V. KHALID J. - The main question that arises for consideration and falls for my decision in this case, whether the ITO is a court within the meaning of s. 195(1)(b) of the Cr. PC. Although this was the main question raised before the Chief Judicial Magistrate, Ernakulam, now an additional ground is urged, that the complaint does not disclose any mens rea. No mens rea can be attributed to A-1, a company. It is further submitted that there are no materials in the complaint specifying the individual acts done by the other accused, nor is the group liability section invoked therein.
There are in all six accused. First accused is the company. The 2nd accused is the managing director. Accused Nos. 3, 4 and 5 are the directors and A-6 is the secretary. The jurisdiction invoked in this application is the inherent jurisdiction of this court under s. 482, Cr. PC.
The facts necessary for the disposal of this petition can be briefly stated as follows: The company filed before the ITO, Bombay, its return of income for the assessment year 1967-68 in respect of the accounting year ended March 31, 1967. The return was filed on December 30, 1967. During the course of the assessment proceedings of the company, the cash book and ledger for the year ended March 31, 1967, were produced before the ITO, B-Ward, Companies Circle, Ernakulam. In the said book, it is alleged, there was a false entry showing a cash receipt of Rs. 30,000 from M/s. K. R. P. Chettiar and Sons, Trichinapally. According to the complaint no such concern existed. That, according to the complainant, was a fabrication. It is also averred in the complaint that in furtherance of the fabrication mentioned above and in support of the alleged bogus claim of credit, the accused produced before the ITO, B-Ward, Companies Circle, Ernakulam, a carbon copy of a cash receipt issued by the accused for the amount of Rs. 30,000 of this non-existing company.
The ITO, B-Ward, Companies Circle, Ernakulam, passed the assessment order without accepting the accounts produced by the company. Against this assessment order an appeal was filed before the AAC. After the passing of the assessment order, the then B-Ward Officer, who completed the assessment order, was transferred as the officer-in-charge of the Special Circle, Ernakulam, and all the files of the company were also transferred to the special circle. While the appeal was pending, the ITO, Special Circle, decided to prosecute the company and the directors for offences under ss. 193 and 196, IPC, on the allegation that the documents produced in support of the repayment of Rs. 30,000 to M/s. K. R. P. Chettiar and Sons are forged documents since the said concern is a fictitious one invented by the accused for the purpose of making a false entry. The ITO, Special Circle, obtained the sanction of the Commissioner of Income-tax, Kerala, for filing the complaint under s. 279 of the I.T. Act. The complaint is dated 12th June, 1974, and the Chief Judicial Magistrate, Ernakulam, took it on file as C.C.No. 104 of 1974.
The accused appeared before the Magistrate and challenged the maintainability of the complaint. The main question that was agitated before the Magistrate was about the non-maintainability of the complaint in so far as the complaint was not filed in compliance with the provisions contained in s. 340 of the Cr. PC, on the basis that the ITO is court within the meaning of s. 195(1)(b) of the Code.
Counsel for the petitioner laid considerable stress on the decision of the Supreme Court in Lalji Haridas v. State of Maharashtra : 1964CriLJ249 . The short question that arose before the five judges of the Supreme Court was whether the proceedings before the ITO under s. 37 of the Indian I.T. Act, 1922, can be said to be a proceeding in any court within the meaning of s. 195(1)(b) of the Cr. PC, then in force. In that case, the allegation against the accused was that he gave evidence on oath which was found to be false. The court was sharply divided and Gajendragadkar C. J., spoke for the majority, three as against two. I read the following observation from the judgment (p. 425):
'That is how the narrow question which arises for our decision in the present appeal is whether the proceedings before an Income-tax Officer are proceedings in any court under section 195(1)(b), Code of Criminal Procedure. The question thus raised is undoubtedly a short one, but its decision is not easy, because the arguments urged in support of the two respective constructions are fairly balanced and the task of preferring one construction to the other presents some difficulty.'
This decision was rendered before the new Cr. PC came into force. I can understand the temptation, in the search of an argument, on the part of the petitioners counsel, to lay stress on this decision, for, were it not for the insertion of sub-s. (3) in s. 195 in the new Code, the said decision would have been a standing authority on the question now at issue before me. The task before me is, therefore, to see whether the effect of that decision has been taken away by the insertion of sub-s. (3) in s. 195 of the new Code.
What the above decision lays down has been clarified by the Supreme Court in Balwant Singh v. L. C. Bharupal, ITO : 70ITR89(SC) as follows:
'In view of these provisions, the majority view was that proceedings before the Income-tax Officer are judicial proceedings for the purposes of sections 193, 196 and 228 of the Penal Code and though the court did not go into the general question whether the officer is a court or not held that those proceedings must be treated as proceedings in a court for the purposes of section 195(1)(b) of the Code of Criminal Procedure. They, therefore, held that the condition precedent prescribed by those provisions had not held that been complied with as a complaint in that case was not filed by the Income- tax Office. The court also observed that though the said proceedings are to be treated as proceedings in a court, the Income-tax Officer was not a revenue court.'
Therefore, it cannot be disputed that the Supreme Court decision mentioned above is an authority for the position that proceedings before an Income-tax Officer is a proceeding in a court, for the purposes of s. 195(1)(b) of the Code. But the question at issue assumes a different character, with the introduction of sub-s. (3) in s. 195.
Before I consider this section, I would like to refer to a decision rendered by me, which is reported in : 106ITR571(Ker) (Friends Union Oil Mills v. ITO). I am happy that an opportunity has presented itself before me to explain and clarify what I said there. Although by some omission or oversight, the decision in Lalji Haridas v. State of Maharashtra : 1964CriLJ249 , was not cited before me, I held that the ITO is not a court. This was on first impression. I am happier, that on first impression, I slipped into the correct conclusion. If the complaint in that case was filed before the coming into force of the new Code, that decision would not have laid down the correct law. On the facts of that case, since the complaint there was after the new Code, the decision has laid down the correct law, although unaided by the observations of the Supreme Court and without adverting to the provisions contained in sub-s. (3) of s. 195.
Now, I shall read s. 195(3) for a proper application of the case before me. It reads as follows:
'195. Prosecution for contempt of lawful authority of public servants, for offences against public justice and for offences relating to documents given in evidence.-
(3) In clause (b) of sub-section (1), the term court means a civil, revenue or criminal court, and includes a tribunal constituted by or under a Central, Provincial or State Act if declared by that Act to be a court for the purposes of this section.'
Counsel for the petitioner brought to my notice a decision of the Bombay High Court in Premchand Maneklal, In re : AIR1914Bom138 and also other decisions, which had taken the view that the Income-tax Officer is a court. He also read from passages from Interpretation of Statutes by G. P. Singh at pp. 8 and 9 and Craies at p. 213. I do not think that these authorities are useful while interpreting sub-s. (3) of s. 195. Those passages are helpful only if the section was not clear. Here, the sub-section is clear. I need not go to any authority to interpret the said section.
Now, this section defines 'court' to mean, civil, revenue or a criminal court in its first part. It cannot be contended that an ITO is a civil court. Nor is it a criminal court. It cannot be contended either that it is a revenue court since it has been decided in Balwant Singh v. L. C. Bharupal, ITO : 70ITR89(SC) that it is not a revenue court by the Supreme Court. Then, we have to examine the latter part of the sub-section and see what it lays down. The term 'court', for the purpose of s. 195, includes 'a Tribunal constituted by or under a Central, Provincial or State Act if declared by that Act to be a court for the purposes of this section'. Therefore, under the new Code, an ITO can be said to be a court only when it is a Tribunal constituted by an Act and if that Act declares the said Tribunal to be a court for the purpose of this section. There is no Act which has done so. Therefore, it has to be held that the ITO is not a court within s. 195(1)(b). Therefore, the contention based on the non- conformity with s. 340 of the Cr. PC, on the ground that the ITO is a court, has to be negatived.
The petitioners counsel then contended that he is entitled to the protection given by the Voluntary Disclosure of Income and Wealth Ordinance XXIII of 1975. According to him, the petitioner had made a clean breast of all the wealth and had included the 30,000 rupees which is the subject-matter of the prosecution, when he made the disclosure. One looks in vain into the provisions of this Ordinance for any provisions which confers a benefit on the petitioner from prosecution which he has to face in order to enable this court to confer on him such benefit. The only provision that can apply in such a case is s. 14 of the Ordinance. Section 14 only saves prosecutions under the provisions of the I.T. Act and W.T. Act. Section 14(1) (c)(iv) reads:
'14. Disclosure of income in cases of search and seizure.-Subject to the provisions of this section, where any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to a person have been seized as a result of a search under section 132 of the Income-tax Act or section 37A of the Wealth-tax Act, and such person, (hereafter in this section referred to as the declarant) makes on or after the date of commencement of this Ordinance but before the first day of January, 1976, a declaration in accordance with sub-section (2) in respect of any income relating to the previous year in which such search was made or any earlier previous year-...
(c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Indian Income-tax Act 1922, or the Income-tax Act, or to disclose fully and truly all material facts necessary for assessment or otherwise.
then, notwithstanding anything contained in any of the Acts mentioned in sub-section (1) of section 8 of the Wealth-tax Act, the amount of income so declared or, as the case may be, the value of the assets representing such income, shall not be taken into account for the purposes of -...
(iv) prosecution of the declarant under the provisions of any of the said Acts.'
Thus, protection can be given only if the present prosecution comes within this specific provision. The present complaint is not one under the Acts mentioned in sub-cl. (4). This argument also is not available to the petitioner.
The further contention raised is that, since in the appeal the original assessment was set aside, all the proceedings taken pursuant to that assessment should also be deemed to have been quashed. No argument is necessary to hold that prosecution of the kind that I have before me, has independent existence, irrespective of what happens to the assessment proceedings. There is a specific object in making these proceedings independent, for, where officers feel that they cannot by themselves impose sufficient penalty in certain cases, law should provide the means to enable the said officers to move appropriate courts to render appropriate punishments commensurate with the gravity of the offences.
The last submission made before me, which was not raised before the Chief Judicial Magistrate, is on the wording of the complaint itself. It was contended that the first accused is a company. A company cannot have mens rea. If the entire complaint is read, it is seen that all the allegations are against the company. No individual acts against the other accused have been indicated, nor are they roped in by virtue of the group liability section. These are matters to be gone into by the trial court on evidence. It would not be proper to exercise inherent jurisdiction under s. 482, Cr. PC at this stage. The prayer, therefore, to quash the proceedings before the Chief Judicial Magistrate on these submissions cannot be allowed.
In my judgment, therefore, this petition has to fail and criminal miscellaneous petition is accordingly dismissed.