Income Tax Officer, Jind vs M/S. Mangat Ram Norata Ram Narwana & Anr

REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO(s). 8 OF 2005

INCOME TAX OFFICER, JIND Appellant (s)

VERSUS

M/S. MANGAT RAM NORATA RAM NARWANA & ANR Respondent(s)

O R D E R

The

Income

Tax

Officer,

aggrieved

by the

acquittal

of the

respondents has preferred this appeal with leave of the Court.

According to the prosecution, respondent no.1 M/s. Mangat

Ram Norata Ram is a partnership firm carrying on the business

of sale and purchase of machinery, iron pipes and spare parts.

Respondent No. 2 accused Hem Raj happened to be one of its

partner. M/s. Mangat Ram Norata Ram (hereinafter referred to

as "the Firm") filed its income tax return for the assessment

year 1988-89 on 14th July, 1988 through its counsel, which was

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signed and verified by Hem Raj, its partner. The income-tax

return showed the income of the firm Rs.1,02,800/-. Return was

accompanied by statement of income, trading accounts, profit &

loss account, partnership account and balance sheet for the

assessment year 1988-89. The assessment was completed by the

then Income Tax Officer under Section 143(3) of the Income Tax

Act for Rs.1,47,370/-.

Further

case of

the

prosecution is that the books of the accounts of the firm were

taken into possession by the Sales Tax Department, which were

obtained by the Income Tax Department and on its perusal

discrepancies relating to entries of income, sale and purchase,

bank account etc. were noticed and accordingly a notice under

Section 148 of the Income Tax Act (hereinafter referred to as

'the Act') was issued requiring the respondents to furnish a

revised return within 30 days. The respondents did not comply

3

with the notice and thereafter notice under Section 142(1) of

the Act was issued and the assessee firm ultimately filed its

income tax return declaring its income of Rs.1,47,870/-. The

prosecution has alleged that this return was duly signed and

furnished by accused Hem Raj, which was accompanied by revised

statement of income, trading account and profit and loss

account. All these documents, according to the prosecution

were also signed by accused Hem Raj. On consideration of the

same, the

Assistant

Commissioner of Income Tax made addition of Rs.1,28,000/- with

trading account, Rs.1,10,000/- in bank account and Rs.19,710/-

as additional income and assessed the total income to

Rs.3,68,200/- and directed for initiating penalty proceedings.

Ultimately, the minimum penalty of Rs.1,24,950/- was

imposed under Section 271(1)(c) of the Act and further a sum of

Rs.7890/- and Rs.12,680/- under Section 271(1)(a) of the Act.

The respondent firm filed appeal against the imposition of

4

penalty which was dismissed by the Commissioner of Income Tax

(Appeals). The respondents had paid the penalty inflicted on

the firm.

A complaint was also lodged for prosecution of respondents

under Section 276C (i), 277 and 278 of the Act. The trial

court on appraisal of the evidence held both the respondents

guilty and awarded a fine of Rs.1000/- each under Section

276C(1), 277 and 278 of the Act to respondent no.1, the firm,

whereas,

respondent no.2 was sentenced to undergo rigorous imprisonment

for one year and to pay a fine of Rs.1,000/- on each count and

in default to suffer simple imprisonment for three months.

Respondents aggrieved by their conviction and sentence

preferred appeal and the Appellate Court set aside the

conviction and sentence on the ground that sanction for

prosecution was not valid. The Appellate Court further held

that the prosecution has not been able to prove the signature

5

of respondent no.2 in the return filed, and hence, the

conviction is bad on that ground also. The Income Tax Officer

aggrieved by the acquittal of the respondents preferred appeal

and the High Court by its impugned judgment upheld the order of

the acquittal and while doing so observed that the sanction is

valid but maintained the order of acquittal on the ground that

the prosecution has not been able to prove that the return was

signed/verified by respondent no.2. The observation of the

High

Court in

that

regard

reads as

follows:

"Irrespective of the above decision as regards grant of sanction and the requirement for hearing the accused, fact remains that there was insufficient proof that the return had been signed/verified by Hem Raj. Statement of Desh Bandhu Goyal (PW 2), the officer who made the final assessment, was to the effect that the return had not been signed/verified in his presence. Furthermore, other witnesses namely Satish Kumar, UDC (PW1), J.K.Sahni (PW 3) and Satish Luthra (PW 4) had not proved Hem Raj's signatures. The prosecution case was that the return had been revised and submitted through a counsel and returns were never signed by the partners in the presence of the Income tax

6

Officer. Therefore, the learned Additional Sessions Judge held that it had not been proved that the return had been signed/verified by Hem Raj as the counsel who had filed the return had not been examined and there was no evidence that it was Hem Raj who had signed the return even though the name Hem Raj appeared on the return. The prosecution could have examined a hand writing expert but failed to do so. For all these reasons the learned appellate court accepted the appeal and acquittal the respondents. The appellate court had taken a plausible view. It was neither perverse nor illegal. No ground exists to interfere with the decision of the appellate court".

Mr. Mukul Gupta, learned Senior Counsel appearing on

behalf of the appellant submits that the accused invited the

order of the Income Tax Authority on the return so filed and

aggrieved by the order of Income Tax Officer preferred appeal.

According to him after the dismissal of the appeal by the

Appellate Authority, the accused paid the penalty and these

facts having been proved by the evidence laid by the

7

prosecution it was for the accused to disprove that the

signature on the income tax return was not his.

Mr.S.S.Khanduja, learned counsel appearing on behalf of

respondent submits that in the case of prosecution of an

accused the onus is always on the prosecution to prove all the

ingredients to bring home the act within the mischief of penal

provision and the prosecution having not proved that the

signatures are of accused Hem Raj, the order of acquittal does

not call

for

interference by this Court in the present appeal.

We have bestowed our thoughtful consideration to the

submission advanced.

True it is that PW 2 Desh Bandhu Goyal, who made the final

assessment did not state in his evidence that the return was

signed or verified by the accused Hem Raj in his presence.

Further the witnesses; namely Satish Kumar (PW1), J.K.Sahni (PW

3) and Satish Luthra (PW 4) have not proved the signatures of

8

Hem Raj. But this, in our opinion would not be sufficient to

throw out the case of the prosecution. The prosecution

undoubtedly is to prove its case beyond all reasonable doubt to

bring home the charge. The evidence for that purpose could be

admission of the accused also. Here in the present case,

prosecution had led evidence to prove that revised return was

filed by the firm under the name of accused Hem Raj and on that

basis assessment was made by the assessing authority. There is

further

evidence

to show

that

aggrieved

by the

order of

asssessing authority, appeal was preferred before the appellate

authority under the signature of the accused Hem Raj, which was

dismissed and the penalty was paid. At no point of time

accused Hem Raj made any objection that the return did not bear

his signature and was not filed by him. It is trite that

admission is best evidence against the maker and it can be

inferred from the conduct of the party. Admission implied by

conduct is strong evidence against the maker but he is at

9

liberty to prove that such admission was mistaken or untrue.

By proving conduct of the accused Hem Raj in not raising any

dispute at any point of time and paying the penalty, the

prosecution has proved his admission of filing and signing the

return. Once the prosecution has proved that, it was for the

accused Hem Raj to demonstrate that he did not sign the return.

There is no statutory requirement that signature on the return

has to be made in presence of the Income-tax authority.

Nothing

has been

brought

in

evidence

by the

accused

Hem Raj

that

signature

did not belong to him on the return and the penalty was paid

mistakenly. We are of the opinion that the appellate court

misdirected itself in not considering the evidence in right

perspective and acquitting the accused, so also the High Court

which failed to correct the apparent error. This render their

judgments unsustainable. Any other view may induce the

appellant to compel the assessee to file return in the

presence of the authority so that the signature is proved by

10

direct evidence by such authority in trial. This will lead to

a difficult situation not contemplated under the Act.

Accordingly, this appeal is allowed, impugned orders are

set aside and the judgment of conviction passed by the Chief

Judicial Magistrate is restored. However, we reduce the

substantive sentence from one year to six months on each count

and they are directed to run concurrently.

........................J (HARJIT SINGH BEDI)

.........................

J (CHANDRAMAULI KR. PRASAD) NEW DELHI MAY 5, 2011