Crl.a/627/1997 Of The Income Tax Officer, A-Ward, Quilon v. G.viswanathan

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.R.UDAYABHANU WEDNESDAY, THE 15TH NOVEMBER 2006 / 24TH KARTHIKA 1928 CRL.A.No. 627 of 1997(C) ------------------------ CC.161/1986 of ADDL.CHIEF JUDICIAL MAGISTRATE (E & O), ERNAKULAM .................... APPELLANT: ------------- INCOME TAX OFFICER, A-WARD, PARAMESWARA NAGAR,NEAR ARCHANA & ARADHANA TEATRES,QUILON. BY ADV. SRI.P.K.RAVINDRANATHA MENON(SR) SRI.N.R.K.NAIR SRI. GEORGE K. GEORGE RESPONDENT: ---------------- G. VISWANATHAN, VISWANATHA CASHEW CO., QUILON. BY ADV. SRI.ALAN PAPALI,M.P.PRABHANANDAN, SMT.PINKU H.THALIATH SRI.M.K.DAMODARAN (SR.) SRI.ALAN PAPALI THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 15/11/2006, ALONG WITH CRA NO. 671 OF 1997, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ON 15/11/2006, ALONG WITH CRA NO. 671 OF 1997, THE COURT K.R. UDAYABHANU, J. ---------------------------------------------- CRL. APPEAL. NO. 627 & 671 of 1997------------------------------------------------ Dated 15[th] day of November, 2006JUDGMENT The appellants are the income tax authorities who hadlodged prosecutions against the respondents under section 276 C(2) of the Income Tax Act, 1960 vide C.C. No. 161/1986 and160/1986 respectively. The court below acquitted the accused inboth matters. The proceedings related to different assessmentperiods i.e., 1978-1979 and 1977-1978. The allegation is thatthe accused was liable to remit a sum of Rs. 10.85 lakhs for theassessment year 78-79 and 3.06 lakhs for the assessment year1977-1978. The allegation is that he attempted to evade thepayment of tax, subsequent on receipt of notice by transferring12 cents of land and residential house by executing gift deed infavour of his minor sons and by causing filing of civil suits by hisminor sons for declaration that the property gifted originallybelonged to the children and not to the accused and that theproperties were purchased by the accused from the amounts Crl. Appeal. No. 627&671 of 1997 given to them by the maternal grand father. The evidenceadduced in C.C. 161/1986 consisted of the testimony of Pws 1 to6 of whom PW1 to 5 are the officials of the Income Taxdepartment and PW6 the elder son of the accused and Exts. P1 toP29 and D1 to D4. In C.C. 160/1986 the evidence adducedconsisted of the testimony of Pws 1 to 6 the officials of Incometax department and PW7, the elder son of the accused as well asExt. P1 to P36 and D1 to D5. The court after detailedconsideration found that in the civil suit instituted by the sons ofthe accused was decreed and that in the same proceedings theUnion of India was also a party. It was also held that the otherproperties of the accused were subjected to attachment but thedetails of encumbrance were not furnished and hence there isnothing to show that the 12 cents of land and house alone is leftout. It was also pointed out that the Income Tax Authoritiescould have proceeded against the property in view of section 281of the Income Tax Act as the provision declares that suchtransfers to evade tax are void. It also pointed out that PW6 theson of the accused who was cross examined by the prosecutionhas stated that the suit was instituted at the instance of the Crl. Appeal. No. 627&671 of 1997 accused to evade payment. Yet he was not declared hostile. Itwas taken note of that at the time of the disposal of the criminalcases the suit instituted by the sons of the accused was decreedand hence without setting aside the above decision in appeal theaccused cannot be held guilty. 2. The counsel for the appellant/tax authorities had Crl. Appeal. No. 627&671 of 1997 accused to evade payment. Yet he was not declared hostile. Itwas taken note of that at the time of the disposal of the criminalcases the suit instituted by the sons of the accused was decreedand hence without setting aside the above decision in appeal theaccused cannot be held guilty. 2. The counsel for the appellant/tax authorities had produced the decision of this court in AS 449/1989 on appeal inO.S. 26/1984 i.e., civil suit instituted by the sons of the accusedas per which the findings of the lower court was set aside andmatter was remitted back for fresh consideration after permittingthe Income Tax authorities to be impleaded. It is submitted thatsubsequently the above O.S. was dismissed for non prosecution.The above fact as such has not been disputed. The counsel forthe appellant has brought to the notice of this court the decisionof the Supreme Court in T.R.O v Gangadhar Viswanath Ranade (S.C.), (1998 IIR 234)as per which the court has heldthat the Income Tax Authorities are not having the power undersection 281 of the Income Tax Act to declare the transfers void.The Tax Recovery Officer will have to initiate proceedings for Crl. Appeal. No. 627&671 of 1997 declaration of the transfer as void and only then steps can betaken for realisation of the tax by the sale of assets. Henceevidently the two of the grounds on the basis of which the courtbelow acquitted the accused are no longer in existence, it issubmitted. 3. The other ground is that the prosecution has not produced evidence to show that the rest of the items ofproperties numbering 11 are encumbered and that 12 cents andthe residential house is the only other item that remainsunencumbered. PW2, the Income Tax Officer has admitted in hisdeposition that he had not tried to ascertain the liabilities on therest of the properties and that he spoke to the Bank Managerover telephone and that he was not personally verified thedocuments in this regard and that the authorities have notattempted to make a valuation of the rest of the items ofproperties. I find that the above aspect is a very much relevantso far as the prosecution initiated are concerned. Evidently onthe basis of the alienation of one item of property alone, theaccused cannot be found guilty. It is also seen from the Crl. Appeal. No. 627&671 of 1997 proceedings that the accused has not suppressed the fact of giftof the property in favour of his sons as the same is mentioned inthe returns filed by him. 4. In the circumstances, and in view of the principle thatthe accused is entitled to benefit of doubt, I find no ground tointerfere in the findings of the court below in C.C. 161/1986 and160/1986. Hence these appeals are dismissed. K.R.UDAYABHANU,JUDGE. RV