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Petitioner: ALKESH SUBODHCHANDRA SHAH and others VS Respondent: STATE OF GUJARAT and JUDGMENT
Court Name: Gujarat High Court Judge(s): S. D. Dave Title:ALKESH SUBODHCHANDRA SHAH and others vs STATE OF GUJARAT and
JUDGMENT
Reported As: 1996 PTD 1052 Result: Order accordingly Judgment JUDGMENT ' These common orders shall govern the disposal of these three criminal revision applications presenting common questions of law and facts. ' The questions of law in the background of facts, undisputed and accepted, are: "(1) When the money and/or the value of the valuable articles, found during search operations during a year has been accepted as the deemed income of the assessee for such financial year by the Income-tax Department and also as wealth on the basis of the returns to be filed by the assessee, can there be a charge of a wilful attempt to evade income-tax and also the wealth tax for the said year? (2) Whether the orders of the City Sessions Court in revisional jurisdiction, quashing the magisterial orders discharging the accused, and directing the framing of the charges, can be said to be interlocutory orders, not amenable to revisional jurisdiction of this Court under section 397(2) of the Code of Criminal Procedure, 1973? (3) Whether, on the facts and in the circumstances of the cases, the assesee accused persons should have been put on trial for wilful attempt to evade income-tax and wealth tax?" ' To these questions, the answers in my view need to be in the negative. Criminal Revision Application No, 130 of 1989: ' The Income-tax Department had carried out search operations at the residential premises of the accused, Alkesh Shah, on January 24, 1984, exercising their power under section 132 of the Income Tax Act, 1961. During the search operations a cash amount of Rs,70,488 was recovered and/or found. Out of this, an amount of Rs,65,000 was treated as an amount of which the nature and
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source of acquisition were not explained. It appears that the necessary return for the Assessment year 1984-85 came to be submitted by the accusedassessee before the requisite date. It is not in dispute that the returned income, as shown by the assessee in the return, has been accepted and that tax thereon has also been assessed. It is also not in dispute that no penalty proceedings against the assessee accused were taken either for concealments of income or for showing incorrect particulars in the return. It is indeed true that some penalty proceedings were initiated against the accused-assessee on the ground that there was a delay in the payment of the instalment of the advance tax and that the correct particulars in respect of the advance tax were not given. But again, later on, these proceedings have been dropped. The factual and legal position therefore, identifiable from this set of facts, is that the amount so recovered during the search operations was shown by the assessee accused as his income in his return and the same has been accepted by the income-tax authorities and the assessment orders have been made. Anyhow it appears that, later on Criminal Cases Nos. 185 of 1986 and 236 of 1986 came to be instituted on the basis of two complaints filed by the competent officials. The said complaints related to the offence punishable under section 276-C of the Income Tax Act, 1961, and for the offence punishable under section 35-A(1) of the Wealth Tax Act, 1957. The evidence of the complainant was recorded and all the materials on which the prosecution wanted to place reliance was made available to the learned Additional Chief Metropolitan Magistrate. After that exercise was done, there was prayer coming from the assessee-accused that looking to the said material, he requires to be discharged from the proceedings. This prayer appears to have been accepted by the learned Metropolitan Magistrate on the ground that he could see no reasonable ground to believe that the accused has committed the offences as alleged by the Department. The learned Metropolitan Magistrate was also of the opinion that there was no sufficient material which would justify the framing of charges against the assesses accused. This view was taken and expressed by the learned Additional Metropolitan Magistrate by his orders, dated June 16, 1985. Being aggrieved and dissatisfied with the abovesaid orders, the Department had preferred the Criminal Revision Application No,200 of 1985 before the City Sessions Court, Ahmedabad. The prayer of the Department was that the orders of discharge pronounced by the Court below were not in accordance with law and that, therefore, the framing of the charge was necessary, regard being had to the factual and legal position. This prayer was countenanced by the learned Additional City Sessions Judge, vide his orders, dated February 13, 1989. After allowing the criminal revision application and after setting aside the orders of the Court below, the learned Additional City Sessions Judge has ordered framing of the charge. These orders dated February 13, 1989, are in challenge in Criminal Revision Application No, 130 of 1989. ' These proceedings are almost similar to the previous proceedings. In this case, the residential premises of petitioner-accused, Kaushikumar, came to be raided on the same date, i,e,, January 24, 1984, and search operations were carried out. It is the case of the Department that cash amount of more than Rs,4,00,000, jewellery of the value of Rs,93,590 gold ornaments of the value of Rs,1,69,355 and silver bars of the value of Rs,59,685 were recovered. In this case also, the assessee- accused had shown the said amount and the value of the jewellery, the gold ornaments and silver bars as his income from other sources and that, the necessary return was submitted by him on June 30, 1984, under which the returned income was in a sum of Rs,7,37,460. The assessee-accused had also submitted the wealth tax return in which this amount and/or the value of the articles was also included. The assessm ent proceedings under the Income Tax Act, 1961 and under the Wealth Tax Act, 1957, have been duly completed. As in the former case, in this case also no penalty proceedings were initiated either on the ground of concealment of income or on the ground of showing incorrect particulars in the return. The returned income as disclosed by the assessee- accused admittedly came to he accepted by the Department and assessment orders have been
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made in this respect. Anyhow, later on, in this case also three criminal cases, namely, Criminal Case No,24 of 1986, Criminal Case No,472 of 1986 and Criminal Case No,476 of 1986, came to be filed by the officials of the Income-tax and Wealth tax Departments, in the Court of the learned Additional Chief Metropolitan Magistrate on similar allegations. A similar prayer was mooted by the accused-assessee saying that requires to be discharged from all the three cases, as material brought before the Court would not go to show any case which could be tried against him. As in the previous case, in this case also, this prayer emanating from the assessees accused came to be countenanced by the learned Additional Chief Metropolitan Magistrate, vide his orders dated June 20, 1988. The Department feeling aggrieved and dissatisfied with these orders had filed the Criminal Revision Application No, 202 of 1988 which came to be allowed under the orders of the learned Additional City Sessions Judge, dated February 13, 1989, and the orders of discharge as pronounced by the Court below came to be quashed and set aside. It was also ordered and directed that the charge should be framed against the assessee-accused in all the above noticed three cases. These orders are under challenge in the present criminal revision application. Criminal Revision Application No, 132 of 1989: ' The residential premises of the assessee-accused, Pariesh Shah, came to be raided on January 24, 1984, and search operations were carried out as it had happened in two previous cases. An amount of Rs,15,000, jewellery of the value of Rs,59,435, and some silver utensils were found during the search operations. The assessee-accused had submitted the return of his income for the Assessm ent year 1984-85 and had declared income of Rs,1,33,220, as income from other sources. The returned income was accepted by the Department and the assessment proceedings have been completed and the necessary assessment orders have been made, on October 29, 1984. The assessee accused had submitted the necessary return under the Wealth Tax Act and the assessm ent proceedings were also concluded. In this case also, no penalty proceedings were initiated by the Department either on the count of concealment of income or of showing incorrect particulars in the returns. The penalty proceedings were indeed initiated in respect of the advance tax legislation but they were ultimately dropped. Thus, in this case also, the income and the wealth as disclosed by the accused-assessee came to be accepted by the Department and the necessary Assessm ent orders have been made. Anyhow two complaints were filed against the assessee-accused, they being Criminal Case No, 12 of 1986 and Criminal Case No, 13 of 1986. In these two cases also, after the examination of the complainant and after the necessary material was submitted before the Court below, there was a prayer on behalf of the accused-assessee urging that as no case is being made out for the alleged commission of the two offences, he requires to be discharged. This prayer came to be recognized by the learned Additional Metropolitan Magistrate, vide his orders, dated September 30, 1986. As the assessee-accused came to be discharged under the said orders, the complainant Department filed criminal revision applications which came to be allowed by the learned Additional City Sessions Judge, Ahmedabad, under his orders, dated February 13, 1989. Under these orders, the orders granting discharge came to be set aside and the charges were directed to be framed against the assessee-accused. These orders are in challenge in the present criminal revision application. ' The learned Additional Metropolitan Magistrate was of the view that, when no satisfactory explanation was emanating from the accused-assessee, the money and/or the value of the articles found, shall be deemed to be the income of the accused-assessee from undisclosed sources in that particular financial year and that, when the respective accused had submitted the returns showing the concerned amount or the value of the articles as his income from undisclosed sources and when such a case put forth by the assesses has been accepted and the assessment orders have been made and the tax also had been paid, the assesses accused were required to be
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discharged under section 245(1) of the Code of Criminal Procedure, 1973. A similar view has been taken in the cases punishable under section 35-A(1) of the Wealth Tax Act, 1957. ' It appears that the above said view expressed by the learned Metropolitan Magistrate came to be set at naught by the City Sessions Court, Ahmedabad, while accepting that, though the change of the previous year was not unlawful it was obvious that the change would not have been made by the assessee-accused but for the fact of the search operation and the kind of money and certain other valuable articles". It was also the view expressed by the City Sessions Court that the enabling provisions contained in section 69-A of the Income Tax Act, 1961, could not and should not be treated as nullifying the penal consequences following the assessee's inability to explain the nature and source of acquisition of the money and the articles. It is also said and expressed that different provisions contained in the Income Tax Act, 1961, and the Wealth Tax Act, 1957, are meant for or intended to advance, the purpose of the taxing statutes and not "to annihilate the real meaning and intent of each other". It was also the view expressed by the City Sessions Court, that according to the scope or the meaning of the relevant statutory provision as urged by the accused assessee would give a lever to the assessee to escape conveniently, from the penal consequences by merely and simply showing the discovered amount or the value of the discovered articles as his income from other sources in the financial year. This reasoning adopted by the City Sessions Court, while allowing the revision application and setting aside the orders of discharge pronounced by the Court below comes under a searching questionnaire and then under a serious challenge at the hands of learned counsel Mr. Kaji, who appears on behalf of the petitioner-accused-assessee. ' Learned counsel, Mr. Kaji, would urge that reading the provisions of sections 14, item F and 56(1) of the Income Tax Act, 1961, as they stood at the relevant time, the discovered amount or the value of the discovered articles, jewellery, etc., should be deemed to be the income of the assessee from other sources and that, under section 69-A of the Act of 1961, if the assessees was found to be the owner of any money, jewellery or valuable article not recorded in the books of account, if any, to be maintained by him and the assessees has no explanation about the nature and sources of acquisition of the same or if the explanation offered by him is not in the opinion of the Income-tax Officer satisfactory, the money and or the value of the jewellery or valuable article shall be deemed to be the income of the assessee for such financial year. Learned counsel, Mr. Kaji, would also urge under section 3(1)(a), 'the previous year would mean any financial year preceding the Assessment year and under section 3(3) of the Act of 1961, an assessee may have different previous year in respect of separate sources of his income and under section 3(1)(f) of the Act, where an assessee is a partner in a partnership-firm and the firm has been assessed as such, then, in respect of the assessee' s share in the income of the firm, the period determined as the previous year for the assessm ent of the income of the firm shall be the previous year for the assessment of the share income of the partner. It is also the contention emanating from learned counsel, Mr. Kaji, that, under section 139 of the Act, the respective petitioner-accusedassessee was required to file his return before the 30th day of June, 1984, and that the same has been done. Mr. Kaji would also further urge that the amount recovered or the value of the articles, recovered, have been shown as the income of the assesses from other sources and the same has been treated as income from undisclosed sources for that financial year and that the income so returned has been accepted by the Department and that the assessment orders have, been made and the tax has been paid, and that no penalty proceedings either for concealment of the income or for furnishing incorrect particulars in the returns have been initiated. Mr. Kaji, therefore, on these facts and circumstances would ultimately urge that all that the assessee were under duty bound, required to do under the relevant statutory obligations having been done by them, has been accepted by the Department. Learned counsel, Mr. Kaji, would also further urge that, loading to the, provisions contained under section 44-AA and the provision in Chapter 16 of the Act, it is clear that when the petitioner-
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accused-assessee had only income from the partnership business he was not required to maintain any account books and that the view taken by the Court below in this respect appears to be ex facie erroneous. Lastly, learned counsel would urge that the material made available to the Court below would not show a prima facie case of any wilful attempt to evade income-tax or wealth tax within the meaning of section 276-C of the Income Tax Act, 1961, or under section 35-A of the Wealth Tax Act, 1957, respectively, and that, regard being had to all these, the learned Metropolitan Magistrate was perfectly justified in ordering the discharge and that, there was no reason for the learned City Sessions Judge to cause any interference in these orders which appear to be in complete consonance with the law on the question. ' Anyhow, learned standing counsel, Mr. B.B. Naik, appearing on behalf of respondent No,2, while taking a preliminary objection would urge that, the present criminal revision applications are not maintainable under section 397(2) of the Code of Criminal Procedure, 1973, as having been directed against the interlocutory orders pronounced by the learned Additional City Sessions Judge. It is also the contention coming from learned counsel, Mr. Naik that the facts and circumstances of the case would go to show that, it was not open to the learned Metropolitan Magistrate to discharge the petitioner-accused while acting under the provisions contained under section 256 of the Code of Criminal Procedure, 1973, because it could not have been said, that no case against the accused was made out which if unremitted would warrant his conviction. Lastly upon a re-reading of the relevant provisions of the Income Tax Act, 1961, and the Wealth Tax Act, 1957, learned counsel would urge ihat, the material adduced before the trial Court unerringly demonstrate the wilful attempt on the part of the assessee to evade tax and that, therefore, the learned Magistrate was not justified in ordering a discharge. On the very same ground and on the basis of the very same statutory provisions learned counsel would urge that no interference with the orders under challenge would appear justifiable. ' The learned Government Counsel, Mr. S.T. Mehta, appearing on behalf of the State Government would endorse in detail, all that has been said by learned standing counsel, Mr. Naik, and would urge with added vehemence that there is no reason for me either in law or on the facts to interfere with the orders of the learned Additional City Sessions Judge. ' Taking up the first contention regarding the maintainability of the present criminal revision application, a reference shall have to be made to the provisions contained under subsection (2) of section 397 of the Code of Criminal Procedure, 1973. Placing reliance upon these provisions both Mr. Naik and Mr. Mehta would urge that the orders under challenge being purely interlocutory in nature could not have been challenged by way of filing the present criminal revision applications and that, under the very same provisions the present proceedings are barred. The question which, therefore, would arise is as to whether the orders under challenge can be said to be interlocutory in nature, against which no revision could be maintainable before this Court. ' Mr. Naik and Mr. Mehta in this respect, would firstly place reliance upon the Supreme Court Pronouncement in Amar Nath v. State of Haryana, AIR 1977 SC 2185. This pronouncement of the Supreme Court while explaining the term "interlocutory order" occurring in section 397(2) of the Code that he has said that the said term has been used in a restricted sense and that any order which substantially affects the rights of the accused or decides certain right of the parties, cannot be said to be an interlocutory orders so as to bar a revision to High Court. It is also stated by way of instance that certain orders summoning witnesses, adjourning cases, passing order for bail and calling for the reports, etc., cannot be said to be final orders and that they would be the steps in aid of the pending proceedings and may amount to interlocutory orders against which no revision would lie. Anyhow, it is pointed out that those orders, which are matters of moment and which affect or adjudicate upon the rights of the accused or a particular aspect of the trial, cannot be said to be interlocutory. It has been pointed out further that, the orders compelling the appellant to
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face a trial, without proper application of mind cannot be held to be an interlocutory matter but one which decides a serious question as to the rights of the appellant to be put on trial. A momentary reversion to the facts of the cases on hand to reckon and appreciate that there are serious disputes as to the rights of the petitioner accused to be put on trial, though appearing to be side-tracking, would be a step in the right direction. ' The second decision on which reliance has been placed in this respect, is the Supreme Court Pronouncement in V.C. Shukla v. State, AIR 1980 SC 962. In this pronouncement while examining the provisions contained under section 11 of the Special Courts Act, 1979 and under section 397(2) of the Code of Criminal Procedure, the expression "interlocutory order" has been explained. No doubt, though in the context of section 11 of the Special Courts Act 1979, but also in the context of the provision contained under section 397(2) of the Code, it is said that, the order of farming charges is purely an interlocutory order as it does not terminate the proceedings but the trial goes on until it culminates in acquittal or conviction. Heavy reliance has been placed upon this say of the Supreme Court, by learned counsel Mr. Naik and Mr. Mehta while urging that the present revision applications against the interlocutory orders telling the trial Court to frame charges would not be maintainable. As against this, learned counsel, Mr. Kaji, appearing on behalf of the petitioner, would invite my attention to what the Supreme Court has said in Madhu Limaye v. State of Maharashtra, AIR 1978 SC 47. irstly, it has been made clear that the bar under section 397(2) will not operate to prevent the abuse of the the of the Court and/or to secure the ends of justice because the label of the petition filed by the aggrieved party is not material and the High Court can examine the matter is an 'appropriate case under its inherent powers. What is yet more important in, the following say of the Supreme Court contained in paragraph 15 of the decision (headnote): "An order rejecting the plea of the accused on a point which, when accepted, will conclude the particular proceeding, will surely be not an interlocutory order within the meaning of section 397(2)." ' The abovesaid say of the Supreme Court would go to show conclusively that an order rejecting the plea of the accused on a point, which when accepted will conclude to proceedings, would surely not be an interlocutory order within the meaning of section 397(2) of the Code. Great emphasis has rightly been placed on these observations by learned counsel, Mr. Kaji, while persuading me to take a. View that if in this case also the order rejecting the plea of the accused had been accepted, it would have concluded the proceedings initiated by the Department and, therefore, the orders cannot be said to be interlocutory. Looking to all that has been said by the Supreme Court in this pronouncement, it appears that, there is considerable force in the contention being raised by learned counsel, Mr. Kaji, in this respect. The plea of the accused, namely, that the material does not disclose a case on which they could be tried before the trial Court, which was already accepted by the learned Metropolitan Magistrate, if it were to be again accepted by the learned Additional City Sessions Judge, then definitely there should have been a conclusion of the proceedings launched against the petitioner-accused. Viewing the matter from this angle it appears that the orders under challenge cannot be said to be interlocutory orders against which the revision application would not be maintainable before this Court. ' In Haryana Land Reclamation and Development Corporation Ltd. v. State of Haryana, Crl.L.R. (SC) 412, the orders of discharge passed by the Chief Judicial Magistrate were held not be falling within the dentition of the term "interlocutory". It was also pointed out that inherent powers of the High Court were not limited. ' On a conspectus of the view expressed by the abovesaid pronouncements, it is clear that the orders passed by the learned Additional City Sessions Court in a revision now cannot be termed as interlocutory orders. As pointed out, if the plea of the petitioner-accused were to be accepted, as was done by the trial Court, then definitely the proceedings against all the petitioners could have
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been concluded and that also in their favour. One more aspect which requires consideration is the real intent and the purport of the provisions contained under section 397(3) of the Code of Criminal Procedure, 1973. This provision while eliminating the scope of two successive revision petitions by the same party would say that, if a revision application under this section has been made by any person either to the High Court or the Sessions Judge, no further application by the same person shall be entertained by either of them. But when once the revision application has been accepted by the Sessions Court and a finding adverse to…
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