Delhi District Court
M/S World Phone And Another vs Sanyam Suresh Joshi on 24 September, 2014
Criminal Revision Nos.146/14, 147/14 &148/14
IN THE COURT OF MS. HEMANI MALHOTRA, ADDL.
SESSIONS JUDGE-05 (CENTRAL), TIS HAZARI COURTS
DELHI
Criminal Revision No.146/14, 147/14 & 148/14
M/s World Phone and Another
C-153, Okhla Industrial Area,
Phase I,
New Delhi
.......Petitioner
Versus
Sanyam Suresh Joshi,
Asstt. Commissioner of Income Tax,
Circle 51 (1), New Delhi
........Respondent
Criminal Revision No.147/2014, 148/14
M/s World Phone and Another
C-153, Okhla Industrial Area,
Phase I,
New Delhi
Mr.Rajiv Kumar,
R/o Villa No.16, Block-I,
Charmwood Village, Faridabad
.......Petitioners
Versus
Sanyam Suresh Joshi,
Asstt. Commissioner of Income Tax,
Circle 51 (1), New Delhi
........Respondent
Date of institution :25.07.2014
Date of conclusion of arguments/
reservation of Judgment :09.09.2014
Date of pronouncement of judgment :24.09.2014
M/s World Phone and Another Vs Sanyam Suresh Joshi 1 of 8
Criminal Revision Nos.146/14, 147/14 &148/14
ORDER
1. By this common order, I shall dispose off criminal revisions bearing Nos. 146/14, 147/14 and 148/14 which have been preferred by the revisionists against the impugned order dated 29.05.2014 passed by the learned ACMM (Special Acts) in criminal complaint case Nos. 72/4, 73/4 ,74/4 of 2013 under Section 276 B & 279(1) read with Section 278E of The Income Tax Act, 1961 whereby the revisionists have been charged u/s 276B read with Section 278E of the Income Tax Act.
2. The brief facts, necessary for the disposal of the revision petitions are that the complainant/respondent had filed complaints before the Learned ACMM (Special Acts) praying therein that the revisionists be prosecuted and convicted under Section 276B, 279 and 278E of The Income Tax Act, 1961. It was alleged that revisionist no. 1 was a private limited company whereas revisionist no. 2 Sh. Rajiv Kumar was the Chief Operating Officer during the relevant financial years 2008-09, 2009-10, 2010-11 and is responsible and incharge for conduct of business of the said company of the revisionist no.1. The assessee company/revisionist no. 1 has made payments to its deductees amounting to Rs.7,54,563/- for the financial year 2008-09, Rs.22,55,952 for the financial year 2009-10 and Rs.7,34,869/- for the financial year 2010-11 but have not deposited the TDS in the government account within the stipulated period. It was further alleged that notice dated 18.09.2012 u/s 2(35) of The Income Tax Act was served upon the assessee as it was mandatory to deposit the TDS amount in the government account within the prescribed period but the revisionists had failed to do so, thereby committing an offence u/s 276B, 279 and 278E of The Income Tax Act, 1961.
M/s World Phone and Another Vs Sanyam Suresh Joshi 2 of 8 Criminal Revision Nos.146/14, 147/14 &148/14
3. On receipt of the complaint, the learned trial court took the cognizance of the offence and passed the summoning order. Pursuant to which, pre-charge evidence was led and impugned order dated 29.05.2014 was passed for framing of charge for the offence punishable u/s 276B read with Section 278E of The Income Tax Act, 1961 which has been challenged before this Court vide the present revision petitions.
4. I have heard the arguments advanced by the learned counsels for the parties and have gone through the record and the judgments cited by the learned counsel for the revisionists with utmost care.
5. The foremost contention of the learned counsel for the revisionists was that no proper notice under Section 2 (35) of The Income Tax Act, 1961 was served upon the revisionist no. 2 before the initiation of the proceedings u/s 276B of The Act and therefore, the complaints in question can not be sustained against revisionist no.2. It was also urged that even at the time of filing of returns during the alleged financial years, revisionist no.2 was neither the principle officer nor incharge of filing returns on behalf of the assessee company/revisionist no. 1.
6. During the course of the arguments, it was very fairly conceded by the learned counsel for the complainant/respondent that indeed no notice under Section 2(35) of The Income Tax Act was served upon respondent no.2 which is a mandate under the Act.
7. I am in complete agreement with the learned counsel for the revisionists in context with the service of notice to revisionist no.2 being mandatory u/s 2 (35) of The Act. The fact that notice u/s 2 (35) M/s World Phone and Another Vs Sanyam Suresh Joshi 3 of 8 Criminal Revision Nos.146/14, 147/14 &148/14 of The Act was not served upon the revisionist no.2 is also evidenced from the scrutiny of the deposition of PW 1 in his pre-charge evidence. PW 1 Sh. Sanyam Suresh Joshi, the then Assistant Commissioner of Income Tax, Circle 51 (1), New Delhi, during his testimony categorically stated that a notice dated 18.09.2012 was sent in the name of Rajesh Chandra Jain u/s 2(35) of the IT Act and the same is Ex.P1/3. His statement reveals that no notice was served upon the revisionist no. 2 u/s 2(35) of the Act treating him as principal officer before initiating the proceedings u/s 276B & 279 (1) read with Section 278 E of the Income Tax Act, 1961. Since, Section 2 (35) of the Act is a mandatory provision therefore, in the absence of revisionist no. 2 having served upon a notice to treat him as principal officer by the complainant/respondent, the prosecution of the revisionist no.2 could not be initiated and since it has been initiated can not be proceeded any further.
8. The second forceful contention which was raised by learned counsel for the revisionist was regarding validity of the sanction order of the respondent under Section 279(1) of The Income Tax Act, 1961. In this regard, it was very vehemently urged that the sanction order which was passed against the revisionist was without any application of mind and in utter disregard to the material placed before the Sanctioning Authority. To substantiate his contentions, learned counsel for the revisionists has placed reliance upon in cases titled as Mohd. Iqbal Ahmed Vs State of Andhra Pradesh, SC 677, Shree Sonal Gum Industries and Ors. Vs State of Gujarat and Anr. (2007) 3GLR 2749, G. Anantharamiah Vs The Income Tax Oficer, Madras (1993) 1 MWN (Cri) 16, Bee Gee Motors and Tractors Vs Income Tax Officer (1996) 127 CTR (P&H)224, P.V. Pai and Ors Vs Rinawma, CIT (1993)200ITR 717(Kar), Income Tax Officer Vs Roshni Cold Storage M/s World Phone and Another Vs Sanyam Suresh Joshi 4 of 8 Criminal Revision Nos.146/14, 147/14 &148/14 (P) Ltd. (1998) 106 TAXMAN 318 (Mad), Ganga Solvent and Ors. Vs State of Bihar and Anr. Decided on 21.05.1996, Greatway (P) Ltd. And Ors. Vs Assistant Commissioner of Income Tax (1993) Comp Case 259 (P&H), D.C.Goel And Ors. Vs B.L.Verma and Ors reported as 1974 93 ITR 63, Delhi, S.G. Kale Vs Union of India reported as (2001) 168, CTR Raj. 214, M/s Banwarilal Satyanarain and Others Vs The State of Bihar and Another,(Crl. Rev.No.743/1986) decided on 24.04.1989, Sirichand Gupta Vs Santosh Kumar & Anr reported as ILR(2008) 2 Del 943, Satish Mehra Vs Delhi Administration and Another , reported as (1996) 9 SC 766 Income Tax Officer Vs Delhi Iron Works (P) Ltd & Ors reported as (2010) 175, DLLT 495, Income Tax Officer Vs Shiv Sewak Cotton Co. reported as (2006) 1 RCR (Cri) 720, Mansukhlal Vithaldas Chauhan Vs State of Gujarat reported as (1997) 7 SC cases 622 and M/s India Steel Corporation & Os Vs Sh Ahindra Lal Datta & Anr reported as (1993) 2 Cal LT 269 Per contra, it was pleaded by learned counsel for the respondent that the sanction order under Section 279 (1) of The Act does not suffer from any infirmity and is a well reasoned order which has been passed after considering all the material on record.
9. Heavy reliance was placed upon a judgment of the Hon'ble Supreme Court titled as Mohd . Iqbal Ahmad Vs State of Andhra Pradesh reported as AIR 1979 Supreme Court 677 which was also quoted and relied upon in another judgment of Rajasthan High Court titled as S.G.Kale Vs Union of India reported as (2001) 168 CTR Rajasthan 214 decided on 19.3.2001 wherein , it was observed here as under:
"It is incumbent on the prosecution to prove that a valid sanction has been granted by the Sanction Authority after it was satisfied that a case for sanction has been made out constituting the offence. This should be done in two ways; either (1) by producing the original sanction which itself contains the facts constituting the offence and the M/s World Phone and Another Vs Sanyam Suresh Joshi 5 of 8 Criminal Revision Nos.146/14, 147/14 &148/14 grounds of satisfaction and (2) by adducing evidence aliunde to show the facts placed before the Sanction Authority and the satisfaction arrived at by it. Any case instituted without a proper sanction must failed because this being a manifest defect in the prosecution , the entire proceedings are rendered void abinito . What the court has to see is whether or not the Sanctioning Authority at the time of giving sanction was aware of the facts constituting the offence and applied its mind for the same; any subsequent fact which may come into existence after the grant of sanction is wholly irrelevant........"
10. The bare reading of the afore cited judgment (supra) discloses the factors which the court ought to keep in mind while assessing the validity of the sanctioning order. According to the observations made by the Hon'ble Supreme Court, the court should see if at the time of giving sanction, the Sanctioning Authority was aware of the facts constituting the offence or not. The bare perusal of the sanctioning order attached with the complaint shows that all the relevant facts constituting the offence against the assessee company/revisionist no. 1 have been specifically mentioned. The sanction order also mentions the submissions made by the assessee company and the reasons for not considering the said pleas. Even the details of the defaults in payments of TDS have been categorically mentioned. Hence, by no stretch of imagination, it can be said that the sanctioning order was passed without considering the material and was a result of non application of mind. Even otherwise, as opined by the Hon'ble Supreme Court in the judgment discussed above, the validity of the sanction order can also be proved by adducing evidence which stage of trial in the instant case is yet to come.
11. It was also contended by the learned counsel for the revisionists that no reasonable opportunity to be heard was granted to the revisionists and for the said reason also, the complaints are not maintainable. I M/s World Phone and Another Vs Sanyam Suresh Joshi 6 of 8 Criminal Revision Nos.146/14, 147/14 &148/14 do not find any force in the arguments of the learned counsel for the revisionists as there is no provision for pre hearing before according of sanction as held in S.G. Kale Khan Vs Union of India (supra), which is a judgment relied upon by the learned counsel for the revisionists himself. It was held therein ;
The first contention of the learned counsel for the petitioner in this regard is that no notice to show-cause before issuing sanction was given to the petitioner and therefore, the sanction accorded without affording an opportunity of hearing is invalid. This contention does not appear to be valid. According of sanction is an administrative function and is only to see that frivolous or avoidable trials do not take place not withstanding that it is an objective exercise by the sanctioning authority to consider the material on record to satisfy himself whether a case fit for launching prosecution exists . On such satisfaction, the sanction can not be accorded and thereafter the trial proceeds in which the person proceeded against has ample opportunity to defend himself against the allegations made against him and to meet the evidence led to substantiate those allegations by the prosecution. There is no provision for pre-hearing before according of sanction. There is catena of decisions of various High Courts almost with unanimity that before launching prosecution there is no need to give hearing to the person concerned.
Ilustratively, reference in this connection may be made to Nirmala Kapur Vs CIT (1980) 122 ITR 473 (P&H);
Universal Supply Corpn Vs State of Rajasthan (1994) 06 ITR 222 (Raj.); K. Balakrishnan Nair VS Asstt. CIT. (1995) 215 ITR 213 (Ker): Lakmandas Pranchand Vs Union of India (1998) 234 ITR 261 (MP) and Dr. (Mrs.) M.S. Bhawani V. J.Ranganathan, ITO (1992) 194 ITR 690 (Mad) I am not taking into account at this stage the decisions which deal with the question where the issues was raised that before grant of sanction, an opportunity ought to be given by issuing notice to the assessee either to avail the benefit of provisions contained in Section 279 (2) for compounding the offence or to obtain the orders under section 273 A from the Commissioner for reducing or waiving the penalty which is imposed for the alleged offence, in which contingency no prosecution can take place.
12. In view of the aforesaid discussion, I am of the considered view that the complaint against revisionist no. 2 only can not be sustained.
M/s World Phone and Another Vs Sanyam Suresh Joshi 7 of 8 Criminal Revision Nos.146/14, 147/14 &148/14 Accordingly, revision is allowed in part and impugned order dated 29.5.2014 stands set aside against the revisionist no.2 namely Rajiv Kumar. However, impugned order dated 29.05.2014 of Learned Trial Court in criminal complaint case Nos.72/4, 73/4 ,74/4 of 2013 under Section 276 B & 279(1) read with Section 278E of The Income Tax Act, 1961 whereby the revisionists have been charged u/s 276B read with Section 278E of the Income Tax Act shall sustain against the revisionist No.1 i.e. M/s World Phone, C-153, Okhla Industrial Area, Phase-1 New Delhi.
13. Revision file be consigned to record room. Trial Court record be sent back with copy of this order.
ANNOUNCED AND DICTATED IN ( HEMANI MALHOTRA )
OPEN COURT ON :24.09.2014 ADDL. SESSIONS JUDGE
05:CENTRE:DELHI
M/s World Phone and Another Vs Sanyam Suresh Joshi 8 of 8