Bangalore District Court
It vs M/S Mydeals on 24 December, 2024
BEFORE THE SPECIAL COURT FOR ECONOMIC
OFFENCES: AT BENGALURU
Dated this the 24th day of December 2024
:Present:
Sri. VISHWANATH C GOWDAR., B.A.L., LL.M.,
Presiding Officer,
Special Court for Economic Offences,
Bengaluru
C.C. No.197/2017
Complainant: The Income Tax Department
By its Income Tax Officer,
Ward-4(1)(4), Room No.220,
2nd Floor, BMTC Building,
80 Feet Road, 6th Block,
Koramangala,
Bengaluru - 560 095.
(Reptd. By Spl. Pubic Prosecutor)
V/s.
Accused : 1. M/s. Mydeals, 247 E-Commerce Pvt. Ltd.,
No.01, 2nd Floor, 11th Main Road,
Millers Road, Vasanth Nagar,
Bengaluru - 560 052.
Represented by its Directors
2. Sri. Someneni Ravikumar,
3. Sri. Someneni Venugapal Rao,
Directors,
M/s. Mydeals, 247 E-Commerce Pvt. Ltd.,
No.01, 2nd Floor, 11th Main Road,
Millers Road, Vasanth Nagar,
Bengaluru - 560 052.
(Reptd. By Sri. MM., Advocate)
2 C.C.No.197/2017
:JUDGMENT:
The instant case emanates from the complaint made by the complainant against the accused persons for having committed the offence punishable U/s.276C(2) of the Income Tax Act, 1961 (hereinafter referred to as 'the IT Act').
2. The complainant's case in nutshell is as under:
The accused No.1 is the Private Limited Company, engaged in the business of e-commerce trading in agricultural produce. The accused Nos.2 & 3 are claimed to be the Directors of the accused No.1 company and they are responsible for day to day conduct and business of the accused No.1 company, so also, they have verified the return of income of the said company with respect to the Assessment Year 2013-14. The said accused No.1 company being an assessee, filed its ITR pertaining to the Assessment Year 2013- 14 on 21.08.2013 declaring the Nil income. The said ITR disclosed the profit after adjustment of depreciation to the tune of Rs.31,92,139/- was set off by claiming depreciation towards business loss to the tune of Rs.31,92,139/-.
3. Pursuant to the said returns, the intimation dated 26.09.2014 U/s.143(1) of the IT Act was passed by the CPC on 26.09.2014 on Book Profit, wherein, the demand of Rs.7,48,453/- (Tax: Rs.6,08,262/- + Interest Rs.1,40,191/-) was raised, by resorting to provisions of MAT (Minimum Alternate Tax). Despite the demand being raised, the assessee 3 C.C.No.197/2017 did not comply the intimation. The tax demand being raised on the basis of Self Assessment Tax U/s.140A of the IT Act, the taxes ought to have been paid before filing of ITR. Thereafter, again the demand vide letter dated 24.01.2017 was sent to accused No.1 assessee through e-mail and telephonic messages. In response to the e-mails accused No.1 assessee vide e-mail dated 30.01.2017 give a reply stating that since it was first year when MAT introduced, there was communication gaps from the accounting firm side and claiming the same to be unintentional requested permission for settlement through installment facility. The said claim of introduction of MAT for the first time was held to be misleading and unacceptable.
4. It has been categorically alleged that, the accused No.1 assessee represented by its Directors i.e., accused Nos.2 & 3 have deliberately and willfully with an intention to evade the payment of taxes, though had a knowledge regarding the said default have not paid the taxes, soon after the demand being raised and several reminders being sent.
5. It is the case of the complainant that, the Principal Commissioner of Income Tax, Bengaluru-4 accorded the sanction to prosecute the accused persons U/s.276C(2) of the IT Act for the default with respect to the Assessment Year 2013-14. Hence, this complaint.
6. This court on having received the complaint, the sworn statement of the complainant was dispensed as the said complainant was a public servant in view of the Section 200(a) 4 C.C.No.197/2017 of the Cr.P.C. Thereafter, this court took cognizance of an offence punishable U/s.276C(2) of the IT Act.
7. In pursuance of the summons issued to the accused persons, on their appearance, they were enlarged on bail. During the course of the EBC, this court issued summons to complainant and got examined him as PW-1 and got marked five documents as Ex.P-1 to Ex.P-5. Thereafter, the accused persons made an IA for discharge. After hearing both the parties on IA as well as on HBC by disposing the said IA, the matter was set down for framing of charge. Charge was framed, in so far as accused Nos.1 to 3 for having committed offences punishable U/s.276C(2) r/w Section 278B of the IT Act, the accused Nos.2 & 3 pleaded not guilty and claimed to be tried.
8. The learned Spl. PP for complainant submitted as to the EBC may be treated as examination-in-chief of the complainant. The same was considered and EBC was treated as evidence in order to substantiate the claim putforth in the complaint. The complainant/PW-1 was fully cross-examined by the accused persons. The complainant side of evidence came to be closed.
9. The accused Nos.2 & 3 denied the incriminating materials appearing against them as well as on behalf of accused No.1 company in the testimony of the CW-1/PW-1 while recording their statement U/s.313 of Cr.P.C. The accused No.3 got examined himself as DW-1 on behalf of 5 C.C.No.197/2017 accused No.1 company and accused No.2 and got closed his side of evidence.
10. Heard the arguments canvassed by the learned Spl. PP and learned counsel for accused persons. The Spl. PP filed written arguments in support of his oral arguments along with authorities.
11. On considering the complaint, evidence on record and arguments addressed by either parties, the following points would arise for the determination of this court viz.:
1. Whether the complainant proves beyond all reasonable doubts that, accused No.1 company willfully and deliberately with an intention to evade payment of taxes, failed to pay the legitimate taxes by submitting Nil income as per ITR for the Assessment Year 2013-14 by claiming Rs.31,92,139/- as a set off of business loss after adjustment of depreciation despite demand being raised U/s.143(1) of the IT Act for sum of Rs.7,48,453/-
by resorting to MAT and thereby accused Nos.2 & 3 being the Directors of accused No.1 company for the relevant period along with accused No.1 company have committed the offence punishable U/s.276C(2) r/w 278B of IT Act, 1961?
2. What order?
12. The findings of this court on the above said points are as under:
Point No.1: In the Affirmative
Point No.2: As per final order
for the following:
REASONS
13. Point No.1: The complainant in order to establish the guilt of the accused persons, got himself examined as PW-1 and got marked in all five documents as Ex.P-1 to Ex.P-5.
6 C.C.No.197/201714. The complainant in his examination-in-chief has reiterated and deposed as to the accused No.1 company being the Private Limited, the accused Nos.2 & 3 being the Directors of accused No.1 company during the relevant period so also, accused Nos.2 & 3 being responsible for the business and conduct of the accused No.1/assessee. It has been also accounted regarding the accused No.1 being assessed to Income Tax, filed ITR on 21.08.2013 for the Assessment Year 2013-14 declaring the Nil income by claiming the set off of business loss to the tune of Rs.31,92,139/- by adjusting the aforesaid entire amount towards depreciation. It has been also deposed regarding the demand being raised by issuance of intimation U/s.143(1) of the Act on 26.09.2014 on Book Profit by the CPC by resorting to provisions of MAT (Minimum Alternate Tax) and being called upon to pay a sum of Rs.7,48,453/-, which was inclusive of interest of Rs.1,40,191/-. It is categorically deposed as to the reply by accused No.1/assessee by way of e-mail with respect to the introduction of MAT for the first time and claims regarding the financial difficulties, requesting to provide installments are untenable. It is further deposed as to the accused No.1 company without valid and cogent reasons, with an deliberate and willful intention to evade payment of taxes has not paid the demanded tax and thereby committed the offence punishable U/s.276C(2) r/w Section 278(B) of the IT Act. Thereafter, the Principal Commissioner of Income Tax having passed the sanction order dated 28.02.2017 authorizing him to lodge the complaint in the case on hand.
7 C.C.No.197/201715. In support of the said oral testimony in all five documents have been got marked as Ex.P-1 to Ex.P-5. Ex.P-1 is the original sanction dated 28.02.2017, wherein the complainant/PW-1 has been authorized to launch prosecution against the accused persons for the offence punishable U/s.276C(2) of the IT Act. Ex.P-2 is the attested copy of return of income submitted by the accused No.1 company, duly verified by the accused No.3 pertaining to the assessment year 2013-14. Ex.P-3 is the attested copy of the intimation dated 26.09.2014 by the complainant U/s.143(1) of the IT Act, wherein the demand is shown as Rs.7,48,453/-, inclusive of interest thereon. Ex.P-4 is the certified true copies of speed post envelops addressed to the Prl. Officer of the accused No.1 company. The e-mail correspondences between complainant Department and accused No.1 assessee are collectively marked as Ex.P-5.
16. PW-1 has been subjected to cross-examination by the counsel for the accused persons, wherein, it has been deposed as to the complainant Department need not examine the books of accounts pertaining to accused No.1 assessee vide proceeding U/s.143(1) of the IT Act. It is also admitted as to the procedure will be followed by the CPC while issuing the intimation U/s.143(1) of the IT Act. The witness has pleaded ignorance regarding the accused No.1 company having stopped its operation since 2014, pursuant to intimation being not given to the complainant Department. The suggestions as to the accused No.1 company has very much disclosed the true income and there is no any evasion of taxes by the 8 C.C.No.197/2017 accused No.1 assessee has been categorically denied by the witness.
17. The accused No.3 in support of the contentions of accused No.1/assessee, accused No.2 as well as himself, got examined himself as DW-1 and deposed as to he was the Managing Director and his brother accused No.2 was the Director of accused No.1 company between 2012 and 2017. The accused No.1 company having closed its operation since 2017 on account of facing financial difficulties from 2013. He has also deposed as to the ITR as per Ex.P-2 pertaining to AY 2013-14 was submitted through Chartered Accountant and same is very much as per the financial transactions of the accused No.1 company disclosing the true and correct financial status. He has categorically claimed that there was no any communications between himself and complainant Department as alleged in Ex.P-5 i.e., e-mail correspondences and also claimed that he has not received any notice by the complainant Department before the lodging of the case on hand. Further, claiming himself and other accused persons being innocent of the alleged offences has sought for acquittal of the case on hand.
18. The aforesaid accused No.3/DW-1 has been subjected to cross-examination by the learned Spl. PP representing the complainant. The said accused No.3 has categorically admitted as to the bank statement pertaining to accused No.1/assessee as well as themselves with respect to FY 2012-13 being not submitted before this court. It is 9 C.C.No.197/2017 deposed as to the documents pertaining to the accused No.1/assessee have been submitted to the ROC as well as the complainant Department. It is also submitted as to no any request has been made before this court seeking for installments to settle the matter. It is specifically admitted as to the registered address of the accused No.1 company was not changed between 2012 and 2017. He has admitted regarding himself having authored a book by name "One Book for Life Success", so also being the Founder of company by name CheQin.club Company with brand name "My Kingdom". He has also admitted regarding himself being the Director of "Naturl Movies" pertaining to the Ayurvedha and also the Director and Writer of Movie by name "Asli Cricket". It is deposed as to till date, himself and accused No.2 having floated five companies and the said five companies being non- operational. The witness has deposed as to not having acknowledgment for submission of documents to the complainant Department pertaining to the financial loss suffered by accused No.1 company. The printout of Linkedin Account Profile pertaining to the witness on being confronted has been admitted by the witness. The same is marked as Ex.P-6 by way of confrontation. He has also admitted regarding his profile being linked to his mail ID and same being managed as well as operated by him.
19. The learned Spl. PP representing the complainant emphatically argued that, the accused No.1 company being duly represented by the accused Nos.2 & 3 i.e., Directors have willfully and deliberately not complied the demand raised as 10 C.C.No.197/2017 per the intimation at Ex.P-3. It is also argued as to the accused No.1 company has hatched plan to evade the taxes, by claiming the entire income as a loss by adjusting the income towards the depreciation amount. Thereby the accused persons have committed the offences which is punishable U/s.276C(2) r/w Section 278(B) of the IT Act. It is also vehemently argued that, the aforesaid provisions very much contemplates any manner of attempt to evade the tax being punishable.
20. The Spl. PP during the course of his arguments has highlighted the dictionary meaning of the word "Willful" as defined in Black's Law Dictionary which reads as under:
"Willful. Proceeding form a conscious motion of the will; voluntary; knowingly; deliberate. Intending the result which actually comes to pass; designed; intentional; purposeful; not accidental or involuntary"
21. By emphasizing the aforesaid definition, the learned Spl. PP has argued as to the complainant has substantiated the deliberate, voluntary or intentional act of having made an attempt to evade the payment of Income Tax. It has been vehemently argued as to the complainant's case is very much covered under the presumption as contemplated U/s.278E of the IT Act, wherein the burden is on the accused to prove that, there was no any willful and deliberate intention on the part of the accused to evade the payment of tax. Amongst these grounds, learned Spl. PP sought to convict the accused persons by placing reliance upon the reported decisions viz., 11 C.C.No.197/2017
1) (2014)5 SCC 139 in the case of Sasi Enterprises V/s. Assistant Commissioner of Income Tax,
2) 2001 SCC Online Del 1241 in the case of N.K. Jain V/s. Union of India & others,
3) ILR (2001) II Delhi 148 in V.P. Punj V/s. ACIT & another
22. The learned counsel for the accused persons vehemently argued as to the accused No.1 company was facing financial crisis, as such, the accused No.1 company could not pay the taxes for the Assessment Year 2013-14 within the stipulated period of time i.e., soon after the intimation being raised as per Ex.P-3. The counsel for the accused has also highlighted as to there is no any iota of evidence on record to incriminate the accused persons and to bring home as to accused persons having deliberately and willfully having attempted to evade the payment of tax by cogent, documentary and oral evidence. It is argued as to the very ingredients of Section 276C(2) of the IT Act is not forthcoming from the complaint and it is also argued as to the presumption U/s.278E of the IT Act being rebuttable presumption, the accused Nos.2 & 3 have very much rebutted the said presumption by getting examined as DW-1 and having substantiated their claim. Amongst these arguments, the counsel for the accused persons has highlighted the cross- examination of PW-1 and sought to acquit the accused persons.
12 C.C.No.197/2017"Evaluation and Analysis of Evidence"
23. At the outset, it is relevant to note that to constitute the offence punishable U/s.276C(2) of the IT Act, the complainant has to prove that, the assessee having willfully and deliberately made an attempts to evade the payment of tax. Section 276C(2) of the IT Act reads as under:
"Section 276C of the Income Tax Act, 1961:
(1)................
(2) If a person willfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under the Act, he shall, without prejudice to any penalty that may be imposable on him under any provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and shall, in the discretion of the court, also be liable to fine"
For the purposes of this section, a wilful 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 proceedings under this Act) containing a false entry or statement; or 13 C.C.No.197/2017 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.
24. Ground No.1 urged by complainant: It is claimed by the complainant as to accused No.1 company/assessee has falsely shown set off of Rs.31,92,139/- by adjusting the profit by claiming the depreciation of Rs.31,92,139/- in AY 2013-14 as per Ex.P-2. This aspect is very much forthcoming from the examination of the very same Ex.P-2. This aspect is also very much being substantiated by the complainant as per the provisions of the Indian Evidence Act and it has not been rebutted by the accused neither by testimony of the accused independently nor by way of the cross-examination of the PW-1/complainant. It is pertinent to note that, the accused persons have neither submitted the documents pertaining to the loss suffered by the accused No.1 company nor have produced the bank statements or financial statements of the accused No.1 company to show their financial status. It is settled as per the provisions of Indian Evidence Act, the person asserting the fact is bound to establish the said fact by cogent oral and documentary evidence. In the case on hand, in 14 C.C.No.197/2017 absence of the necessary documents, the claim of the accused persons as to the accused No.1 company suffered a loss cannot be accepted and believed by this court only on the basis of the oral testimony of the DW-1, as the same is contrary to Section 91 of the Indian Evidence Act . As such, the complainant has established ground No.1 to the satisfaction of this court.
25. Ground No.2 urged by complainant: It is the specific claim of the complainant as to the accused persons approached the complainant Department and sought for installments to pay the demand raised as per Ex.P-3 to an extent of Rs.7,48,453/-, as the accused No.1 company was undergoing severe financial crisis.
26. The testimony of the accused No.3 as to the accused No.1 company did not receive the communications from the complainant Department so also, there was no any request made for settlement of the arrears of taxes is unable to be accepted. The correspondences between the complainant Department and accused is very much forthcoming from Ex.P-4 & Ex.P-5. The accused persons having requested the court by making memo seeking for necessary directions to the complainant Department to consider their compounding applications in itself is sufficient to reject the contention of the accused No.3 as to non-service of the intimations and communications so also, the accused persons having not approached the complainant Department for compounding of the case on hand. As such, this court is justified to hold the 15 C.C.No.197/2017 complainant has established ground No.2 to the satisfaction of this court.
27. Ground No.3 urged by complainant: The complainant Department being an agency empowered to adopt the provisions of MAT (Minimum Alternate Tax) in order to raise the demand U/s.143(1) of the IT Act, is very much forthcoming as per the Section 115JB of the IT Act being inserted by virtue of Finance Act, 2000 with effect from 01.04.2001 having replaced earlier Section 115JA which was inserted by virtue of Finance Act, 1996 with effect from 01.04.1997. The reading of the said provisions makes it clear that the primary object of the said provisions being one and the same for the purpose of computation of taxes.
28. The arguments of the learned Spl. PP as to Section 115JB of the Act was introduced as certain companies were making huge profits and were also declaring substantial dividends to the shareholder, but were not paying the taxes claiming various tax concessions and incentives, with an ulterior intention to avoid payment of Income Tax holds the field.
29. In the case on hand, the complainant Department having intimated the accused No.1/assessee and other accused persons on several occasions is very much forthcoming and in this background the contention of the accused persons that MAT was introduced for the first time during the relevant year for consideration is untenable and without any justification. As such, this court is inclined to 16 C.C.No.197/2017 hold the complainant has established ground No.3 to the satisfaction of this court.
30. Defence No.1 of the accused: The accused persons have put forth specific defence as to there is no any deliberate and willful attempt by their end to evade the payment of taxes. The plain reading of Section 276C(2) of the IT Act along with presumption as contemplated in favour of the complainant as per Section 278E of the IT Act, the accused Nos.2 & 3 have to establish regarding the accused Nos.2 & 3 were not having any said culpable mental state to evade and to commit an offence with respect to the Act.
31. In the instant case, in absence of the necessary documents pertaining to the financial status, more particularly financial loss suffered by accused No.1/assessee, the presumption U/s.278E of the IT Act certainly needs to be appreciated and considered in favour of the complainant Department. This aspect very much inclines this court to draw an inference as to the accused No.3 being Managing Director of accused No.1 company at the relevant period having made an attempt to evade the tax, while submitting the ITR for the Assessment Year 2013-14, by having verified the ITR at Ex.P-2. As such, this defence will not survive.
32. Defence No.2 of the accused: In the case on hand, the accused persons have claimed the submission of necessary documents pertaining to the financial loss suffered by accused No.1/assessee to the ROC and the complainant Department prior to lodging of the complaint.
17 C.C.No.197/201733. This particular defence put-forth by the accused persons, in absence of necessary acknowledgment for having submitted the said documents before the aforesaid agencies, will certainly be raising doubts as to very production/submission of the documents to the above authorities. Hence, this defence will not hold the water.
34. That apart, the accused persons having not challenged the intimation U/s.143(1) of the IT Act before the proper Appellate Forum, as per the provisions of Income Tax Act is also a factor which certainly assumes significance and inclining the court to reject the contentions of the accused persons in so far as the MAT being adopted by the complainant Department.
35. It is pertinent to note that, as per Section 278E of the IT Act, the accused persons have to establish their defence beyond all reasonable doubts. In absence of the cogent documents in support of the specific defence of the accused Nos.2 & 3 as to the accused No.1 assessee undergoing financial loss, the sole testimony of the DW-1/accused No.3 which is contrary to the Ex.P-2 i.e., ITR for the assessment year 2013-14 is very much contrary to the Section 91 of the Indian Evidence Act.
36. The claim of the complainant has very much withstood the test of cross-examination. The complainant's case is very much covered under the presumption as contemplated U/s.278E of the IT Act, which reads as under:
18 C.C.No.197/2017Section 278E of Income Tax Act "Presumption as to culpable mental state"
278E. (1) In any prosecution for any offence under this Act which requires a 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 sub-section, "culpable mental state"
includes intention, motive or knowledge of a fact or belief in, or reason to believe, a fact.
(2) For the purposes 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.
37. The overall examination of the complainant's case, in the light of the evidence on record, the very ingredients of Section 276C(2) of the IT Act having been examined in parlance with presumption as contemplated U/s.278E of the IT Act very much makes it clear that, the accused persons having willfully and deliberately evaded the payment of self assessment tax U/s.140A of the IT Act, has been substantiated and established by cogent, oral and documentary evidence by the complainant. Per contra, the accused persons being bound to establish their defence beyond all reasonable doubts as per the Sub Section 2 of the 19 C.C.No.197/2017 Section 278E of the IT Act have miserably failed to bring home their defence to the satisfaction of this court.
38. In otherwords, the accused No.1 assessee without substantiating its financial crisis at the relevant point of time, while ITR for the assessment year 2013-14 being submitted to the complainant Department will certainly inclines the court to draw an adverse inference against the accused. The complainant's case is very much covered under the presumption as contemplated U/s.114 of the Indian Evidence Act as the complainant is the Department being involved in its functions of recovering the Income Tax, as mandated under the Income Tax Act.
39. The view of the court as to the accused having failed to rebut the presumption as contemplated U/s.278E of the IT Act is very much supported by the decision of the Hon'ble Apex Court in Sasi Enterprises V/s. Assistant Commissioner of Income Tax, so also the decision of Hon'ble Delhi High Court in a case of N.K. Jain V/s. Union of India and others. So, also in the decision of the Hon'ble High Court of Gujarat in a case of Vinod Chandra C Patel V/s. State of Gujarat.
40. Having due regard to the facts and circumstances in the case on hand, this court is of the considered view that, the complainant has discharged the burden of demonstrating the accused Nos.2 & 3 having willfully and deliberately made an attempt to evade the payment of tax and they have hopelessly failed to bring home their defence beyond all reasonable doubts as contemplated U/s.278E(2) of the IT Act. There is no 20 C.C.No.197/2017 iota of clinching evidence adduced by the accused Nos.2 & 3 to gather their defence of accused No.1 company having undergone financial loss while submitting the ITR as per Ex.P-2 for the assessment year 2013-14.
41. This court is of the considered view that, the accused Nos.2 & 3 having been responsible for the day to day affairs of accused No.1 company as on submission of ITR in the case on hand. As such, accused No.1 company/assessee being represented by the accused Nos.2 & 3 being Directors are liable for the default committed U/s.276C(2) r/w 278(B) of the Act in the case on hand. In the light of the discussion made supra, this court without any hesitation proceeds to answer Point No.1 in the Affirmative.
42. Point No.2: In view of the findings on Point No.1, this court proceeds to pass the following:
ORDER The accused Nos.1 to 3 are found to be guilty of the offences punishable U/s.276C(2) r/w 278(B) of the Income Tax Act.
For hearing on sentence.
(VISHWANATH C GOWDAR) Presiding Officer, Spl. Court for Economic Offences, Bengaluru.21 C.C.No.197/2017
HEARING ON SENTENCE Heard the learned counsel for the complainant on the quantum of sentence.
Heard the accused Nos.2 & 3 and the counsel for the accused Nos.1 to 3.
The learned counsel for the complainant submitted that, the accused persons have been found guilty of the alleged offences and the complainant has succeeded to establish the guilt of the accused persons beyond all reasonable doubts and the factors alleged by the accused Nos.1 to 3 that, the accused Nos.2 & 3 had no any intentions which is pre-requisite for the commission of the offences and other aspects cannot be considered as the accused persons are involved in committing an offence which is affecting economic fabric of the country having regard to the object and intent of the statute and sought for maximum punishment prescribed to the offence.The learned counsel for the accused Nos.1 to 3
emphasized that, the accused No.2 is noway responsible for the affairs of accused No.1 company. It is claimed that, accused Nos.2 & 3 are sole bread earners of their family and have an obligation to look after their families so also their old aged parents. Accused Nos.2 & 3 have claimed regarding themselves being unemployed and having various financial commitments by way of loans. It is also contended that, as the accused Nos.2 & 3 are not involved in the offence which is punishable with death sentence or life imprisonment has 22 C.C.No.197/2017 sought for lenient view. Amongst these arguments, it has been sought to take lenient view.
Considering the submissions of accused Nos.2 & 3, arguments advanced by the learned counsel for the accused Nos.1 to 3 and the learned counsel for complainant this court, on an overall examination of the facts and circumstances and evidence on record, this court is of the considered opinion that, the accused Nos.2 & 3 being the Principal Officers are responsible for the day to day affairs of accused No.1 company with an obligation to respect the law of the land.
In view of the accused Nos.2 & 3 being held guilty of offence punishable U/s.276C(2) of the Act, so also the accused Nos.2 & 3 being the Principal Officers are responsible for accused No.1 company having committed offence punishable U/s.276C(2) r/w 278(B) of the Act are not entitled to the benefit of the Probation of Offenders Act, as more fully discussed supra.
This court is of the considered view that, the accused Nos.1 to 3 are entitled to be given lenient view as they have made out their obligations towards family as well as towards other debts. That apart, the accused No.1 company having undergone loss, the claim of accused Nos.2 & 3 as to being in financial distress and unemployed with aspirations to set up with a start up company are reasonable grounds to take the lenient view.23 C.C.No.197/2017
As such, this court holds that, there are adequate and justifiable reasons as discussed supra, wherein, accused Nos.2 & 3 be sentenced to undergo RI for the period of three months each on their behalf as well as on behalf of accused No.1 company and the accused Nos.1 to 3 be imposed with fine of Rs.10,000/- each. In result, this court proceeds to pass the following :
ORDER Acting under section 248(2) of Cr.P.C., the accused Nos.1 to 3 are convicted of the offences punishable U/s.276C(2) r/w Section 278(B) of the Act.
The accused No.1 being company i.e., juristic person is hereby sentenced to pay fine of Rs.10,000/- for being guilty U/s.276C(2) r/w Section 278(B) of the Act.
Further, the accused Nos.2 & 3 being the Principal Officers of accused No.1 company are sentenced to undergo RI for period of three months each and to pay fine of Rs.10,000/- each for the offence committed under Section U/s.276C(2) r/w Section 278(B) of the Act. In default of payment of fine, the accused Nos.2 & 3 shall undergo SI for a period of 2 months.
Pursuant to accused No.1 company being managed by accused Nos.2 & 3, they shall 24 C.C.No.197/2017 jointly pay the fine of Rs.10,000/- on behalf of accused No.1 company and they shall also undergo RI for a period of 3 months each. In default of payment of fine on behalf of accused No.1 company, the accused Nos.2 & 3 shall undergo further SI for a period of 2 months.
Total fine amount Rs.30,000/-.
The aforesaid sentences shall run
concurrently.
The complainant is entitled to the
compensation of Rs.1,000/- out of the fine amount as contemplated under section 357 of Cr.P.C.
Office is hereby directed to furnish the free copy of this judgment to the accused Nos.2 & 3 in compliance of section 353(4) of Cr.P.C.
forthwith.
(Dictated to the Stenographer directly on computer, typed by him, corrected and then pronounced by me, in open court on this the 24th day of December 2024) (VISHWANATH C GOWDAR) Presiding Officer, Spl. Court for Economic Offences, Bengaluru.
25 C.C.No.197/2017ANNEXURE:
List of the witnesses examined on behalf of the Complainant:
PW-1 : Ramachadran A List of the Documents exhibited on behalf of the Complainant:
Ex.P-1 : Original Sanction Order
Ex.P-2 : Attested copy of Return of Income
Ex.P-3 : Attested copy of the Intimation
Ex.P-4 : Certified True Copies of Speed Post Envelops
Ex.P-5 : E-mail Correspondences
Ex.P-6 : Printout of Linkedin Account Profile
(By way of Confrontation)
List of witnesses examined on behalf of the Accused:
DW-1 : Venugopal Rao Someneni List of Documents examined on behalf of the Accused:
- Nil -
Presiding Officer, Spl. Court for Economic Offences, Bengaluru.26 C.C.No.197/2017
Accused No.1 company Accused Nos.2 & 3 present.
Judgment pronounced in the open court (vide separate order) ORDER Acting under section 248(2) of Cr.P.C., the accused Nos.1 to 3 are convicted of the offences punishable U/s.276C(2) r/w Section 278(B) of the Act.27 C.C.No.197/2017
The accused No.1 being company i.e., juristic person is hereby sentenced to pay fine of Rs.10,000/- for being guilty U/s.276C(2) r/w Section 278(B) of the Act.
Further, the accused Nos.2 & 3 being the Principal Officers of accused No.1 company are sentenced to undergo RI for period of three months each and to pay fine of Rs.10,000/- each for the offence committed under Section U/s.276C(2) r/w Section 278(B) of the Act. In default of payment of fine, the accused Nos.2 & 3 shall undergo SI for a period of 2 months.
Pursuant to accused No.1 company being managed by accused Nos.2 & 3, they shall jointly pay the fine of Rs.10,000/- on behalf of accused No.1 company and they shall also undergo RI for a period of 3 months each. In default of payment of fine on behalf of accused No.1 company, the accused Nos.2 & 3 shall undergo further SI for a period of 2 months.
Total fine amount Rs.30,000/-.
The aforesaid sentences shall run concurrently. The complainant is entitled to the
compensation of Rs.1,000/- out of the fine 28 C.C.No.197/2017 amount as contemplated under section 357 of Cr.P.C.
Office is hereby directed to furnish the free copy of this judgment to the accused Nos.2 & 3 in compliance of section 353(4) of Cr.P.C. forthwith.
PRESIDING OFFICER.
The learned counsel for the accused Nos.1 to 3 has filed the application under section 389(3) of Cr.P.C. seeking to enlarge the accused Nos.1 to 3 on bail till the expiry of appeal period. It is further submitted that, the accused Nos.1 to 3 are intending to file appeal and as they have been convicted.
Hence, have sought for enlarging them on bail.
The learned Spl. PP has orally objected to the said application and submitted that, the accused Nos.2 & 3 are not entitled to the said relief as the accused Nos.2 & 3 are involved in the socio-economic offence and has also submitted as to the chances of accused Nos.2 & 3 absconding from the jurisdiction of this court and failure to comply the order of this court to appear in order to undergo the punishment as per the 29 C.C.No.197/2017 Judgment, as such sought for dismissal of application.
Considering the fact that, the accused Nos.2 & 3 have been granted bail during the course of trial and in view of the sentence being imposed is not exceeding three years, having due consideration as to the accused Nos.2 & 3 intending to challenge the Judgment by preferring an appeal, it is just and appropriate to grant the bail to the accused Nos.2 & 3 till the expiry of the appeal period only. Accordingly, the bail application is hereby allowed and the accused Nos.2 & 3 have been granted bail till the expiry of appeal period.
The bail application is allowed subject to condition that, the accused Nos.2 & 3 shall execute the personal bonds for Rs.10,000/- each.
Office is hereby directed to take personal bonds of the accused Nos.2 & 3 forthwith.
The accused Nos.2 & 3 shall be present before the court to undergo the sentence on 24-01-2025.
Call on: 24-01-2025.
PRESIDING OFFICER.
30 C.C.No.197/2017