Delhi District Court
Ito vs Harish Chadda on 23 February, 2012
IN THE COURT OF SH. GORAKH NATH PANDEY
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts)CENTRAL
TIS HAZARI COURTS, DELHI
ITO vs Harish Chadda
U/s 276C(2), 276C, 276D r.w.s.279 of Income Tax Act
JUDGEMENT CC No.45/4/09
(a)Serial no. of the case : 02401R5180452004
(b)Date of commission of offence : AY 199596 & 199697
(c)Name of complainant : Ms. Lalitha Santhanam
Income Tax Officer,
Income Tax Ward 33(I)
New Delhi
(d)Name, parentage, residence: Harish Chadda
3C/30 New Rohtak Road,
New Delhi
(e)Offence complained of/ proved : U/s 276C(2) of Income Tax Act
(f)Plea of accused : Pleaded not guilty
(g)Final order : Convicted
(h)Date of such order : 23.02.12
Date of Institution of complaint: 31.03.04
Date of Reservation of Judgment : 17.02.12
Date of Pronouncement of Judgment : 23.02.12
Brief statement of the reasons for the decision:
1.The complainant Lalitha Santhanam, Income Tax Officer, filed the present complaint against the accused Harish Chadda pertaining to assessment year 199596 and 199697 for the offence punishable u/s 276C(2), 276D read with section 279 of the Income Tax Act, 1961 (hereinafter called as the Act). As per complaint the accused is/was indulged in the business of export. The allegations made in the complaint are that on 30.10.95 a survey under section 133A was carried out and on 31.10.95 accused filed audit report accompanied ITO vs Harish Chadda 1-9 with profit and loss account and balance sheet but no return was filed till 26.03.99. From the said record it was found that accused had earned total profit of Rs.4,05,81,265/ in the financial year 199596. As per sales shown by the accused his export turn over was Rs.3,44,92,085/. In the assessment year 199596 the accused shown profit from licenses and interest and FDRs but he did not file any report from Chartered Account in from No.10CCAC under Rule 18BBA(3) to claim the exemption under section 80HHC. In the balance sheet accused shown loans and advances amounting to Rs.6,21,70,763/. On 26.03.99 a notice u/s 148 of the Act was issued for verification of the aforesaid advances. In compliance of the said notice accused filed return on 20.02.01 declaring net income of Rs.27,51,590/. Notice u/s 143(2)/142(1) of the Act have been issued to the accused. On 07.03.01 an assessment order was passed for assessment year 199596.
It is further alleged that after regular assessment accused did not file the income tax return after 199697 nor deposited the tax in willful manner to evade the payment of tax, penalty or interest. A show cause notice for prosecution u/s 276CC/276D and 276C was served upon the accused fixing the date of hearing on 14.12.2003 but no compliance was made. Hence, present complaint for the offence punishable u/s 276C(2) read with section 278(e) and 279 of the Income Tax Act is filed against the accused.
2. After precharge evidence, charge was framed against the accused u/s 276C(2) read with section 278E of the Act to which he pleaded not guilty and claimed trial.
ITO vs Harish Chadda 2-9
3. In order to substantiate her allegations, complainant Ms. Lalitha Santhanam, the then Income Tax Officer examined herself as PW1, Sh. Shyam Singh, the then DCIT as PW2, and Sh. Kishan Lal, the then DCIT as PW3.
4. In her evidence PW1 reiterated the facts of the complaint and proved on record her complaint as Ex. PW1/1, sanction/authorization letter to file the present complaint as Ex. PW1/2 and copy of return of income filed by the accused in response to notice u/s 148 as Ex. PW1/4. PW1 further deposed that assessment was completed at the declared income and a total tax demand including interest was created amounting to Rs.38,13,620/ and a letter was written in this regard to Tax Recovery Officer vide Ex. PW1/5.
5. PW2 Sh. Shyam Singh, the then DCIT deposed that he issued notice u/s 148 dated 26.03.99 and proved on record the said notice as Ex.PW2/1.
6. PW3 Sh. Kishan Lal, the then DCIT deposed that he issued notice u/s 143(2) of the Act and proved on record the said notice as Ex. PW3/1. He also proved on record letter dated 10.10.2000 issued to accused as Ex. PW3/3, summons u/s 131 dated 13.10.2000 as Ex. PW3/4, show cause notice as Ex. PW3/5, another notice u/s 133 of the Act as Ex. PW3/6, notice u/s 140A(3) of the Act as PW3/7, assessment order as Ex. PW3/8, notice for penalty u/s 271A, 271(1)
(b) and 271(1)(c) for the assessment year 199697 as Ex. PW3/9 to Ex. PW3/12.
As no other witness was examined by the complainant, the PE was closed.
ITO vs Harish Chadda 3-9
7. Statement of accused was recorded u/s 313 read with section 281 Cr.P.C. whereby the accused admitted that he was an assessee of income tax for the assessment year 199596, though, he denied having received the notice u/s 148 of the Act, issued by PW2, vide Ex. PW2/1. The accused denied the receipt of notice Ex. PW2/1 further stating that he has filed the return for the assessment year 199596 vide Ex. PW1/4 which is duly signed and verified by him. However, in regard to notice Ex. PW3/1 u/s 143(2) of the Act, notice u/s 142(1) Ex.PW3/3, summons Ex. PW3/4, show cause notice Ex. PW3/5, notice u/s 131 Ex. PW3/6 and notice u/s 140A Ex. PW3/7, accused did not specifically deny these notices and gave evasive answer that he does not remember. Accused also admitted that he declared aforesaid taxable income simply stating that he has not willfully evaded the payment of taxes due and already furnished the reply to the department admitting the assessment order Ex. PW3/8. The accused contended that it is a false complaint.
8. In defence evidence accused examined himself as DW1. In his defence evidence accused stated that his cobrother Subhash Chand Kathuria taken away his money including his all capitals. He also admitted that departmental tax demands were against him and not his aforesaid cobrother. He also admitted that the tax demand is outstanding for the relevant assessment years as on date also.
9. I have heard the arguments on behalf of both the parties and gone through the relevant records. I have also considered the relevant provisions of the Income ITO vs Harish Chadda 4-9 Tax Act, 1961 and written submissions filed on behalf of accused as well as complainant. Learned counsel for complainant also relied upon the case law '1978 Tax L.R. 2132' in support of his claim and contentions.
10.This complaint is filed by the complainant to punish the accused u/s 276C(2) read with section 278(e) and 279 of the Act and the charge was framed against the accused vide order dated 27.01.10 u/s 276C(2) read with section 278(E) of the Act. The relevant sections are reproduced herein below: Section 276C(2). If a person willfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any provisions of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend three years and shall, in the discretion of the court, also be liable to fine. Explanation. For the purposes of this section, a willful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person i. has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or ii. makes or causes to be made any false entry or statement in such books of account or other documents; or iii. willfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or iv. causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof.] [Section 278E. Presumption as to culpable mental state. (1) In any prosecution for any offence under this Act which requires culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.
Explanation. In this subsection, "culpable mental state" includes ITO vs Harish Chadda 5-9 intention, motive or knowledge of a fact, or belief in, or reason to believe, a fact.
(2) For the purpose of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.]
11.In this case most of the material contentions/allegations in the complaint against the accused in one way or the other is either admitted or not rebutted. The tax demand as alleged by the complainant is also not disputed by the accused. It appears that main/only defence of the accused regarding willful evasion of the tax is that the assets of the accused was taken by one Mr. SC Kathuria, his cobrother. As the accused has no assets, he is unable to pay any tax and therefore, there is no willful evasion. It is further argued by the learned counsel for the accused that this fact of inability of the accused to pay any tax liability was also brought to the notice of the complainant department but same was not considered and the complainant has not taken any steps to recover the due amount against the accused from Mr. Kathuria. Therefore, default in making of the payment of tax and liability is one way or the other proved in view of the testimony of the witnesses as well as materials available on record. The only question which remained to be examined as to whether the default in making the payment of liability by the accused was willful or not. Admittedly the accused has not paid the due amount till today and accused admitted that demand was against him and not against his cobrother Mr. Kathuria. The accused further admitted that the payment of the demand is his responsibility.
The accused has relied on the letter dated 04.10.01 written to the ITO vs Harish Chadda 6-9 Income Tax Officer mentioning that his entire capital has been taken by his brotherinlaw Mr. Kathuria and requested to recover from him against the outstanding demands for the assessment year 199596 and 199697 which is the sole defence of the accused in this case. The accused has further contended that no step was taken by the complainant department in this respect and no inquiry was made from Mr. Kathuria. This contentions of the accused on the face of it, appears to be false and contrary to the record. Even the documents filed by the complainant in this regard are relied by the accused during the course of final arguments. Auditors' report is dated 25.10.96 which also contains the name of debtors as on 31.03.96 and it is relevant to note that the name of such Kathuria or anybody does not appear in the same as defended by the accused. Further Mr. Kathuria was also examined by the complainant department and notice was also issued to him to verify the factum as stated by the accused, who also produced the relevant records for verification to the complainant department and thereafter no liability was found. The notice was also issued to one M/s Anita International in this respect. There is one document also on record which shows the details of creditors and debtors on 18.10.01 and accused himself has shown no sundry debtors as 18.10.01 in view of the documents on record. From the bare perusal of these documents it appears that accused has concocted a false story to avoid the liability to pay tax. No one is supposed to keep mum if his assets are taken away by any other person. Admittedly no action is taken by the accused against Mr. Kathuria till today as per law even to settle the interse dispute between the parties. It is very easy to avoid liability by merely saying that my ITO vs Harish Chadda 7-9 assets are taken away by X or Y and it cannot be expected that the authority shall run after X or Y leaving the liable person. As mentioned, the testimony of prosecution witnesses remained unrebutted and uncontroverted during their cross examination and the accused has even not made any complaint before any authority till today against socalled cheating by Mr. Kathuria nor filed any petition before the competent court to show that he is either insolvent or having no assets. I failed to find as to how the accused is alive when he has no sustenance as argued. In my considered view it is no answer that as I have no means I will not pay the tax/dues and the same be recovered from third person on the basis of bald statement.
12.Learned defence counsel taken one another stand that the Assessing Officer had issued the summons u/s 131 of the Act to Mr. Kathuria to produce the relevant records but he did not comply with the said summons and tried to wriggle out of the provisions of section 226(3) and 131 of the Act and manipulated the entries in his account books in respect of the entire capital investment of the accused which he taken away. This court does not find any force in these pleas. From the record it is clear that Mr. Kathuria was also examined by the complainant department and notice was also issued to him to verify the factum as stated by the accused, who also produced the relevant records for verification to the complainant department and thereafter no liability was found. So far as any manipulation/interpolation or violation of the provisions of section 131 of the Act by Mr. Kathuria, is concerned, accused did not lead any evidence or brought any thing on record to show that the records ITO vs Harish Chadda 8-9 produced before the complainant department by Mr. Kathura, were prepared by Mr. Kathuria in violation of the provisions of section 226(3)/131 of the Act. Further in view of the facts and circumstances of the case the provisions of section 226(3) of the Act do not apply as the present complaint is made in view of the provisions of section 276C(2) of the Act. Section 278E stated above is itself sufficient to show culpable mental state of the accused and presumption in this respect.
13.Keeping in view the facts and circumstances of the case and aforesaid discussions, this court is of the considered opinion that the prosecution has been successful in proving their case against the accused beyond reasonable doubt. Thus, it is held that accused willfully evaded the payment of taxes due and accordingly he is held guilty and convicted for the offence punishable u/s 276C(2) of the Income Tax Act.
(GORAKH NATH PANDEY) ACMM(Spl. Acts) CENTRAL TIS HAZARI COURTS DELHI Announced in open court on 23.02.12 ITO vs Harish Chadda 9-9