Tuesday, 8 November 2016

HC acquits I-T officials convicted in lower court

Bangalore Mirror d. 7/11/16
The two were convicted on charges of causing a Rs 10-cr loss to income tax dept

The High Court has overturned the verdict of a lower court and has acquitted two senior income tax (I-T) officials convicted on July 30 for five years on charges of causing a loss to the department to the tune of Rs 10.26 crore.

It was one of the high-profile cases last year as the legal counsel of one of these officials had sought permission to cross- examine President Pranab Mukherjee for sanctioning prosecution of his client, a high-serving I-T official.

The case, when it came before Justice Anand Byrareddy, had some heavyweights (two senior I-T officials, CBI and sons of former chiefs of Karnataka Lokayukta and State Vigilance Commission) engaged in a legal battle.

On Saturday, the High Court finally ruled in favour of Dheerendra Kumar Jha, an additional commissioner and UA Chandramouli, a deputy commissioner with the I-T department, pointing out that the prosecution failed to prove specific charges leveled against the accused and also that there was no valid sanction accorded to prosecute them from the sanctioning authority, the President and former Finance Minister Pranab Mukherjee.


The case pertains to 2008. The CBI had registered a case pertaining to an I-T case that sleuths had taken up in August 2006, wherein a team of I-T officials led by Chandramouli had carried out an inspection at M/s Children’s Education Society (CES) in JP Nagar.

The case had been registered on charges of aiding an income tax assesse of monetary help to evade tax assessment.They were charged of entering into a criminal conspiracy with SN Narasaraju of CES in the matter of income tax. It had been further charged that a key document impounded during the survey carried out had been returned to Narasaraju without retaining copies of said documents on record and ignoring the financial transactions reflected therein while assessing the tax liability.


Sixteen witnesses had been examined, and 47 exhibits from prosecution and 15 from defence had been marked. The trial court on July 30, 2016, had convicted the DC, additional commissioner, sentencing them for rigorous imprisonment of 6 months and fine of Rs1 lakh for offence under IPC section 120 (b) (criminal conspiracy) r/w IPC section 420 (cheating), 18 months and Rs.1.50 lakh for offence under IPC section 218 (public servant framing incorrect record or writing with intent to save person from punishment or property from forfeiture) of IPC, and again five years imprisonment and Rs 2.50 lakh fine under IPC section 420.


The same had been challenged by both in two separate appeals. Designated senior counsel Sheshachala, son of former lokayukta Justice N Venkatachala, put forth defense for the DC. The assessment order for financial year 2004-05 by Chandramouli was under section 144 of the I-T act and that the assessment order was a judicial order, he put forth. Further, the charge – that he returned the impounded document pertaining to assessment year 2004-05 without permission from his superior officer, was contended. He took a defence that under the I-T Act for retaining the document for more than 10 days the assessing officer should take permission and for returning the document, no such permission was required, nor the I-T Act contemplated such a contingency.

Senior counsel CG Sundar defended Jha. He maintained that latter couldn’t have interfered with the judicial order passed by DC. Charge that he did not interfere in the assessment order or in the release of fax sheet, is itself uncanny as IT act clearly mandated that no person shall interfere with the proceedings of the income tax authority by issuing orders, instructions and directions, argued Sundar on behalf of his client. The counsels also argued before the High Court that the trial court could not have convicted the duo in the absence of incriminating evidence against them and that the Income Tax commissioner had admitted before the court as a witness that there was no revenue loss to invoke recovery order section 263 of the Income Tax Act. Advocate Sundar pointed out that even the prosecution had admitted that the entire Rs 10.26 crore had been assessed contrary to the accusation made in the initially.


The High Court observed that the trial court had overlooked the basic principles of criminal jurisprudence and convicted accused on conjectures and surmises rather than evidence on record. The High Court rejected the prosecution contention that illegal gratification need not be specific and stated that it shall be quantified to prove the charge since that charge should be specific and not vague. It was observed that the prosecution failed to bring home the charge against the accused persons and observed that there was no sanction under section 197 before setting aside the order of trial court judge in its totality.

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