Karnataka High Court
Sri U A Chandramouli vs Central Bureau Of Investigation on 5 November, 2016
Author: Anand Byrareddy
Bench: Anand Byrareddy
1
IN THE HIGH COURT OF KARNATAKA AT
BENGALURU
DATED THIS THE 5TH DAY OF NOVEMBER, 2016
BEFORE
THE HON'BLE MR. JUSTICE ANAND BYRAREDDY
CRIMINAL APPEAL No.1305 OF 2016
CONNECTED WITH
CRIMINAL APPEAL NO.1306 OF 2016
IN CRL.A.No.1305/2016
BETWEEN:
Sri. U.A.Chandramouli,
Son of Late U. Aswathanarayanaiah,
Aged 60 years,
Resident of No.10,
M.H.B.Colony,
Parvath Nagara,
Bellary District 583 101,
Karnataka.
Now in Judicial Custody,
Central Jail,
Parappana Agrahara,
Bengaluru.
...APPELLANT
(By Shri M.V.Seshachala, Senior Advocate along with
Shri Aravind V. Chavan, Advocate)
2
AND:
Central Bureau of Investigation,
No.36, Bellary Road,
Ganga Nagar,
Bengaluru - 560 032.
...RESPONDENT
(By Shri P. Prasanna Kumar, Advocate)
*****
This Criminal Appeal filed under Section 374(2) of the
code of Criminal Procedure, 1973, by the advocate for the
appellant praying to set aside the judgment dated 30.7.2016
passed by the XLVII Additional City Civil and Sessions Judge
and Special Judge for C.B.I.Cases, Bangalore in
Spl.C.C.No.155/2010 - convicting the appellant/accused no.1
for the offence punishable under Sections 218, 420 and 120(B)
read with 420 of IPC and Sections 13(2) read with 13(1)(d)(ii)
of P.C.Act and etc.
IN CRL.A.No.1306/2016
BETWEEN:
Sri. Dhirender Kumar Jha,
Son of Upender Prasad Jha,
Aged 51 years,
Residing at Mallikarjuh Nilaya,
3rd Cross, Pampa Nagar,
Sagar Road,
Shivamogga District.
Now in Judicial Custody
Central Jail,
Parappana Agrahara,
Bengaluru - 560 100.
...APPELLANT
3
(By Shri M.V.Seshachala, Senior Advocate along with Shri
C.G.Sundar , Advocate)
AND:
Central Bureau of Investigation,
No.36, Bellary Road,
Ganga Nagar,
Bengaluru - 560 032.
...RESPONDENT
(By Shri P. Prasanna Kumar, Advocate)
*****
This Criminal Appeal filed under Section 374(2) of the
code of Criminal Procedure, 1973, by the advocate for the
appellant praying to set aside the judgment dated 30.7.2016
passed by the XLVII Additional City Civil and Sessions Judge
and Special Judge for C.B.I.Cases, Bangalore in
Spl.C.C.No.155/2010 - convicting the appellant/accused no.3
for the offence punishable under Sections 218, 420 and 120(B)
read with 420 of IPC and Sections 13(2) read with 13(1)(d)(ii)
of P.C.Act and etc.
These appeals coming on for Hearing this day, the Court
delivered the following:
JUDGMENT
These two appeals are disposed of by this common order. On the face of it, it is noticed that in the second of these appeals, the appellant has been proceeded against as a co- accused, along with the appellant in the first of these appeals. 4 Therefore, whether the appellant in the second of these appeals can at all be prosecuted, would depend on whether the proceedings initiated against the appellant in the first of these appeals could be sustained. In that view of the matter, the appeal in the first of these appeals is considered on merits, in the first place.
2. The brief facts are as follows:
The appellant was working as a Deputy Commissioner of Income Tax in the Income Tax Department and was framing assessments as per the provisions of the Income Tax Act, 1961 (hereinafter referred to as 'the IT Act', for brevity). An assessee within his jurisdiction, namely 'M/s. Children Education Society' registered under the Karnataka Societies Registration Act, 1960, is said to have filed a return of income under Section 139 of the IT Act for the assessment year 2004- 05 declaring a loss of Rs.5,82,97,003/-. The assessee in the return of income, had claimed exemption under Section 10(23C)(iiiad) and (iiiab) of the IT Act, in respect of each of the 5 36 institutions it was said to be running. These aforesaid sections contemplate that an assessee is entitled to total exemption from Income Tax, if its gross turnover is below Rs.1 crore. The claim of the assessee was that the assessee's entire turnover should not be taken into account, but each of the 36 institutions that was being run by the assessee should be taken into account as exclusively individual institutions would have a turnover of less than Rs.1 crore and not cumulatively. In other words, that all the 36 institutions should not be taken up as one assessment entity, as this would result in taxing the entire gross turnover of the assessee. The Assessing Officer, namely the appellant herein, was presented with this return of income as it fell within his jurisdiction, to verify whether the claim made by the assessee was in consonance with the provisions of the IT Act. As it was a Society registered under the Karnataka Societies Registration Act, 1960, under Section 11 read with Sections 12 and 13 of the said Act, the accounts of the Society were to be audited by a Chartered Accountant in terms of 6 Section 226 of the Companies Act, 1956. The Chartered Accountants concerned had issued a certificate that the accounts were true and correct. The Assessing Officer had adopted an 'Inquisitorial system', where investigation is carried on the evidence collected and thereafter a judgment is arrived at. In other words, this system envisages an investigation, prosecution and judgment on the issue by the very officer. In order to verify the authenticity of the claim made by the assessee, the officer took up the matter under Section 143(2) of the IT Act for scrutiny. The assessee was called upon to substantiate the claim of exemption under Section 10(23C)(iiiad) & (iiiab) of the IT Act, and other expenditure claimed in the return of income, in consonance with the law.
The Assessing Officer had issued a questionnaire to the assessee and posted for compliance on 25.08.2006. Once again, on 19.09.2006, a remainder was issued and again the matter was posted on 8.11.2006. After further remainders, the Assessing Officer, in order to obtain information regarding the 7 authenticity of the claim, had conducted a survey under Section 133A of the IT Act in the premises of the assessee and perused the records maintained by the assessee on 29.08.2006 and impounded a number of documents. These were numbered as Annexures 1 to 3. The Officer was entitled to retain the documents for a period of 10 working days for the purpose of verification. He could not complete the work of verification within the said period and the assessment order ought to be passed on or before 31.12.2006 in terms of Section 153 of the IT Act. Since the material impounded was required for further investigation upto that date for the purpose, he had sought permission of his superiors to retain the impounded documents upto 31.03.2007. Thereafter, on 6.9.2006, he had submitted a preliminary survey report about the proceedings taken by him. Certain internal enquiries were made in the Department and the CBI, based on source information, proceeded to register an FIR and thereafter investigation was conducted. The case was registered as Spl.C.C.No.155/2010 before the Special Judge for 8 CBI Cases, Bangalore, and charges were framed alleging offences punishable under Sections 218, 420 read with Section 120-B of the IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 in respect of which the prosecution had tendered evidence and marked a number of documents. It was noticed that the Sessions Judge had failed to record the statement of the accused under Section 313 of the Code of Criminal Procedure, 1973, but merely directed that they should present their defences. Thereafter, the Sessions Judge had proceeded to render judgment and had awarded a sentence, whereby the appellant in the first of these appeals as well as the appellant in the second of these appeals who were the accused, were convicted and sentenced to undergo rigorous imprisonment for a period of six months for an offence punishable under Section 120-B read with Section 420 IPC; to undergo rigorous imprisonment for a period of 1 ½ years and to pay a fine of Rs.1,50,000/- in respect of the offence punishable under Section 218 IPC; to undergo rigorous imprisonment for 9 the period of five years and to pay a fine of Rs.2,50,000/- for the offence punishable under Section 420 IPC and, to undergo rigorous imprisonment for a period of five years and to pay a fine of Rs.2,50,000/- for the offence punishable under Sections 13(2) read with Section 13(1)(d(ii) of the Prevention of Corruption Act, 1988. It is that which is under challenge in the present appeals.
3. The learned Senior Advocate Shri M.V. Sheshachala appearing for the counsel for the appellants would contend that the court below has completely overlooked the mandatory requirement under Section 313(1) of the Cr.P.C. and calling upon the accused to have his say as regards the incriminating material that was found in the evidence against him and this by itself is a ground which is sufficient to allow the appeals and set aside the judgment. On the other hand, it is to be seen that there are no incriminating material appearing against the accused, from the evidence of PW-1 to PW-16. This is confirmed by the fact that the Trial Court has not referred to the 10 evidence of any of the witnesses which could be termed as incriminating evidence and hence, the judgment ought to be set aside on that ground alone. The Trial Court was also in error in arriving at a conclusion that sanction for prosecution was neither necessary under Section 19 of the PC Act nor under Section 197 of the IPC notwithstanding that the entire allegations against the appellants are in respect of their actions in the course of their official functions.
Apart from pointing out other infirmities, the primary contention of the learned Senior Advocate is to the overall tenor of the judgment which on a bare reading, would indicate that the Trial Court was in fact sitting in appeal over the assessment order passed by the appellant and has proceeded to meticulously make calculations of the amounts indicated towards the loss, profit and the exemption that was claimed in holding that the charges have been brought home on the footing that the documents which were impounded and were continued to be impounded on the basis of orders of the superiors of the 11 appellant from time to time, had been unceremoniously returned to the assessee without obtaining a further order from his superior in that regard and thereby, it has resulted in the assessee being able to benefit from such documents having not formed part of the record and thereby, the revenue loss that has occasioned to the State is clearly for illegal consideration obtained by the appellant and that such act committed by the accused was for illegal gratification, which may have been received by the accused.
The learned Senior Advocate would point out that from the evidence of the prosecution, it is nowhere apparent as to the manner in which the accused could have benefited by virtue of the documents having been returned to the assessee, nor is there any mention of the amount of monies that could have been paid to the accused or is there any mention of the monetary benefit that may have accrued to the assessee in the absence of which, the criminality as regards the action of the appellant, is not forthcoming. The return of the documents without proper 12 permission or authority, by itself would not result in any criminal offence and could at best be an act of indiscipline which might warrant disciplinary action against the appellant and nothing more. The contention that the documents have been returned for illegal benefit of the accused or to enable the assessee to have the benefit of escaping income tax, is also not demonstrated with any particulars, in the absence of which, it could not be said that the charges could have been brought home. The court below, proceeding to make a re-assessment as it were and to hold that the accused had committed an offence and thereby caused loss to the revenue, is an exercise which is not contemplated in criminal law and in the absence of categorical allegations or charges being made, the court below proceeding to pass the judgment in the manner that it has, results in a miscarriage of justice. Particularly, the learned Senior Advocate would point out that on a point of law, it could not be said that the so-called irregularity or illegality committed by the appellant in this case would amount to a crime. On the 13 other hand, the law mandates that the appellant could not retain such impounded documents beyond a prescribed period and to do so, he requires the permission of his superior and such permission has been obtained once. The retaining of such impounded documents indefinitely being impermissible, the appellant has returned the documents after the assessment was made for the year 2004-05. There is no illegality and even otherwise, it is pointed out that on noticing that the document was no longer available, there has been a re-construction of the said document, as reflected in the judgment impugned. Therefore, there is no substance in the case of the prosecution.
4. The learned Standing counsel for the CBI on the other hand, would vehemently oppose this appeal and would seek to justify the judgment of the court below. He would particularly refer to Section 133-A of the IT Act and would also rely on sub-section (3) thereof to contend that without obtaining permission of the authority, the document could not have been returned. While also stating that from a reading of Section 14 13(1)(d) of the PC Act, it is not necessary for the prosecution to specify the revenue loss or other benefit which the accused may have obtained or any other person could have derived. It is sufficient if it is established that there was loss caused to the revenue and that there was pecuniary advantage to the assessee in view of the actions of the accused. It is in this vein that the learned counsel seeks to justify the judgment of the court below.
5. While by way of reply, the learned Senior Advocate would point out that it would be incorrect to contend that Section 13(1)(d) of the PC Act does not require the prosecution to specify the benefit that may have accrued to any other person. It would be contrary to the first principles of criminal jurisprudence if on such vague charges an accused could be held guilty. Not only the crime committed to be specified in particular, the loss or gain would also have to be specified. For otherwise, it is only on a vague charge the prosecution would be seeking to prove the case as against the accused. Further, 15 insofar as the reliance placed under sub-section (3) of Section 133-A of the IT Act, it is pointed out that under the proviso to the sub-section, if the documents had been impounded under sub-section 2A of the said section, then sub-section (3) does not apply and in the absence of any indication as to under which provision the documents were impounded, the benefit of the said proviso to sub-section 2A would be to the advantage of the accused and would thus contend that the appeal be allowed.
6. On a consideration of the above facts and circumstances, it is to be firstly noticed that the appellant was acting as an officer of the Department and was carrying out his official duties in passing an assessment order. The assessment order for the year 2004-05 was duly completed. The document in question which was impounded was in relation to the said assessment year. It is also not in dispute that the appellant had obtained permission to impound the documents beyond the prescribed period, from his superior authority. If once he has 16 obtained such permission and once the assessment order has been completed, the question of detaining the document indefinitely, did not arise. It is only on a re-look into the matter, the authorities had opined that the document was necessary to further address the exemption that was claimed by the assessee and since the document was not available, exception has been taken against the accused and he has been hauled up along with the appellant in the second of these appeals of having committed a grave crime, without specific information regarding the advantage that the appellants may have derived, or the monetary benefit which the assessee may have gained by virtue of this action. Therefore, even if it could be assumed that the appellant had deliberately acted in returning the impounded documents, in the absence of particulars of the amounts that may have changed hands, or the benefit that the assessee may have derived, it was not open for the court below to have carried out the exercise of re- 17 assessment as it were and then to conclude that there was indeed revenue loss, which is impermissible.
The criminality of the conduct of the appellant was to be established in an appropriate fashion, which has not been done. The fact that the accused was not examined and his statement under Section 313 of the Cr.P.C. was not recorded, would also be a ground which would, without entering upon the merits of the case, the accused could have been acquitted. In any event, from the facts and circumstances as narrated above, there is no case made out against the accused whatsoever and the court below was in serious error in having proceeded to hold that the charges have been brought home, when the charges itself were vague and not sufficient in detail for the prosecution to even establish its case. In that view of the matter, the appeal is allowed. The judgment of the court below is set-aside. The appellant is acquitted. The bail bond if any, stands cancelled. 18
In view of the first of these appeals having been allowed, the second of these appeals is also allowed. The judgment of the court below is set aside. The bail bond if any stands cancelled. The accused are acquitted.
Sd/-
JUDGE KS