Appeal against acquittal — If the prosecution proves its case on basis of evidence and the same is also supported by the implied admission of the accused, the conviction of the accused under s 276C(1), 277 and 278 is not liable to be interfered with on the ground that the return did not bear his signature and was not filed by him, as held by SCI in ITO v Mangat Ram Norata Ram Narwana and Anr — In favour of: The revenue (partly); Criminal Appeal No(s) 8 of 2005.
ITO v Mangat Ram Norata Ram Narwana and Anr.
Supreme Court of India
Criminal Appeal No(s). 8 of 2005
Harjit Singh Bedi and Chandramauli Kr. Prasad, JJ
Decided on: 5 May 2011
Order
1. 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 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 and 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/-.
2. 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 with the notice and thereafter
notice under section 142(1) of the Act was issued and the assessee firm ultimately filed its
3. 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 penalty
which was dismissed by the Commissioner of Income Tax (Appeals). The respondents had
paid the penalty inflicted on the firm.
4. 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 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 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".
5. 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 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 Hem Raj. But this, in our
opinion would not be sufficient to throw out the case of the prosecution.
6. 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 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.
7. 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 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.
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