellant's income - Trial Court was in error to conclude that appellant could not substantiate his plea on basis of documents produced by prosecution - Conviction is unsustainable.
3. The cardinal principles of criminal jurisprudence are (i) that the onus lies affirmatively on the prosecution to prove its case beyond reasonable doubt and it cannot derive any benefit from correctness or falsity of the defence version by proving its case, (ii) that in a criminal case accused must be presumed to be innocent unless proved guilty, and (iii) that the onus of the prosecution never shifts.
25. The above decisions are squarely apply to the facts of the present case as well. The Income Tax Appellate Tribunal has accepted the explanation of the accused and held that the surplus amount found by the Assessing Authority cannot be held to be unexplained or undisclosed income. As rightly contended by the learned Senior Counsel, Section 465 IPC is also not attracted as there is no forgery. Section 201 IPC also will not come into play as there is no screening of or disappearance of any material evidence by the accused. Thus when A.1 has satisfactorily explained the lawful sources, and the same has been accepted by the Income Tax Appellate Tribunal, it is not open to the prosecution to reject the same and file the charge sheet as against A.2 and A.3 as well. So also Section 120B IPC not attracted since there is no alleged conspiracy in creating the sale deed which came into existence nearly one year prior to the date of raid. In view of the well settled position of law as has been enunciated by the various courts in the decisions referred earlier and for the reasons stated above, this Court holds that the there is no concrete materials to frame charges as against the accused and therefore the accused are liable for discharge.
26. In the result, both the Criminal Revision Petitions are allowed setting aside the order passed in Crl. M.P. No. 253 and 252 of 2004 respectively, dated 31.5.2005 in C.C. No. 1 of 2004 on the file of the learned Chief Judicial Magistrate and Special judge, Ramanathapuram.