Delhi District Court
Rahul Kejriwal vs Income Tax Office on 6 December, 2023
IN THE COURT OF SH. SUSHIL ANUJ TYAGI,
ADDITIONAL SESSIONS JUDGE-04:CENTRAL,
TIS HAZARI: DELHI.
CNR NO. DLCT01-016980-2022
CR No. 709/2022
CNR NO. DLCT01-016979-2022
CR No. 710/2022
CNR NO. DLCT01-016972-2022
CR No. 711/2022
CNR NO. DLCT01-016971-2022
CR No. 712/2022
Rahul Kejriwal
R/o. E-547, Divyasree Republic of Whitefield,
EPIP Zone, Bengaluru, Karnataka, 560066,
India.
...... Revisionist
Vs.
Income Tax Office (ITO)
Through Deputy Director of Income Tax (Inv)
Unit 4(3), Room No. 122, 1st Floor,
C Block, Dr. SPM Civic Centre,
Minto Road, New Delhi-110002
(Through its Standing Counsel)
(Through its Public Prosecutor)
...... Respondent,
Huawei Technologies India Pvt. Ltd.
Regd. Office :-
SYNO. 37, 46, 45/3, 45/4 Etc.
KNO. 1540, Kundalahalli Village,
Divyasree Techno Park, Whitefield,
Bengaluru, Karnataka-560066.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 1 of 58
...... Revisionist
Vs.
Income Tax Office (ITO)
Through Deputy Director of Income Tax (Inv)
Unit 4(3), Room No. 122, 1st Floor,
C Block, Dr. SPM Civic Centre,
Minto Road, New Delhi-110002
(Through its Standing Counsel)
(Through its Public Prosecutor)
...... Respondent,
Dunming Wang
Address :
Huawei Residential Block, Apartment No. H-3-6-FL
01, SYNO 37, Near EPIP Industrial Area, Whitefield
Bengaluru, Karnataka-560066.
...... Revisionist
Vs.
Income Tax Office (ITO)
Through Deputy Director of Income Tax (Inv)
Unit 4(3), Room No. 122, 1st Floor,
C Block, Dr. SPM Civic Centre,
Minto Road, New Delhi-110002
(Through its Standing Counsel)
(Through its Public Prosecutor)
...... Respondent &
Yunfeng BI
Address :
Huawei Residential Block, Apartment No. H-3-3-FL
01, SYNO 37, Near EPIP Industrial Area, Whitefield
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 2 of 58
Bengaluru, Karnataka-560066.
...... Revisionist
Vs.
Income Tax Office (ITO)
Through Deputy Director of Income Tax (Inv)
Unit 4(3), Room No. 122, 1st Floor,
C Block, Dr. SPM Civic Centre,
Minto Road, New Delhi-110002
(Through its Standing Counsel)
(Through its Public Prosecutor)
...... Respondent
Date of institution of Revisions : 13.12.2022
Date on which orders reserved : 11.09.2023
Date on which orders pronounced : 06.12.2023
COMMON O R D E R
1. Vide this common order, this Court shall decide these four revision petitions filed by the revisionists u/s. 397 Cr. P.C. against the same impugned order dated 30.08.2022 passed by the ld. Trial Court of Sh. Anurag Thakur, ld. ACMM (Special Acts), Tis Hazari Courts, Delhi, in CC No. 1517/2022 in case titled as "Income Tax Office (ITO) Vs. M/s. Huawei Technologies India Pvt. Ltd. & Ors." whereby the revisionists have been summoned for offence u/s. 275-B r/w. 278-B of the Income Tax Act, 1961 (hereinafter referred to as the IT Act). For the sake of convenience, the revisionists i.e. (1) M/s.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 3 of 58 Huawei Technologies India Pvt. Ltd. & Ors. (2) Mr. Yunfeng Bi, (3) Mr. Dunming Wang @ Charles and (4) Rahul Kejriwal are referred to R-1 to R-4 respectively.
2. The brief facts of the cases are that on 15.02.22, a search under Section 132 of the IT Act was conducted at the office premises of R-1 i.e. at SY No. 37, 46, 45/3, 45/4 etc. at KNO 1540, Kundalahalli Village, Divyaasree Techno Park, Whitefield, Bengaluru, Karnataka-550037. On 18.02.22, a show cause notice (SCN) was issued to R-1 by Principal Director of Income Tax (Inv.)-2, New Delhi under Section 275B of the IT Act on the allegations that books of accounts are not being produced and necessary facility to inspect the same was not provided and that they are also not providing e- mails and messenger chats. On 21.02.22, R-1 filed preliminary reply to the show cause notice and thereafter on 07.03.22, R-1 filed detailed response to the show cause notice and sought the report of authorized officers of the respondent on the basis of which Section 275B IT Act has been attracted. On 28.06.22, the Principal Director of Income Tax (Inv.)-2, New Delhi gave sanction under Section 279 of the IT Act to prosecute the revisionists. On 13.07.2022, a complaint under Section 190(c)/200 Cr.P.C for the offences under section 275B read with section 278B of the IT Act was filed by the Income Tax Officer DDIT (Inv.), Unit-4(3), Delhi against the revisionists. On 30.08.22, the Ld. Trial court CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 4 of 58 issued summons against all the revisionists and hence, the present revision petition.
3. After hearing the rival contentions from both the sides and perusing the judicial record, the following three questions arises for the consideration of this Court:
A. Whether ld. Trial court has territorial jurisdiction to try the alleged offences?
B. Whether non-conduct of inquiry under section 202 Cr.P.C. on a complaint registered by a Public Servant vitiates the entire proceedings? C. Whether the impugned summoning order suffers from any infirmity, irregularity or illegality and whether it is amenable to revision?
4. Now, this Court shall deal with the aforesaid questions one by one.
Whether ld. Trial court has territorial jurisdiction to try the alleged offences?
5. The Ld. Counsel for the revisionists has flagged the question of jurisdiction as to whether the Ld. Trial Court has jurisdiction to entertain the present complaint. It is interalia contended that the Trial Court of Ld. ACMM (Special Acts), Tis Hazari Courts, Delhi does not have local jurisdiction for enquiry and trial of the present complaint. It is contended that Section 177 of the CrPC is applicable for determining the jurisdiction of the court in respect of offences under IT Act. It is further contended that CBDT Notification no. 69/2014 dated 13.11.14 is not applicable for determining the CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 5 of 58 jurisdiction of the court, but it is for internal administrative purpose of the department and it has no bearing or relevancy with respect to the jurisdiction of the court. It is further contended that Section 280A and 280B of the IT Act provides for the jurisdiction of Special Court. It is argued that the alleged offence had occurred between 15.02.22 to 18.02.22 when the search u/s 132 of the IT Act was conducted at SY No. 37, 46, 45/3, 45/4 etc. at KNO 1540, Kundalahalli Village, Divyaasree Techno Park, Whitefield, Bengaluru, Karnataka-550037 and where the request for providing adequate facility to inspect the books of accounts and documents maintained in electronic form was made and alleged denial to provide such adequate facility took place. It is further argued that at the time of conduct of search, the R-1 company was assessed by DCIT, Circle 3 (1)(1), Bengaluru, Karnataka and subsequently, the case was centralized and jurisdiction was transferred within Bengaluru to DCIT/ACIT Central Circle-2 (1), which is under the jurisdiction of CCIT (Central), Bengaluru. It is argued that the local jurisdiction of the Ld. ACMM (Special Acts), Tis Hazari Courts, Delhi is within the State of Delhi and not in Bengaluru, Karnataka. It is argued that the place occurrence was in Bengaluru, Karnataka and not in Delhi and as per section 177 CrPC the competent court of Bengaluru, Karnataka is having the jurisdiction with respect to the alleged offences. It is further argued that para 1.6 of the Chapter-III of the Prosecution Manual issued by the Income Tax (PR PP and OL) provides CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 6 of 58 for the place of prosecution as per Section 177 CrPC. It is further argued that the SOP for the prosecution in cases of TDS/TCS default also provides that the complaint is to be launched in the competent court having jurisdiction over the place where the offence is committed. The Ld. Counsel also relied upon the para 30 of the Sanction order dt. 28.06.22 which directed the complainant to file the complaint in the court of competent jurisdiction. It is further argued that the CBDT Notification no. 69/2014 dt. 13.11.14 has been issued by the Ministry of Finance under Section 120 (1) and 120 (2) of the IT Act which relates to the jurisdiction of Income Tax Authorities and not for conferring jurisdiction upon the courts. It is argued that the jurisdiction of the courts can be decided as per Section 177 CrPC and not as per the CBDT Notification no. 69/2014 dt. 13.11.14. It is argued that Section 120 (1) is applicable in respect of powers and functions of the Income Tax Authorities and not of the Magistrates. It is argued that the purpose of the notification is not to shift the jurisdiction of the court from Bengaluru, Karnataka to Delhi, but to empower the officer in Delhi to file a complaint in Bengaluru, Karnataka. The Ld. Counsel relied upon the judgement in the case titled as Anil Jain versus Principal Director General of Income Tax (Inv.) 2023 (1) TMI 1229 passed by the Hon'ble Madras High Court. It is further argued that a notification cannot ultravires the statute and it cannot supersede the Act. The Ld. Counsel relied upon judgment in case titled as Commissioner of Central Excise, CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 7 of 58 Bolpur versus Ratan Melting and Wire Industries. It is further argued that as per section 280B of the IT Act, the offence under IT Act shall be triable by the Special Court for the area or areas in which the offence has been committed. The Ld. Counsel also relied upon the order passed by the Ld. ACMM, Special Acts, Tis Hazari Courts in case titled as Income Tax Officer versus Anil Tuteja and others, Ct. case no. 1183/2022 wherein the court observed that the notification only enhances or enlarges the powers of the investigating authority as certain investigating authorities can exercise PAN India jurisdiction, but the same does not have any bearing on the jurisdiction of Criminal Courts as contained in Section 177 to 189 CrPC and that the power of an authority to investigate an offence is not co-terminus with the jurisdiction of the court to entertain a case.
6. To the contrary, Ld. Counsel for respondent has vehemently argued that the revisionists has not raised the question of jurisdiction in their revision petitions and it is only raised during the arguments. It is further argued the Ld. Trial court has jurisdiction to deal with the present complaint and it has rightly taken cognizance and issued summons against the revisionists. The Ld. Counsel referred to Section 280D of the IT Act which provides that save as otherwise provided in the Act, CrPC shall apply. Ld. Counsel argued that as per Section 119 of the IT Act, CBDT may issue orders/instructions. It is argued that if CrPC is to apply then there was no need for the CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 8 of 58 said provision providing for the need of CBDT. The Ld. Counsel referred to the CBDT Notification dt. 13.11.14 and its column no. 6 of the schedule and argued that the prosecution has PAN India jurisdiction.
7. The very first basic question of law that has arisen for the consideration of this court is whether the trial court of Ld. ACMM (Special Acts), Tis Hazari Court has jurisdiction to enquire or try the alleged offences.
8. In the present case, the revisionists have been put to trial for the offences under section 275B r/w 278B of the IT Act. The Section 275B of the IT Act reads as follows:
"Failure to comply with the provisions of clause (iib) of sub-section (1) of section 132 275B. If a person who is required to afford the authorised officer the necessary facility to inspect the books of account or other documents, as required under clause (iib) of sub-section (1) of section 132, fails to afford such facility to the authorised officer, he shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine."
9. The clause (iib) of sub-section (1) of Section 132 of the Act is reproduced below for reference:
"(iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; "
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 9 of 58
10. The offence under Section 275B of IT Act is the failure to afford the necessary facility to the authorised officer to inspect any books of account or other documents maintained in the form of electronic records. Thus, the said alleged offence stands committed with the act of failure or omission to afford the necessary facility to the authorised officer for inspection of electronic records. The search and seizure proceedings took place at the office of the revisionists which is situated in Bengaluru, Karnataka where the alleged failure took place. Therefore, the alleged offence has apparently committed at Bengaluru, Karnataka.
11. Now coming to the question of jurisdiction of court which can try the offences under IT Act, in this regard, it is important ot refer Section 280A of IT Act which provides for the designated "Special Courts" for trial of the offences punishable under IT Act. It reads as follows:
"280A. (1) The Central Government, in consultation with the Chief Justice of the High Court, may, for trial of offences punishable under this Chapter, by notification, designate one or more courts of Magistrate of the first class as Special Court for such area or areas or for such cases or class or group of cases as may be specified in the notification.
Explanation.-- In this sub-section, "High Court" means the High Court of the State in which a Magistrate of first class designated as Special Court was functioning immediately before such designation.
(2) While trying an offence under this Act, a Special Court shall also try an offence, other than an offence referred to in sub-section (1), with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 10 of 58
12. Section 280 B of the IT Act provides that the offences under IT Act shall be triable only by special courts, if so designated, for the area in which the offence has been committed.
"280B. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--
(a) the offences punishable under this Chapter shall be triable only by the Special Court, if so designated, for the area or areas or for cases or class or group of cases, as the case may be, in which the offence has been committed:
Provided that a court competent to try offences under section 292 ,--
(i) which has been designated as a Special Court under this section, shall continue to try the offences before it or offences arising under this Act after such designation;
(ii) which has not been designated as a Special Court may continue to try such offence pending before it till its disposal;
(b) a Special Court may, upon a complaint made by an authority authorised in this behalf under this Act take cognizance of the offence for which the accused is committed for trial."
13. Vide CBDT Notification dt. 21.04.22, the Ld. Trial Court of ACMM (Special Acts), Central Tis Hazari Cours, has been designated as special court for trying the offences under IT Act for whole of the NCT of Delhi. The same is reproduced as follows:
"SPECIAL COURTS DELHI Vide Notification No. 39/2022-Income Tax, Dated:
21.04.2022 CBDT designates Court in the State of Delhi as the Special Court for the purposes of section 280A(1) of Income-tax Act, 1961 and section 84 of Black Money CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 11 of 58 (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) (INVESTIGATION DIVISION-V) New Delhi, the 21st April, 2022 Notification No. 39/2022-Income Tax S.O. 1909(E).-- In exercise of the powers conferred by sub-section (1) of section 280A of the Income-tax Act, 1961 (43 of 1961) and section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015), the Central Government, in consultation with the Chief Justice of the Delhi High Court, hereby designates the Court of Additional Chief Metropolitan Magistrate (Special Acts), Central, Tis Hazari Courts, Delhi as the Special Court for the purposes of section 280A of the Income-tax Act, 1961 and section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for the entire National Capital Territory of Delhi.
[Notification No. 39/2022/F. No. 285/40/2021-IT (Inv.V)/CBDT] DEEPAK TIWARI, Commissioner of Income Tax (OSD) (INV.)"
14. From the contents of afore-mentioned notification, it is clear that only the Court of ACMM (Special Acts), Central, Tis Hazari is the designated special court for trying the offences under IT Act committed within jurisdiction of NCT of Delhi. In other words, the Court of the ld. ACMM (Special Acts), Central, Tis Hazari Courts, Delhi, does not have jurisdiction to try the offences committed outside the territory of NCT of Delhi.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 12 of 58
15. Section 280 D of the IT Act provides that CrPC shall apply the proceedings before the Special Court unless it is provided in the IT Act. Section 280D of the IT Act is reproduced below:
Application of Code of Criminal Procedure, 1973 to proceedings before Special Court.
280D. (1) Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) (including the provisions as to bails or bonds), shall apply to the proceedings before a Special Court and the person conducting the prosecution before the Special Court, shall be deemed to be a Public Prosecutor:
Provided that the Central Government may also appoint for any case or class or group of cases a Special Public Prosecutor.
(2) A person shall not be qualified to be appointed as a Public Prosecutor or a Special Public Prosecutor under this section unless he has been in practice as an advocate for not less than seven years, requiring special knowledge of law.
(3) Every person appointed as a Public Prosecutor or a Special Public Prosecutor under this section shall be deemed to be a Public Prosecutor within the meaning of clause (u) of section 2 of the Code of Criminal Procedure, 1973 (2 of 1974) and the provisions of that Code shall have effect accordingly.
16. It is pertinent to note that there are no provisions in IT Act with respect to the jurisdiction of the Courts and therefore, the provisions of CrPC are fully applicable with respect to the jurisdiction of the Special Courts.
17. Chapter XIII of the Code of Criminal Procedure, 1973 contains provisions relating to jurisdiction of criminal Courts in inquiries and trials.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 13 of 58
18. The principles laid down in Sections 177 to 184 of the CrPC regarding the jurisdiction of criminal Courts in inquiries and trials can be summarized in simple terms as follows:
(1) Every offence should ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed. This rule is found in Section 177. The expression "local jurisdiction" found in Section 177 is defined in Section 2(j) to mean "in relation to a Court or Magistrate, the local area within which the Court or Magistrate may exercise all or any of its or his powers under the Code"
(2) In case of uncertainty about the place in which, among the several local areas, an offence was committed, the Court having jurisdiction over any of such local areas may inquire into or try such an offence. (3) Where an offence is committed partly in one area and partly in another, it may be inquired into or tried by a Court having jurisdiction over any of such local areas.
(4) In the case of a continuing offence which is committed in more local areas than one, it may be inquired into or tried by a Court having jurisdiction over any of such local areas.
(5) Where an offence consists of several acts done in different local areas it may be inquired into or tried by a Court having jurisdiction over any of such local areas. (Section 178) (6) Where something is an offence by reason of the act done, as well as the consequence that ensued, then the offence may be inquired into or tried by a Court within whose local jurisdiction either the act was done or the consequence ensued. (Section 179) (7) In cases where an act is an offence, by reason of its relation to any other act which is also an offence, then the first mentioned offence may be inquired into or tried by a Court within whose local jurisdiction either of the acts was done. (Section 180) (8) In certain cases such as dacoity, dacoity with murder, escaping from custody etc., the offence may be inquired into and tried by a Court within whose local jurisdiction either the offence was committed or the accused person was found.
(9) In the case of an offence of kidnapping or abduction, it may be inquired into or tried by a Court within whose local jurisdiction the person was kidnapped or conveyed or concealed or detained.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 14 of 58 (10) The offences of theft, extortion or robbery may be inquired into or tried by a Court within whose local jurisdiction, the offence was committed or the stolen property was possessed, received or retained. (11) An offence of criminal misappropriation or criminal breach of trust may be inquired into or tried by a Court within whose local jurisdiction the offence was committed or any part of the property was received or retained or was required to be returned or accounted for by the accused person.
(12) An offence which includes the possession of stolen property, may be inquired into or tried by a Court within whose local jurisdiction the offence was committed or the stolen property was possessed by any person, having knowledge that it is stolen property. (Section 181) (13) An offence which includes cheating, if committed by means of letters or telecommunication messages, may be inquired into or tried by any Court within whose local jurisdiction such letters or messages were sent or received.
(14) An offence of cheating and dishonestly inducing delivery of the property may be inquired into or tried by a Court within whose local jurisdiction the property was delivered by the person deceived or was received by the accused person.
(15) Some offences relating to marriage such as Section 494, IPC (marrying again during the life time of husband or wife) and Section 495, IPC (committing the offence under Section 494 with concealment of former marriage) may be inquired into or tried by a Court within whose local jurisdiction the offence was committed or the offender last resided with the spouse by the first marriage. (Section 182) (16) An offence committed in the course of a journey or voyage may be inquired into or tried by a Court through or into whose local jurisdiction that person or thing passed in the course of that journey or voyage. (Section 183).
(17) Cases falling under Section 219 (three offences of the same kind committed within a space of twelve months whether in respect of the same person or not), cases falling under Section 220 (commission of more offences than one, in one series of acts committed together as to form the same transaction) and cases falling under Section 221, (where it is doubtful what offences have been committed), may be inquired into or tried by any Court competent to inquire into or try any of the offences. (Section 184).
19. Apart from Sections 177 to 184, which lay down in elaborate detail, the rules relating to jurisdiction, Chapter XIII of the CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 15 of 58 Code also contains a few other sections. Section 185 empowers the State Government to order any case or class of cases committed for trial in any district, to be tried in any Sessions division. Section 186 empowers the High Court, in case where 2 or more courts have taken cognizance of the same offence and a question as to which of them should inquire into or try the offence has arisen, to decide the district where the inquiry or trial shall take place. Section 187 speaks of the powers of the Magistrate, in case where a person within his local jurisdiction, has committed an offence outside his jurisdiction, but the same cannot be inquired into or tried within such jurisdiction. Sections 188 and 189 deal with offences committed outside India.
20. The plain reading of sections 177 to 189 CrPC would reveal that Section 177 CrPC is the general rule and rest other sections are exceptions to such general rule. Section 177 reiterates the well-established common-law rule referred to in Halsbury's Laws of England (Vol. 9, para 83) that the proper and ordinary venue for the trial of a crime is the area of jurisdiction in which, on the evidence, the facts occur and which are alleged to constitute the crime. In civil cases, normally the expression "cause of action" is used, in criminal cases as stated in Section 177 of the Code, reference is to the local jurisdiction where the offence is committed.
21. Thus, as per Section 177 CrPC, the offence is to be tried by the court having local jurisdiction over the area where the CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 16 of 58 offence is committed. It is relevant at this juncture to refer to Chapter III of Prosecution Manual issued by Directorate of Income Tax (PR PP and OL) which provides as follows:
"1.6 Place of prosecution Section 177 or CrPC provides that every offence shall ordinarily be tried by the court in whose jurisdiction the offence is committed. The provision of this section is also applicable to offences under the Direct Tax laws."
22. Admittedly, the search and seizure proceedings took place at the official premises of the accused persons where they allegedly denied to afford the necessary facility to inspect the books of accounts or other documents maintained in electronic form. Thus, the alleged offences of denial to afford necessary facility to inspect, took place at the official premises of the accused persons situated at Bengaluru, Karnataka and hence, the alleged offences took place in Bengaluru, Karnataka. According to Section 177 CrPC, the alleged offences are to be tried ordinarily at Bengaluru, Karnataka where they have taken place. No other exceptions are applicable to the facts of the present case. Therefore, the special designated court having jurisdiction over the area of Bengaluru, Karnataka would have competency and jurisdiction to try the alleged offences. The Ld. Trial Court of Ld. ACMM (Special Acts), Central, Tis Hazari Courts only have jurisdiction to try the offences committed in the territory of NCT of Delhi. The Ld. Trial Court does not have CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 17 of 58 jurisdiction to try the offence which has been committed in Bengaluru, Karnataka, outside the territory of NCT of Delhi.
23. The contention of the Ld. Counsel for the respondent that the Ld. Trial Court has jurisdiction as the CBDT Notification no. 69/2014 dated 13.11.14 provides for the jurisdiction, is misconceived. From the bare perusal of the said notification, it would reveal that it has been issued by CBDT for the jurisdiction and power for the assessing officers. The name of Section 120 of IT Act in pursuance of which the aforesaid notification is issued, would itself suggest that it is for the jurisdiction of Income Tax Authorities. It has nothing to do with the jurisdiction of the Courts. The jurisdiction of the courts are governed by the provisions of CrPC and not by the said notification. The said notification is only for administrative control and convenience of the assessing officers and therefore, it is of no relevance in deciding the jurisdiction of the Courts. It is true that the jurisdiction of Income Tax Authorities is not co-terminus with the jurisdiction of Courts.
24. It is also important to observe that in criminal cases, the objection of territorial jurisdiction has to be raised at the very first instance. In the present case, the revisionists have been summoned by the Ld. Trial Court and that summoning order has been challenged by way of these revision petitions where this question of jurisdiction has been flagged. Thus, it cannot CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 18 of 58 be said that the objection of jurisdiction is not raised at the very first instance.
25. For the foregoing reasons, this Court is of the considered opinion that the Ld. Trial Court lacked territorial jurisdiction to try the alleged offences as they were committed outside the territory of NCT of Delhi.
Whether non-conduct of inquiry under section 202 Cr.P.C. on a complaint registered by a Public Servant vitiates the entire proceedings?
26. In this regard, it is argued by the Ld. Counsel for the revisionists that the Ld. Trial court was required to follow the procedure under Section 202 CrPC, as the accused persons are residing at a place beyond the area in which the Magistrate exercises his jurisdiction and therefore, it was mandatory on the part of the Magistrate to postpone the issue of process under Section 204 CrPC pending enquiry. It is submitted that as per the memo of parties, the address of the accused persons is of Bengaluru, Karnataka and therefore directly passing summoning orders without following the due procedure laid down in Section 202 CrPC vitiates the proceedings. The Ld. Counsel for the revisionists relied upon several judgements to stress upon the fact that enquiry under Section 202 CrPC is mandatory, if the accused persons reside beyond the jurisdiction of the Magistrate, which are as follows:-
(1) S.C. Mathur vs. Electronik Lab, 2010 (2) Bom.C.R. (CRI) 385;
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 19 of 58 (2) Shivjee Singh vs. Electronik Lab, 2010 (2) BOM,C.R. (CRI) 385; (3) Smt. Neeta Sinha vs. Nagendra Tiwary and Ors.,2010 (7) SCC 578;
(4) K.T. Joseph vs. State of Kerla and Anr., 2009 (15) SCC 109; (5) Rajeev Sawhney vs. State Bank of Mauritius Ltd. and Ors., MANU/MH/0662/2011, 2011 (6) MHLJ 401, Cri. Rev. Appl. 441/2008;
(6) Savesa Sidhu vs. Harleen Sidhu and Anr., MANU/PH/3941/2010, Equivalent Citation 2011 (2) RCR (CRL) 442;
(7) Anil Jindal and Ors. vs. State and Anr., Crl. M.C. 1427/2008, Order date-05.05.2008;
(8) Udai Shankar Awasthi vs. State of U.P. & Anr., 2013 (2) SCC 435;
(9) Harjinder Kaur Sandhu vs. Surinder Singh Sandhu, Crl. Misc.
No. 36058/2009, dated 15.07.13;
(10) Smt. Meera Devi W/o. Lal Chand vs. The State of Rajasthan and Anr, 1999 (1) WLN 191;
(11) Manharibhai Muljibhai Kakadia and Anr. vs. Shaileshbhai Mohanbhai Patel and Ors., 2012 (4) JCC 3105; (12) National Bank of Oman vs. Barakara Abdul Aziz and Anr., SLP (CRL) NO. 9098/12, dated 03.12.2012;
(13) National Bank of Oman vs. Barakara Abdul Aziz and Anr., 2013 (2) SCC 488;
(14) Dr. Jasminder Kaur and Anr. vs. Raj Karan Singh Boparai, Misc. No. 20260/2008, dated 03.10.2013.; (15) Abhijit Pawar vs. Hemat Madhukar Nianr Mbalkar and Anr., 2016 (2) SCLAE 788;
(16) Amar Ujala Publications Ltd. and Ors. vs. State of NCT of Delhi and Anr., Crl. M.C. No. 1096/17, dated 17.03.17; (17) Statement of Objects and Reasons 202 Cr. P.C. (18) Aroon Poore vs. Jayakumar Hiremath, 2017 (7) SCC 767; (19) M/s. Whirlpool of India Ltd. vs. M/s. Krishna Electronics, Case No. 1844/2005 dated 01.05.2017;
(20) Asma w/o. Moinoddin @ Shaker Quazi and Ors. vs. The State of Maharashtra and Anr., Crl. Writ Petition No. 1404/16, dated 28.09.2017;
(21) Sunil Bharti Mittal vs. State of Uttar Pradesh and Anr., Crl.
M.C. No.1162/2008;
(22) Sandeep Aggarwal vs. Radhika Ghai Aggarwal, ADJ Patiala House Court, dated 02.01.2018;
(23) Krishna Murari Lal vs. IFCI Factors Ltd., 2013 (1) MWN (CR.) DCC 189 (DEL);
(24) S.S. Binu vs. State of West Bengal, 2018 SCC OnLine Cal 1741; (25) Abhishek Agrawalla vs. Boortmalt NV & Anr., 2011 (122) DRJ 421;
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 20 of 58 (26) K.S. Joseph vs. Philips Carbon Black Ltd. and Anr., 2016 (11) SCC 105;
(27) Birla Corporation Ltd. vs. Adventz Investments and Holding Ltd.
and Ors., Crl. Appeal No. 878/19;
(28) Deepak Bajpai vs. State (Govt. of NCT of Delhi), MANU/DE/3343/2017;
(29) Grievances Redressal Officer vs. M/s. V.V. Minerals Pvt. Ltd., Crl. OP. (MD) No. 9067/16;
(30) Expeditious trial of cases u/s. 138 of NI Act, Suo Moto Writ Petition (Crl.) 02/2020 & (31) K.S. Joseph vs. Philips vs. Carbon Black Ltd. and Anr., 2016 (11) SCC 105.
27. The Ld. Counsel also relied upon the judgement in Lion Dates Impex Private Limited vs The State of Karnataka (Criminal Petition number 100786/2021) in support of his contention that in respect of the complaint filed by the public servant enquiry under Section 202 CrPC is mandatory.
28. To the contrary, the Ld. Counsel for the respondent emphatically argued that as per Section 202 CrPC, the enquiry before issuance of process is not mandatory where the complainant is a government servant who has been placed on a different pedestal by the legislature. To support his arguments, the ld Counsel relied upon the judgements in Cheminova India Pvt Ltd and another vs State of Punjab and another, Shivjee Singh vs Nagendra Tiwary and Ors (Crl Appeal no. 1158/2010). It is argued that the judgement in Lion Dates case relied upon by the revisionist pertains to the Honourable High Court of Karnataka and the judgement of the Honourable Apex Court in Cheminova case has not been discussed or dealt with in the said judgement and the same is CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 21 of 58 sub-silentio on the said aspect and is therefore inapplicable to the present case.
29. To consider this issue as to whether the Ld. Magistrate could have straight away issued process against the accused persons who were housed admittedly beyond the jurisdiction of the Ld. Magistrate and taken cognizance of the offence, it is germane to refer to Section 200 and 202 of the Cr.P.C. which reads as follows:
"Section 200. Examination of complainant. A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate:
Provided that, when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses-
(a) if a public servant acting or- purporting to act in the discharge of his official duties or a Court has made the complaint; or
(b) if the Magistrate makes over the case for inquiry or trial to another Magistrate under section 192:
Provided further that if the Magistrate makes over the case to another Magistrate under section 192 after examining the complainant and the witnesses, the latter Magistrate need not re-examine them."
"202. Postponement of issue of process.
(1) Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance or which has been made over to him under section 192, may, if he thinks fit and shall in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction, postpone the issue of process against the accused, and either inquire into the case himself or direct CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 22 of 58 an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding;
Provided that no such direction for investigation shall be made,--
(a) where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session; or
(b) where the complaint has not been made by a Court, unless the complainant and the witnesses present (if any) have been examined on oath under section 200. (2) In an inquiry under sub- section (1), the Magistrate may, if he thinks fit, take evidence of witnesses on oath:
Provided that if it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session, he shall call upon the complainant to produce all his witnesses and examine them on oath. (3) If an investigation under sub- section (1) is made by a person not being a police officer, he shall have for that investigation all the powers conferred by this Code on an officer- in- charge of a police station except the power to arrest without warrant."
30. Section 202 Cr.P.C. mandates that any Magistrate prior to issuance of process shall hold an inquiry in the case where the accused resides beyond the jurisdiction of the said Magistrate. In such an eventuality, the Court should adapt what could be conveniently called as the "halt and proceed" approach before issuing process. This is a guarantee assured to all the potential accused in private complaints residing outside the territorial jurisdiction of the summoning Court that before they are called upon to make an arduous trip to the Court to answer the charges.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 23 of 58
31. The accused persons in the present case resides beyond the jurisdiction of the Ld. Trial Court, but the other important aspect that needs deliberation is that the complainant is a public servant. The complaint is registered by a public servant and recording of his sworn statement is exempted in terms of Section 200(1) of the Cr.P.C. Whether the duty cast upon the Court under Section 202 of the Cr.P.C. is also taken away, when a public servant registers a complaint, is what is required to be considered.
32. The Hon'ble High Court of Punjab and Haryana in the case of Cheminova India Limited and Others v. State of Punjab and Another held that inquiry under Section 202 Cr.P.C. would be mandatory even if the complaint is registered by a public servant. But, held that recording of sworn statement of the complainant is exempted if the complainant is a public servant. The said duty cast upon the learned Magistrate was exempted, but it was further held that an inquiry under Section 202 if the accused are residing beyond the jurisdiction of the Magistrate, is mandatory.
33. But there was a subsequent development, that the said judgment in Cheminova India Limited (supra) was tossed before the Hon'ble Apex Court. The Hon'ble Apex Court reversed the judgment rendered by the Hon'ble Punjab and Haryana High Court by holding that if the complaint is preferred by a public servant both obligations - one of recording of sworn statement of the complainant and the other CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 24 of 58 an inquiry being conducted by postponing the process under Section 202 Cr.P.C. would stand exempted. The Hon'ble Apex Court in Criminal Appeal No.750 of 2021 decided on 04-08-2021 held as follows:
"Similarly, with regard to the procedure contemplated under Section 202 of the Code of Criminal Procedure, the same is to be viewed, keeping in mind that the complainant is a public servant who has filed the complaint in discharge of his official duty. The legislature in its wisdom has itself placed the public servant in a different pedestal, as would be evident from a perusal of proviso to Section 200 of the Code of Criminal Procedure. Object of holding an inquiry/investigation before taking cognizance, in cases where accused resides outside the territorial jurisdiction of such Magistrate, is to ensure that innocents are not harassed unnecessarily. By virtue of proviso to Section 200 of Code of Criminal Procedure, the Magistrate, while taking cognizance, need not record statement of such public servant, who has filed the complaint in discharge of his official duty. Further, by virtue of Section 293 of the Code of Criminal Procedure, report of the Government Scientific Expert is, per se, admissible in evidence. The Code of Criminal Procedure itself provides for exemption from examination of such witnesses, when the complaint is filled by a public servant. In the present case, 2nd respondent/public servant, in exercise of powers under provisions of the Insecticides Act, 1968, has filed complaint, enclosing several documents including reports of the Government Laboratories, it is always open for the Magistrate to issue process on such complaint which is supported by documents. In any event, we do not find any merit in the submissions of the learned counsel that proceedings are to be quashed only on the ground that, the Magistrate has taken cognizance without conducting inquiry and ordering investigation. In the absence of showing any prejudice caused to the appellant at this stage, the same is no ground to quash the proceedings in exercise of power under Section 482 of the Code of Criminal Procedure."
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 25 of 58
34. The Hon'ble Apex Court while reversing the judgment of the Hon'ble Single Judge of the High Court of Punjab and Haryana held that the procedure contemplated under Section 202 of the Cr.P.C. is to be viewed keeping in mind that the complainant is a public servant, who has filed the complaint in the discharge of his official duty and the Legislature in its wisdom has itself placed the public servant on a different pedestal. The Hon'ble Apex Court further held that the object of holding an inquiry/ investigation before taking cognizance in cases where accused resides outside the territorial jurisdiction of the Magistrate is to ensure that innocents are not harassed unnecessarily. Since the Cr.P.C. itself provides for exemption, if the complaint is filed by a public servant, the rigour of Section 202 of the Cr.P.C. is also diluted.
35. Fortified by the obsevations made by the Hon'ble Apex Court in the afore-mentioned precedent, this Court is of the considered view that non-conduct of an inquiry by the Ld. ACMM under Section 202 of the Cr.P.C. has not vitiated the proceedings.
Whether the impugned summoning order suffers from any infirmity, irregularity or illegality and whether it is amenable to revision?
36. The Ld. Counsel for the revisionists argued that no offence was committed under Section 275B of the IT Act as its ingredients were not fulfilled. It is argued that the said section is attracted, if there is denial of "necessary facility" "to CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 26 of 58 inspect" the books of accounts or other documents as required under Section 132 (1)(iib) of the IT Act, which in turn provides for the obligation to allow "facility to inspect"
the books or other documents "maintained in electronic form" only and not in respect of physical books of accounts or documents. It is argued that necessary facility to inspect even the physical records was not denied and same was duly provided. It is argued that the requirement under Section 275B read with Section 132 (1)(iib) is only to provide necessary facility to inspect the books of accounts or other documents maintained in the form of electronic record, and as such if the access to data stored in electronic form is provided, then there is no question of any contravention of Section 275B read with Section 132 (1)(iib) of the IT Act because what is required under the law is "to afford the necessary facility to inspect". It is argued that a person cannot be held guilty the moment such facility to inspect is afforded. It is argued that ERP accounting system was comprehensive accounting system in which entire books of accounts and documents were prepared as required for the purpose of compliance of all the laws and the laptop containing entire ERP accounting system was handed over along with the user IDs and passwords.
37. It is further argued that criminal law has to be strictly interpreted and the Courts cannot add anything which is not mentioned in the law and in fact, the breach of conduct or CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 27 of 58 immoral act is not offence, if the same is not an offence as per law. The Ld. Counsel relied upon the judgments in R. Sai Bharathi vs J. Jayalalitha and Raj Kumar Khurana vs State of NCT of Delhi and Anr, 2009 III AD CR (SC) 305 to support his arguments.
38. It is further argued that the ingredients of offence under Section 275B of the IT Act were not established for taking cognizance in the present case. It is argued that none of the accused persons was found to be in possession or control of books of accounts and other documents, maintained in electronic form, necessary facility to inspect of which was denied. It is argued that entire books of accounts of the company were maintained in ERP accounting system, access of which was duly provided by physically handing over the laptops containing ERP accounting system along with the user IDs and passwords during search and this fact is also recorded in para 2.2 of "Response to show cause notice for prosecution issued under section 275B of the Act" dated 07.03.2022 where it is explained that complete access to company's ERP accounting system was duly provided through laptops of Mr Rahul Kejriwal, Mr Vinay KC, Ms Swapna Shankar and Ms Rekha K J. It is argued that though the company and the individual accused persons were under obligation to allow inspection of the electronic records which they have duly allowed, but they have also handed over the dump of books of accounts in multiple pen drives. It is argued CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 28 of 58 that the offence under Section 275B of the IT Act is not applicable, if the person has duly allowed the access to electronic records (ERP dump data was additionally provided). It is argued that the laptops, mobile phones, and other electronic devices of the accused persons were taken over by the respondent, which also contains emails and messenger chat. It is argued that statement of Rahul Kejriwal explained the entire process and he also provided the entire general ledger, dump and trail balance in multiple pen drives which the complainant has not enclosed with the complaint. It is argued that each of the accused persons had duly informed that books of accounts are maintained in electronic form and the servers are maintained in China and that day to day accounting support is provided by a Shared Services accounting team based at Kuala Lumpur, Malaysia and the Malaysian team has both read and write access to the data, whereas the local Bangalore team has read only access to the books of accounts and no changes can be made at local level i.e. at Bangalore office level and that for monthly compliances or any other financial activities, the local team reach out to the Malaysian team by way of an E-flow and only the requested data is provided by the Malaysian team by way of an E-flow to the local team and that even for annual audit process, the local team gets the data from the Malaysian team only. It is argued that by reading the statement of all the accused persons, it can be seen that none of the accused persons deflected or skirted to comply with Section 132 (1) CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 29 of 58 (iib) of the IT Act. It is argued that there is no delay in affording access to the books of accounts and other documents in the electronic form because time was sought to prepare a report in requisite format from the very same data of which necessary facility to inspect was already provided, and there was no delay in providing necessary facility to inspect books of accounts or other documents in electronic form, rather time was sought to provide additional reports.
39. It is argued that the impugned summoning order does not specify the offence for which the accused persons were summoned. It is argued that the offence under section 275B is not attracted for:-
(a) Non-compliance of clause (i) to (v) of sub-section (1) of Section 132, rather it is for non-compliance under clause (iib) of sub-section (1) of Section 132.
(b) Non-providing of physical documents, rather it is for not affording necessary facility to inspect the books of accounts or documents maintained in electronic form.
(c) Giving vague answers to some questions.
(d) Answers given by accused persons were incongruous to each other.
40. It is argued that summoning order was issued after noting acts and omissions which do not constitute the ingredients of Section 275B of the IT Act. The Ld. Counsel relied upon the judgment in Deepak Gaba & ors vs State of UP and Anr [Crl Appeal no 2328 of 2022] decided by the Hon'ble Apex Court wherein it was held that conscious application of mind is required by the Magistrate as the summoning order has grave CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 30 of 58 consequences of setting criminal proceedings into motion and only upon being satisfied that there is sufficient ground for summoning the accused to stand the trial, the summons should be issued. It is further argued that the Ld. Trial court should have specified in the summoning orders about the documents which were asked by the complainant and were not provided by the accused persons and whether the said accused persons were having possession or control of those documents and whether those documents were maintained in electronic form or not. It is further argued that Ld. Trial Court should have specified the specific questions, the answers to which were vague and which of the accused persons has given such vague answers. It is argued that Ld. Trial court should have specified the other questions, the answers to which were given by accused persons, were incongruous to each other and which accused persons has given the said answers.
41. It is further argued that full facility to inspect the books of accounts and documents as required under Section 132 (1) (iib) of the IT Act was duly provided by the accused company and the accused persons. It is further argued that books of accounts are maintained electronically in ERP system and other supporting documents i.e. manually signed PO, invoices, agreements etc. were maintained partly in physical form and partly in the form of computerized records. It is further argued that the complainant has stressed that CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 31 of 58 prescribed books of accounts were not made available to the authorized officer, however no books of accounts have been prescribed under Section 44AA of the IT Act, but still the company has maintained all the books of accounts. It is argued that it was clearly stated in the Form 3CD that no books of accounts are prescribed under Section 44AA of the IT Act and that the requirement under Section 132 (1)(iib) of the IT Act was only to provide necessary facility to inspect those books of accounts and documents which will enable the assessing officer to compute income of the accused company. It is argued that access to the entire accounting record was provided which was also officially sealed by the search team. It is argued that ERP accounting system is comprehensive and customized accounting system which contains all data required for preparation of balance sheet, profit and loss account and filing of income tax returns and that the laptops of employees (Mr Rahul Kejriwal, Mr Vinay K C, Ms Swapna Shankar and Ms Rekha KJ) which has the ERP accounting system access was duly handed over to the respondent at the time of search and also the access to the entire accounting record room on the third floor of the accused company was provided which was also officially sealed by the search team. It is further argued that there is no scope of modification or manipulation in ERP accounting system. It is argued that the respondent has not been able to prove that there was any sort of ill will or malafide intention at the end of accused to derail the investigation by referring to CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 32 of 58 any document which was maintained in electronic form and was in possession and control of the accused persons facility to inspect of which was not provided and on the contrary, the accused persons have submitted the entire information as required by the respondent and have also given free access to the accounting record room. It is further argued that there is no allegation in the complaint that there is manipulation of data due to the alleged delay in providing access to books of account, in fact, once the ERP access is provided, and ERP dump is handed over, it is technically impossible to sanitise or manipulate books of account. It is argued that no document/books of accounts are alleged to be in the possession or control of any of the accused persons which was maintained in electronic form and not provided to the authorized officer. It is argued that the possession and control were with the accountants in Malaysia and the server were maintained in China and none of the accused persons were having possession and control.
42. It is further argued that no offence was committed by any person either directly under Section 275B or under deeming Section 278B, both complaint and impugned order are silent whether each person is charged for the offence under Section 275B or under Section 275B read with section 278B, and that there are common allegations against each accused persons, including the company and therefore, the impugned order is en-masse summoning order which is liable to be struck of.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 33 of 58
43. It is further argued that Section 275B is not applicable to the alleged non-compliance on the part of accused persons. It is argued that there are separate sections for non-providing of information as were mentioned in the statement of all individual accused persons i.e. "Question ... You are being made aware of the certain sections of Indian Penal Code and Income Tax Act, 1961:
177 of IPC, pertaining to furnishing false information. 179 of IPC, pertaining to refusing to answer a question. 180 of IPC, pertaining to refusal to sign aside statement. 181 of IPC, pertaining to making any false statement on oath. 277 of Income Tax Act, 1961 pertaining to false statements 277 A of Income Tax Act, 1961 pertaining to enabling others to evade tax."
44. It is further argued that Section 271A of the IT Act provides for the penalty, in case if the books of accounts are not maintained and Section 275B is not applicable if the books of accounts are not maintained. It is further argued that Section 275B is also not attracted for giving vague answers.
45. It is further argued that as per Prosecution Manual of the Directorate of Income Tax, show cause notice was required to be given, however the complaint has been filed and the cognizance has been taken in respect of the allegations for which no show cause notice was given. It is argued that the complaint could not have been filed without giving show cause notice and without seeing the reply of accused persons.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 34 of 58 It is therefore submitted that the impugned summoning order is illegal and liable to be set aside.
46. The ld Counsel for the revisionists relied upon a number of judgments in support of his arguments which are as follows:
(1) Pepsi Food Ltd. and Anr. vs. Special Judicial Magistrate and Ors. (1998) 5 SCC 749;
(2) N Sampath Ganesh vs. Union of India & Anr., Writ Petition (Crl) No. 4145/2019 and 4144/2019 order dated 14.08.2019; (3) Ram Lal and Ors. vs. Parvinder Singh and Ors., 1986 (10) DRJ 188;
(4) Mehmood Ul Rehman vs. Khazir Mohammad Tunda and Ors., 2015 (2) JCC 1337;
(5) GHCL Employees Stock Option Trust vs. India Infoline Ltd., (2013) 4 SCC 505;
(6) G. Sagar Suri vs. State of U.P., 2000 (2) SCC 636; (7) Smt. Krishna and Anr. vs. State, Crl. M.C. No. 493/2009; (8) Raj Kishore Jha vs. State of Bihar, 2003 (11) SCC 519; (9) M/s. Shree Mahavir Carbon Ltd. vs. Prakash Jalan (Financer) & Anr., (13) SCALE 303;
(10) S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhall and Anr., 2005 III AD (CR.) S.C. 593;
(11) Raminder Kaur Narula & Anr. vs. Prem Chemicals P. Ltd., Criminal Misc. Case 2690/2004;
(12) Pooja Ravinder Devudasani vs. State of Maharashtra & Anr., 2014 (16) SCC 1;
(13) Sudeep Jain vs. M/s. Ece Industries, 2013 (201) DLT 461; (14) N.K. Wahi vs. Shekhar & Ors. (SC), 2007 (1) JCC (NI) 112; (15) Rajkumar Khurana vs. State (NCT of Delhi) and Anr., 2009 (6) SCC 72;
(16) R. Sai Bharathi vs. J. Jayalalitha, 2004 CRI. L.J. 286; (17) Euro School Education Trust vs. Divisional Fee Regulatory Committee, (2017) 6 MahLJ 343;
(18) SS Earth Movers vs. The Joint Director Directorate of Enforcement Bhubhneswar, Appellate Tribunal Prevention of Money Laundering Act at New Delhi, Date of Decision 18.10.17, FPAPMLA-1196/BBS/2016;
(19) CJ. Paul and Ors. vs. District Collector and Ors., 2009 (14) SCC 564;
(20) Nalinakhy Abysack vs. Shyam Sunder Haldar and Ors., AIR 1953 SC 148;
(21) Opto Circuit India Ltd. vs. Axis Bank & Ors., Crl. Appeal No. 102/21;
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 35 of 58 (22) Understanding the 'Lakshman Rekha' of Interpretation, Article; (23) Ms. Eera Through Dr. Manjula Krippendorf vs. State (Govt. of NCT of Delhi) & Anr, Crl. Appeal No. 12171219/17;
(24) Bhagwant Singh vs. Commissioner of Police, (1985) 2 SCC 537;
(25) Neeraj Verma vs. State, Delhi High Court, Crl. M.C. No. 3770/2005, dated 13.08.2007.
(26) Sunil Wadhwani vs. J.P. Sharma and Ors., 26 (1984) Delhi Law Times;
(27) Rajender Kumar Sitarampande vs. Uttam, 1999 SCC (Cri) 393; (28) Om Kumar Dhankar vs. State of Haryana, (2012) 11 SCC 252; (29) Sunil Bharti Mittal vs. CBI, (2015) 4 SCC 109.
47. To the contrary, the ld. Counsel for the respondent strongly argued that the Ld. Trial court has passed well-reasoned summoning order after due deliberation and detailing the gravamen of accusation thereunder. It is argued that Ld. Trial court has duly dealt with the statements as annexed in the complaint, from which it is apparent that Accused no. 2 to 4 while holding key positions in Accused no. 1 company attempted to confuse the authorities in order to deny the access to the books of accounts and other documents pertaining to Accused no. 1 company. It is argued that revisionists have preferred the present petition and are simply misusing the administration of criminal justice system to stifle legitimate prosecution. It is further argued that the revisionists have deliberately sought to cherry pick relevant portions of the complaint, certain annexures in order to tweak the purport and scope of the same. It is argued that the complaint is ought to be seen as a whole along with the annexures, and upon reading the said complaint and its CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 36 of 58 annexures, the Ld. Trial court had rightly issued the summons against the accused persons for the prima-facie offence under Section 275B/278B of the IT Act. It is further argued that Ld. Trial court has passed speaking order, duly discussing as to how the accused persons during the course of the statements have attempted to frustrate the search proceedings which was being carried out by the IT department.
48. It is further argued that in the search action, the company along with the other accused persons, holding key and eminent positions with respect to the company have willfully and deliberately attempted to deny access to the authorized officer in carrying out such action between 15th Feb 2022 to 18th Feb 2022. It is argued that during the course of search, the authorized officer was denied access to the books of accounts of Accused no. 1 which were required to be delved upon the true financial position of the accused company and the accused persons in deep cahoots with each other have practically frustrated such action. It is argued that as per their own audited ITR for assessment year 2020-2021, in form 3CD, the address of the searched premises of the company was furnished wherein their books of accounts were supposed to have been maintained.
49. It is further argued that the revisionists are attempting to misdirect the Hon'ble Court and it has been clearly mentioned in the show cause notice that accused persons were in possession of the books of accounts of the Accused no. 1 CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 37 of 58 company and they were holding key positions in the said organization and they failed to produce their books of accounts, thereby contravening the provisions of the IT Act. The Ld. Counsel referred to Question no. 6, 11, 13, 18 and 19 of the statement of accused Yunfeng Bi @ Isaac and Question no. 7, 21, 24 and 34 in the statement of accused Dunming Wang @ Charles and argued that they are the CEO and CFO holding high position and relevant departments, but they have deliberately skirted of their responsibility to provide the books of account of the company. It is argued that the CFO holding the charge of financial department shifted the onus upon Ms. Swapna Shankar with respect to the maintenance of the books of accounts of the company. It is further submitted that accused Yunfeng Bi @ Isaac in Question no. 19 stated that the process of accounting the forex gain or loss should be in the knowledge of CFO Dunming Wang @ Charles, however Dunming Wang @ Charles in his own statement feigned deliberate ignorance and stated that he does not have any knowledge with respect to the treatment of forex gain/loss. It is argued that it is appalling that Dunming Wang @ Charles (CFO) holding the charge of financial department and reporting directly to the CEO was not aware as to how the treatment of forex gain or loss is carried out by the company.
50. The Ld. Counsel also referred to Question no. 5, 6, 7 and 8 in the statement of Ms. Swapna Shankar and argued that she has casually moulded the statement of CFO and came up with CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 38 of 58 fresh inference of her own that by the books of account, the CFO might have tried to say that the documents pertaining to invoices.
51. The Ld. Counsel also referred to Question no. 6, 7, 8, 9, 12 and 13 of the statement of accused Rahul Kejriwal and argued that the said statement corroborates the fact that CFO deliberately shifted his burden whilst he approve the entries in the books of account on daily basis. It is further argued that form 3CA/CD filed by the accused company, nowhere mentioned that the books of account are maintained in Malaysia and the same itself violates the provisions of Income Tax Act.
52. It is further argued that the accused persons in cahoots with each other did not provide the basic digitally maintained data with respect to their financial books during the search operation along with the real-time access to the books of accounts. It is argued that the accused persons are attempting to hold a mini trial by way of the present revision and dislodge the accusation made against them without availing the legal remedies before the court of first instance, where they have the right to make submissions at the time of framing of notice under Section 251 Cr.P.C.
53. It is further argued that the revisionists have hair-splitted the definition of Section 132 (1)(iib) of the IT Act as per their understanding and whims, which dehors the plain and simple construction of the statutory provision.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 39 of 58
54. It is further argued that it is nowhere the scheme of IT Act that a company cannot be prosecuted for the offences requiring mens-rea. It is argued that the company runs through the board of directors whose role is to appoint the functioning officers to carry out the day-to-day functions of the company and the accused persons arrayed in the complaint from their very designations are the officers appointed to carry out the business activities of the company and were holding eminent position thereof, but they have failed to provide the real-time access to the said books of accounts of the company in cahoots with each other, thereby jeopardising the search action by the complainant department.
55. It is further argued that the seizure of electronic devices of the accused persons by the department does not absolve them of the offences under Section 275B of the IT Act, as nothing surfacing out of the said electronic documents has been relied upon by the complainant department in their complaint. It is further argued that simply handing over the physical pen drives/laptops etc. does not render giving access to the facility and non-furnishing of required information by the accused is evident from their statements. It is argued that the revisionists are attempting to lead the statement in piece-meal manner only presenting the portions that seem to support their case. It is further argued that merely providing accounting entries through the ERP system and seeking additional time to provide basis/rationale of the said entries ought not to be CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 40 of 58 construed as providing due access to the authorized officer for inspection of books of accounts. It is further argued that the accused persons were simply attempting to buy time in order to fabricate explanations to adjust their books of accounts before providing the same to the authorized officer. It is argued that revisionists are presenting facts in a half-baked manner and brushing aside the purport of the complaint preferred before the Hon'ble Trial court. It is argued that statements were made by the key persons of the company to delay the search proceedings and with such delay, they provided a possibility of tampering with the financials of the company in order to paint an image as if statutory compliances were being taken care of. It is argued that the accused persons have used dilatory tactics to hamper the commencement of trial and their contradictory submissions speaks volumes as to how the accused persons in active connivance with each other attempted to frustrate the search proceedings. It is prayed that the petition is devoid of merits and deserves to be dismissed.
56. In the instant case, the revisionists have been summoned u/s 275 B r/w 278B of IT Act vide impugned summoning order dated 30.08.2022 of the Ld. Trial Court.
57. The Section 275B of the IT Act reads as follows:
"Failure to comply with the provisions of clause (iib) of sub-section (1) of section 132 275B. If a person who is required to afford the authorised officer the necessary facility to inspect the books of CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 41 of 58 account or other documents, as required under clause (iib) of sub-section (1) of section 132, fails to afford such facility to the authorised officer, he shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine."
58. The clause (iib) of sub-section (1) of Section 132 of the Act is reproduced below for reference:
"(iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; "
59. From the holistic reading of the aforesaid sections of the IT Act, it is clear that the offence under Section 275B is made out if the following ingredients are satisfied:
-Any person who is found to be in possession or control of any books of account or other documents;
-Maintained in electronic form
-Fails to afford necessary facility
-To inspect such books of account or other documents.
60. Since the offence alleged against the revisionists is restricted to Section 275B r/w 278 B of the IT Act only, it is important to note that it pertains to books of accounts and other documents maintained in electronic form and not physical documents. The revisionists were duty-bound to afford necessary facility for inspection of such electronic records. It is also important to understand that the offences attracted only with respect to not affording necessary facility for inspection and not for not providing any information or documents.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 42 of 58
61. To understand the Section 275B of the IT Act better, it is relevant to refer to the Prosecution Manual 2009 issued by the Directorate of Income Tax (PR PP & OL) which in Chapter III-Procedure for launching prosecution, at para 2.2 provides as follows:
"Failure to comply with the provisions of clause (iib) of sub-section (1) of section 132 (section 275B):
(a) A person, who during a search operation is found to be in control/possession of books/documents in electronic media, fails to afford the authorized officer/DDIT/ADIT necessary facilities to inspect the same as per provisions of section 132 (1)(iib), would render himself liable for prosecution, as such failure amounts to commission of an offence under this section.
(b) If the authorized officer/DDIT/ADIT is unable to open or have access to files containing books of accounts or documents maintained on electronic media such as computers and the person incharge of the premises does not make available such computer codes or passwords, this act will constitute an offence u/s. 275B [Explanatory note 55 to Finance Act 2002]. The authorized officers are advised to ask the passwords/secret codes specifically in the statement recorded on oath and the denial or deliberate non-furnishing of such passwords/secret codes shall be brought out in the statement recorded by the authorized officer. The evidence regarding the presence of Panchas, and their statements as witnesses, recorded contemporaneously, would be important to establish the commission of offence under this section.
(c) Whenever any violation of provisions of section 132(1)(iib) of the Act is noticed, by the DDIT/ADIT/Authorized officer, the processing DDIT/ADIT himself shall process the case for prosecution. If it is noticed by the Assessing Officer then the assessing officer concerned shall process the case for prosecution. After processing the case, he shall forward the proposal to CIT, having jurisdiction over the accused for prior sanction. For a successful prosecution under this provision, the processing ADIT/DDIT/Assessing officer would have to bring evidence on record to prove CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 43 of 58 deliberate failure of the accused to afford necessary facilities.
(d) It may be mentioned that if a person who is in control/possession of books of account/documents in electronic media, destroys the same to prevent their access by the authorized officer, it will constitute an offence u/s.
204 of IPC."
62. It is clear from plain reading of Section 275B and the afore-
mentioned stipulation of Prosecution Manual that a person who during search operation is found to be in control/possession of books/documents in electronic media fails to afford the authorized officer necessary facilities to inspect, would render himself liable for the prosecution. In other words, if the authorized officer is unable to open or have access to the files containing books of account or documents maintained in electronic media and the person-in- charge of the premises does not make available such computer codes or passwords, the offence u/s 275B will be constituted. The authorized officer has to ask for the passwords/secret codes specifically in the statement recorded on oath and the denial or deliberate non-furnishing for such passwords/secret codes shall be brought in the recorded statement. The evidence of presence of Panchas as witness and their statement recorded contemporaneously, would be important to establish the commission of offence under this section.
63. Adverting to the facts of the present case, on 15.02.2022 a search u/s 132 of the IT Act was conducted by the respondent CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 44 of 58 at the premises of the accused no.1 company and a show cause notice (SCN) dated 18.02.2022 was given to Accused no.1 company that the books of accounts are not being produced and necessary facility to inspect the same has not been provided. It is stated in the SCN dated 18.02.2022 that approval to free access to server is being denied and the persons are also not providing emails and messenger chats. It is stated that the search and seizure commenced on 15.02.22 and the authorized officer has been demanding unrestricted access to books of accounts since then for all the relevant financial years, however, till the time of issue of SCN, the said facilitation has been deliberately denied which is in contravention of Section 275B of the IT Act.
64. In response to such SCN, vide reply dated 21.02.22 the Accused no. 1 company submitted the necessary information including books of accounts for the FY 2014-15 to FY 2020- 21 including balance sheet, profit and loss accounts, notes to accounts, trail balance, detailed ledgers etc., which were made available to the authorized officers to conduct necessary inspection and were also annexed with the reply. It was submitted that the entire dump of the financial statements including detailed ledgers for each year were also made available in soft copy during the course of search proceedings. It was submitted that with respect to emails and messenger chats, the access to the same was available for all the respective employees as part of laptops seized under the CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 45 of 58 search and seizure proceedings and further, at the direction of the authorized officer, all the concerned employees were called during the course of search proceedings and their laptops and mobile phones were cloned/copied by the department officers. With the reply, the Accused no. 1 company filed the annexure containing a list of documents/records including books of accounts of the company provided to the authorized officer under the temporarily conducted search and seizure proceedings, as follows:
S. Submitted Remark
No.
1. Form 3CEB for the FY 17-18, FY 18-19, FY 19-20 Hard & FY 2020-21 Copy/Soft Copy
2. TP Study FY 2019-20 Soft Copy
3. Details of all bank accounts alongwith balances as Hard Copy on 15.02.2022
4. All the intercompany agreements Hard Copy/Soft Copy
5. General Ledger Dump & Trial Balance for the FY Soft Copy 2014-15 till date
6. Foreign payments and receipts general ledger Hard reconciliation with the bank statement Copy/Soft Copy
7. Foreign payables and receivables balance for FY Hard 2018-19, 2019-20 & 2020-21. Copy/Soft Copy
8. Foreign Earnings general ledger for the year FY Soft Copy CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 46 of 58 2018-19, 2019-20 & 2020-2021
9. Latest organization Chart of the company Hard Copy/Soft Copy
10. Salary Data for FY 2020-21 Soft Copy
11. Employee Details (Name, ID, Roles, Soft Copy Payroll/Contract/Expats)
12. List of PHD's currently employed by HTIPL Soft Copy
13. List of employees currently employed studied from Soft Copy IIT and IISC
14. List of experts joined in last five years Soft Copy
15. Salary range for last three years Soft Copy
16. Performance achievement of TOP employees Soft Copy approx. 75 employees
17. Last five year appraisal ratings for all employees Soft Copy 18 Patent Data since 2016 Soft Copy
19. Employee details involved in the patents filing Soft Copy
65. Again by detailed reply dated 07.03.22, the Accused no.1 company further replied to the show cause notice, in which at para 2.2, it was specifically mentioned that laptops belonging to Mr Rahul Kejriwal, Mr Vinay K C, Ms Swapna Shankar and Ms Rekha KJ which have complete access to company's accounting ERP system was provided to the authorized officer and the backup of the said laptop was also taken after inspection.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 47 of 58
66. Thereafter, vide sanction order u/s 279 of the IT Act dated 28.06.22, sanction was accorded to file the complaint u/s 275 B r/w 278B of the IT Act against the revisionists on the premise that the company and its officers who are the accused persons i.e CEO, CFO and Sr Accounts manager have denied the authorized officers adequate facility to inspect the books of accounts and other documents. The sanction relied upon the certain questions put to the accused persons and their replies.
67. From the questions and answers, it is apparent that the accused persons stated that that the books of accounts are maintained on ERP accounting system.
68. It is not the case of the respondent that the accused persons did not provide the access to the ERP accounting system or that they have not provided the user IDs, passwords or secret codes of the ERP or electronic documents/books of accounts. In the reply dated 07.03.22, the Accused no.1 company stated that under the search and seizure proceedings, the authorized officer has seized various documents, laptops, hard disk, mobile phone, etc. in possession of the employees of HTIPL along with various electronic and physical records located at the business premises of the HTIPL and that numerous requests seeking voluminous financial data were made to the company officials which have been duly complied with and to the best of their information, a list of information/documents were furnished to the authorized officer during the course of CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 48 of 58 search which was also annexed with the reply. It was further stated that the company had duly provided books of accounts, general, ledger, and other information in its possession in electronic form to the authorized officer, including access to the company laptops belonging to Mr Rahul Kejriwal, Mr Vinay KC, Ms Swapna Shankar and Ms Rekha K J, which has complete access to the companies accounting ERP system and the entire backup of the laptop was taken after inspection. The seizure of aforesaid electronic devices/laptops of the employees have not been controverted by the respondent. It is also not controverted that user IDs and passwords of the electronic devices were duly provided to the search team. The companies accounting system was being maintained in the ERP system for which the server was maintained in China and the same was accessible through the laptops of the employees with for which the user IDs and passwords were provided to the search team and the laptops were seized as well as cloned by the search team. The complaint is silent regarding which books of account or other document maintained in electronic form which were in possession and control of the accused persons were not provided, and for which the prosecution is launched. The complaint is also silent as to how the accused persons have not afforded the necessary facility to inspect the electronic records, when the electronic gadgets of the employees along with the user IDs and passwords to the ERP accounting system was duly provided to the search team. It is nowhere documented in the CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 49 of 58 statements of accused persons that authorized officer is unable to open or have access to the files containing books of account or documents maintained in electronic media and the person In-charge of the premises does not make available such computer codes or passwords. It is also relevant to note that the sanction order u/s. 279 IT Act, dated 28.06.2022 records in para 16 regarding the reply filed by the revisionists in response to the SCN but it remains silent and does not appreciate about the seizure of the mobiles/electronic devices or laptops of the employees having access to the ERP system and which were also cloned by the search team, as was mentioned in the reply dated 07.03.2022.
69. Now coming to the impugned summoning order dated 30.08.2022, the ld. ACMM on the basis of the statements of Accused No. 2 to 4 observed that they deliberately chose to give vague answers to some questions and regarding other questions, the answers given by them were incongruous to each other and it seems that they tried to confuse the authorized officer in order to deny access to the books of account and other documents and also unreasonably long time was sought by the accused persons for furnishing data and information which ought to have been readily available with Accused No. 1. In this regard, it is important to understand that the offence alleged against the accused persons is only of not affording necessary facility for inspection of electronic books of accounts or other documents which were in their CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 50 of 58 possession or control. The prosecution is not for giving false information or for not providing the books of accounts or any other information or for not maintaining the books of accounts. There are different sections for the other offences. Section 175 IPC is attracted when a person legally bound to produce or deliver up any document or electronic record intentionally omits to do so. Section 176 IPC is attracted when a person intentionally omits to give any notice or furnish information which he was legally bound to give or furnish on any subject to any public servant. Section 177 IPC is attracted when a person refuses to answer any question when bound by oath to do so. Section 181 IPC is attracted when a person intentionally makes a false statement under oath and section 182 IPC is attracted when a person gives false information to a public servant. Section 271A of the IT Act is attracted for non-maintenance of books of accounts.
70. No other offence except section 275B of IT Act is invoked in the present case by the respondent against the accused persons. Giving of vague or incongruous answers to the questions does not fall within the ambit of this section except when they are related to the passwords or secret codes of the electronic devices. It is not the case of the prosecution that the passwords or secret codes of electronic devices are not provided. Bare perusal of the impugned summoning order would reveal that the ld Trial court has not mentioned which CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 51 of 58 accused has given which vague answers and what answers given by the accused persons were incongruous to each other.
71. In these revision petitions, this Court has to ponder upon whether the ld. ACMM has applied mind before issuing the summons to the revisionists. The law regarding the issuance of summons is well settled. Section 204 Cr.P.C. provides that the Magistrate finding sufficient grounds for proceeding against the accused may issue the summons. It is axiomatic that at the stage of cognizance and summoning, the Learned MM must apply its mind to the facts of the case to prima facie form an opinion whether there are sufficient grounds for summoning the accused for the alleged offences. It is also settled law that the summoning order may not be a detailed one but it must speak of the mind of the Court to adjudge that there is application of mind and sufficient grounds exists for summoning. The summons cannot be issued in mechanical manner or as a matter of course. The summoning order must indicate that the application of mind and satisfaction that facts alleged constitute any offence and prima facie sufficient grounds exists for summoning. In absence of any such indication, the rights of accused may be seriously affected. The test that needs to be satisfied at the time of issuance of summons is that there must exist "sufficient grounds for proceeding" against the accused. The sufficient grounds are for forming prima facie view that the accused has committed CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 52 of 58 the crime and not sufficient grounds that he may be convicted for the crime.
72. In Mehmood Ul Rehman v. Khazir Mohammad Tunda, (2015) 12 SCC 420, the Hon'ble Apex Court observed as follows:
"22. The steps taken by the Magistrate under Section 190(1)(a) CrPC followed by Section 204 CrPC should reflect that the Magistrate has applied his mind to the facts and the statements and he is satisfied that there is ground for proceeding further in the matter by asking the person against whom the violation of law is alleged, to appear before the court. The satisfaction on the ground for proceeding would mean that the facts alleged in the complaint would constitute an offence, and when considered along with the statements recorded, would, prima facie, make the accused answerable before the court. No doubt, no formal order or a speaking order is required to be passed at that stage. The Code of Criminal Procedure requires speaking order to be passed under Section 203 CrPC when the complaint is dismissed and that too the reasons need to be stated only briefly. In other words, the Magistrate is not to act as a post office in taking cognizance of each and every complaint filed before him and issue process as a matter of course. There must be sufficient indication in the order passed by the Magistrate that he is satisfied that the allegations in the complaint constitute an offence and when considered along with the statements recorded and the result of inquiry or report of investigation under Section 202 CrPC, if any, the accused is answerable before the criminal court, there is ground for proceeding against the accused under Section 204 CrPC, by issuing process for appearance. The application of mind is best demonstrated by disclosure of mind on the satisfaction. If there is no such indication in a case where the Magistrate proceeds under Sections 190/204 CrPC, the High Court under Section 482 CrPC is bound to invoke its inherent power in order to prevent abuse of the power of the criminal court. To be called to appear before the criminal court as an accused is serious matter affecting one's dignity, self-
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 53 of 58 respect and image in society. Hence, the process of criminal court shall not be made a weapon of harassment.
23. Having gone through the order passed by the Magistrate, we are satisfied that there is no indication on the application of mind by the learned Magistrate in taking cognizance and issuing process to the appellants. The contention that the application of mind has to be inferred cannot be appreciated. The further contention that without application of mind, the process will not be issued cannot also be appreciated. Though no formal or speaking or reasoned orders are required at the stage of Sections 190/204 CrPC, there must be sufficient indication on the application of mind by the Magistrate to the facts constituting commission of an offence and the statements recorded under Section 200 CrPC so as to proceed against the offender. No doubt, the High Court is right in holding that the veracity of the allegations is a question of evidence. The question is not about veracity of the allegations, but whether the respondents are answerable at all before the criminal court. There is no indication in that regard in the order passed by the learned Magistrate."
73. The jurisprudence around the caution needed while exercising magisterial power regarding issuance of summons to an accused by magistrate is well settled. This aspect was dealt with by the Hon'ble Supreme Court in the case of Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 wherein in para 28 of its judgement, the Hon'ble Apex Court held that :
"Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. it is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 54 of 58 be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."
74. The Hon'ble Apex Court in Lalankumar Singh & Ors.
Versus State of Maharashtra, 2022 Livelaw (SC) 833, delineated the law relating to summoning in the following words:
"28. The order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not. The formation of such an opinion is required to be stated in the order itself. The order is liable to be set aside if no reasons are given therein while coming to the conclusion that there is a prima facie case against the accused. No doubt, that the order need not contain detailed reasons. A reference in this respect could be made to the judgment of this Court in the case of Sunil Bharti Mittal vs. Central Bureau of Investigation (2015) 4 SCC 609, which reads thus:
"51. On the other hand, Section 204 of the Code deals with the issue of process, if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding. This section relates to commencement of a criminal proceeding. If the Magistrate taking cognizance of a case (it may be the Magistrate receiving the complaint or to whom it has been transferred under Section 192), upon a consideration of the materials before him (i.e. the complaint, examination of the complainant and his witnesses, if present, or report of inquiry, if any), thinks that there is a prima facie case for proceeding in respect of an offence, he shall issue process against the accused.
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 55 of 58
52. A wide discretion has been given as to grant or refusal of process and it must be judicially exercised. A person ought not to be dragged into court merely because a complaint has been filed. If a prima facie case has been made out, the Magistrate ought to issue process and it cannot be refused merely because he thinks that it is unlikely to result in a conviction.
53. However, the words "sufficient ground for proceeding" appearing in Section 204 are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against the accused, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect."
29. A similar view has been taken by this Court in the case of Ashoke Mal Bafna (supra)."
75. In the case of S.N. Mukherjee v. Union of India, (1990) 4 SCC 594, the Hon'ble Apex Court stated that the recording of reasons is important for the following reasons (Page 612, para
35) "(i) guarantee considerations by the authority;
(ii) introduce clarity in the decisions and
(iii) minimise chances of arbitrariness in decision- making".
76. There is no doubt that in criminal matters, summoning of the accused is a serious matter and should not be done in mechanical manner. Though no detailed order is required at the stage of summoning, but the order must reflect application of mind by the Magistrate and that he is prima facie satisfied that sufficient grounds exists for proceeding against the CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 56 of 58 accused. The mentioning of reasons in the summoning order guarantees consideration, clarity and reduce the chances of arbitrariness. Recording of reasons are meant to serve the wider principle of justice and that justice must not only be done, it must also appear to be done as well. Reasons are heart and soul of the judicial order and in the absence thereof, such orders become vulnerable. Also, if the reasons given turns out to be exfacie incorrect, the order would be bad in law.
77. In the present case, perusal of the impugned summing order reveals that the Ld. ACMM got swayed with the version of the respondent. The summoning order was passed on the basis that accused persons gave vague or incongruous answers but that by itself does not satisfy the requirements of the offence under Section 275B of the IT Act. Further, the impugned order does not speak about the specific vague or incongruous answers on the basis of which the accused persons are summoned. It is settled law that the Court cannot act as the mouthpiece of the prosecution but has to apply its mind independently to the facts of the case to decide whether the ingredients of the alleged sections are prima facie made out and whether there are sufficient grounds for proceeding against the accused persons. The reasons furnished by the Ld Trial Court for summoning the accused persons are insufficient and does not satisfy the ingredients of section CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 57 of 58 275B/278B of the IT Act. Thus, the impugned summoning order is liable to be set aside.
CONCLUSION
78. Resultantly, for the foregoing reasons, the revision petitions are allowed and the impugned summoning order dated 30.08.2022 of the ld. Trial Court is hereby set aside.
79. Copy of this order be sent to the ld. Trial Court alongwith the TCR for information and necessary action.
80. Revision file be consigned to Record Room.
SUSHIL Digitally signed
Announced in the open ANUJ
by SUSHIL ANUJ
TYAGI
Court on 06th December, 2023 Date: 2023.12.06
TYAGI 15:53:14 +0530
(SUSHIL ANUJ TYAGI)
ASJ-04/CENTRAL/DELHI
06.12.2023(VR)
CR Nos. 709/22, 710/22, 711/22, 712/2022 Page No. 58 of 58