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ANSWERS TO THE QUESTION OF LAW

42. So far as question Nos 1 & 2 are concerned, Shri Bagadiya, NEUTRAL CITATION NO. 2025:MPHC-IND:19701 W.P. No.4554 of 2006 & Others learned Senior Counsel, has placed heavy reliance upon a judgment delivered by the Apex Court in the case of V.C. Shukla (supra). As per the facts of the case, the CBI New Delhi searched the premises of J.K. Jain at G-36 Saket, New Delhi. In the course of the search, CBI recovered two diaries, two small notebooks and two files containing details of receipts of various amounts from different sources and details of payment to various persons recorded in an abbreviated form. Preliminary investigation revealed the transfer of huge amounts of money through hawala channels to 115 persons, including politicians, from 1998 to 1991. The CBI registered an FIR under Sections 7 & 12 of the Prevention of Corruption Act and Section 56 r/w section 81 of the Foreign Exchange Regulation Act, 1973 against the Jains, some private servants and upon completion of investigation, filed 34 charge-sheets in the Court of Special Judge. In the charge-sheet, Shri L.K. Advani and Shri V.C. Shukla, the then Member of Parliament, were added as co-accused. Thereafter, the charges were framed and the petitions under Section 482 of the Code of Criminal Procedure, 1973, were filed before the Delhi High Court seeking quashment of the FIR and charges. The writ petitions were allowed by common order, and the proceedings of two cases, i.e. CC No.15/1996 & CC No.17/1996, were quashed, in which Shri L.K. Advani and Shri V.C. Shukla were added as accused.

43. In the said case, the issue came up for consideration before the Apex Court whether loose sheets or scraps of papers can be treated as entries in the books of account regularly kept in the course of business. The Apex Court in paragraphs - 46 & 47 held that statements in the books of account of persons are admissions and can NEUTRAL CITATION NO. 2025:MPHC-IND:19701 W.P. No.4554 of 2006 & Others be used against Jains, but cannot be used against any person like Shri L.K. Advani or Shri V.C. Shukla. But in the present case, all these materials collected from the premises of Lunkad Media & Entertainment were duly examined and verified from the bank accounts' statement by the Assessing Officer against the appellants. The appellants, being assessees, were given ample opportunity to produce the concrete material to rebut the same, but even no income tax return was filed to explain those money receipts. Therefore, in the hawala case, the evidentiary values of these materials were examined under the provisions of the P.C. Act and the Indian Evidence Act. But in the present case, the search was conducted by the Income Tax Authorities in the companys' affairs and the Income Tax Authority examined all the material, which was confirmed by the Commissioner of Income Tax as well as the ITAT. Therefore, loose scrap papers containing certain entries of money were found in corroboration with the bank statements, and the same were duly appreciated by the Assessing Officer, CIT as well as ITAT, and all the correspondence money found in the bank account has rightly been treated as books of account. Hence, the facts and the law involved in the case of V.C Shukla (supra) are different from the case at hand. Hence, question Nos. 1 & 2 are answered against the petitioners/appellants.