The Honourable Mr.justice N. Sathish Kumar v. The Deputy Director Of Income Tax (Investigation), Unit 3(2), Room

THE HIGH COURT OF JUDICATURE AT MADRAS Reserved onDelivered on04~12~202011~12~2020 CORAM: THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR Crl.R.C.No.510 & 511 of 2020 &Crl.M.P.Nos.4044 & 4045 of 2020 Crl.R.C.No.510/2020 Karti P.Chidambaram ... Petitioner Vs. The Deputy Director of Income Tax (Investigation), Unit 3(2), Room No.120, 1 st Floor, Investigation Wing Building, No.45, Old No.108, Uthamar Gandhi Road, Nungambakkam,Chennai-600 034. ... Respondent Crl.R.C.No.511/2020 1. Smt.Srinidhi Karti Chidambaram 2. Karti P.Chidambaram ... Petitioners Vs. The Deputy Director of Income Tax (Investigation), Unit 3(2), Room No.120, 1 st Floor, Investigation Wing Building, No.45, Old No.108, Uthamar Gandhi Road, Nungambakkam,Chennai-600 034. ... Respondent Prayer: These Criminal Revision Cases have been filed undersection 397 read with 401 of Code of Criminal Procedure to setaside the Order dated 07.01.2020 in Crl.M.P.Nos. 25633 and 25634of 2019 in C.C.Nos.15 & 16 of 2019 on the file of the SpecialCourt No.1 for trial of Criminal Cases related to ElectedMembers of Parliament and Members of Legislative Assembly ofTamilnadu, Chennai. https://hcservices.ecourts.gov.in/hcservices/ For Petitioners: Mr.Kapil Sibal Senior Counsel for Mr.N.R.R. Arun Natarajan [Petr in Crl.R.C.No.510 of 2020] Mr.P.S.Raman Senior Counsel for Ms.C.Uma [1st Petr. in Crl.R.C.No.511 of 2020] Mr.N.R.Elango Senior Counsel for Mr.N.R.R. Arun Natarajan[2nd Petr. in Crl.R.C.No.511 of 2020] For respondent: Mrs. M. Sheela and Mr.N. Baskaran Standing Counsel for Income Tax Department Assisted by Mr.H.Siddharth [in both Revisions] C O M M O N O R D E R Aggrieved over the order of the Special Court No.1 for Trialof Criminal Cases related to Elected Members of Parliament andMembers of Legislative Assembly of Tamiland in Crl.M.P.No.25634of 2019 in C.C.No.15 of 2019 and Crl.M.P.No.25633 of 2019 inC.C.No.16 of 2019 the present revisions filed. 2. The brief facts leading to file these Revisions are asfollows:2.(a) The Revision Petitioners are husband and wife. ThecaseoftheDepartment/ProsecutionisthatthePetitioners/Accused sold their immovable property situated inMuttukadu village. The Petitioner in Crl.R.C.No.15 of 2020Mr.Karti P. Chidambaram has sold 5.110 Acres of land for a totalconsideration of Rs.21.7175 Crores out of which Rs.15.33 Croressaid to have received by cheque and remaining Rs.6.38 Croreswas received as Cash, whereas he has filed Return of Income forthe Assessment Year 2014-15 on 29.07.2014 declaring his totalincome at Rs.45,18,430/-. In his Return of Income he has shownthe sale of the said property at Rs.15,33,00,000/- as a LongTerm Capital Gain. However, he did not disclose the cash part ofthe sale consideration of Rs.6.38 Crores. Mrs.Srinidhi KarthiChidambaram 1[st] Petitioner in Crl.R.C.No.16 of 2020 has sold 1.18Acres of land for a total consideration of Rs.5.01 Crores out of https://hcservices.ecourts.gov.in/hcservices/ which Rs.3.65 Crores was received by Cheque and Rs.1.36 Croreswas received by cash, whereas she has filed Return of Income forthe Assessment Year 2015-16 declaring her total income atRs.69,98,410/-. In her Return of Income she has shown the saleof the said property at Rs.3,65,80,000/- as a Long Term CapitalGain. She has also not disclosed the cash payment of Rs.1.36Crores in the return of income. https://hcservices.ecourts.gov.in/hcservices/ which Rs.3.65 Crores was received by Cheque and Rs.1.36 Croreswas received by cash, whereas she has filed Return of Income forthe Assessment Year 2015-16 declaring her total income atRs.69,98,410/-. In her Return of Income she has shown the saleof the said property at Rs.3,65,80,000/- as a Long Term CapitalGain. She has also not disclosed the cash payment of Rs.1.36Crores in the return of income. 3. Above facts came to light in a survey under Section 133 Aof the Income Tax Act carried out in the case of M/s.AdvantageStrategic Consulting Private Limited and other entities on01.12.2015 by the Income Tax Department and EnforcementDirectorate. In the course of the search several hard diskswere retrieved by the Income Tax Department and EnforcementDirectorate. Further search and seizure also conducted inM/s.Agni Estates and Foundation Pvt. Ltd., in the year 2018 andcertain Note books were seized from cashier of the purchasercompany and their statements also recorded. Thereby, privatecomplaint was filed by the Deputy Director of Income TaxDepartment against Mr.Karti P. Chidambaram for the offencesunder Section 276C(1), 277 of the Income Tax Act. Similarlyanother complaint was filed against Tmt. Srinidhi KartiChidambam and Mr.Kati P.Chidambaram under Sction 276C(1), 277and 278 of the Income Tax Act. The private complaints onexamination of some witness on the side of the respondent, takenon file and numbered as CC.No.15 of 2019 for the offences undersections 276C(1) and 277 of the Income Tax Act as against thePetitioner/Accused Mr.Karti P Chidambaram and another complainttaken on file in CC.No.16 of 2019 against both wife and husbandfor the offences under Sections 276C(1), 277 and 278 of theIncome Tax Act. 4. After the court has taken cognizance of the complaint,the Petitioners/Accused have filed petitions under Section 245Cr.P.C., to discharge them from the prosecution mainly on theground that the documents alleged to have been seized during thesearch conducted in M/s. Advantage Strategic ConsultingPvt.Ltd., and M/s.Agni Estates and Foundation Pvt. Ltd., areinadmissible and the alleged cloning of the electronic recordswere not done by any experts and those documents also notadmissible due to non-compliance of Section 65B of the IndianEvidence Act. Similarly, the so called person who said to havegiven a statement as to the cash transaction has not beenexamined while taking cognizance by the Court. Hence, withoutany evidence in this regard, there is no materials to proceed asagainst the accused. 5. It is also further submitted that the Deputy Director ofIncome Tax Department is not a competent person to file acomplaint for the alleged false declaration. Only the Assessing https://hcservices.ecourts.gov.in/hcservices/ Officer of Income Tax, before whom the Returns were filed iscompetent to file any complaint for the alleged false Returns orevidence. All the assessment proceedings are deemed to be ajudicial proceedings within the meaning of Section 193 and 196of the Indian Penal Code Section 136 of the Income Tax Act alsostipulate that any proceedings under the Act shall be deemed tobe judicial proceedings for the purpose of 193, 228 and for thepurpose of Section 196 of I.P.C.and every Income Tax authorityshall be a Civil Court for the purpose of Section 195 of theI.P.C. Therefore, the plea was taken to the effect that thecomplaint lodged by the Deputy Director of Income Tax is notmaintainable in the eye of law. However, learned trial Courthas dismissed the Petitions filed by both accused in C.C. Nos.15and 16 of 2019. Hence, present revisions have been filed. 6(a). Learned Senior Counsel Mr.Kapil Sibal appearing forthe Revision Petitioner in Crl.R.C.No.510 of 2020 has submittedthat the prosecution was launched against the accused withoutany materals and only due to the political reasons. It isfurther submitted that the Returns of the year 2014-15 filed andcompleted as early as 30.12.2016. Therefore, the assessmentstill holds good. The proceedings under Section 148 of theIncome Tax Act to reopen the assessment did not result in orderof reassessment. The time limit for reassessment is alsolapsed. Now it appears that the notice under Section 153(C) hasbeen issued. Hence, it is the contention that merely on thebasis of the some search said to have taken place in third partypremises and statements recorded from 3rd parties theprosecution cannot be launched by the Deputy Director of IncomeTax Department, who is not competent to launch the prosecutionfor the offences under Section 276(C) and 277 of the Income TaxAct. It is his submission that none of the ingredients toattract the offence under Section 276(C) of the Income Tax Actis made out and no materials unearthed by the searching officeror the Deputy Director. Therefore, the complaint lodged by theDeputy Director is not maintainable in the eye of law. Only theAssessing Officer who records the finding on the basis of thesearch materials that there is a wilful attempt to evade anytax, or any another person authorised by him is competent tofile a complaint as per Section 195 of the Cr.P.C. Hence it ishis contention that the alleged offences making false statementor wilful attempt to evade any tax cannot be inferred. Withoutany finding as to the nature of the escaped income or falseReturn, the Deputy Director of Income Tax cannot assume the roleof fact finding authority and lodge a complaint for the offencesreferred above. 6(b). Further it is his submission that since the assessmentofficer deemed to be a Civil Court, all the proceedings deemedto be a judicial proceedings any statement which is false and an attempt to evade tax, prosecution can be launched only underSection 195 of the Cr.P.C. Section 195 of the Cr.P.C is anexception to the general rule. Any false statements or returnsfiled before the authority only such authority or theirsubordinate as directed alonecompetent to file complaint underSection 195 Cr.P.C. It is his further contention that on thebasis of the very complaint there is no materials to proceedagainst the accused. It is well settled position of law byvarious judgments of the Apex Court that prosecution must awaitthe outcome of the assessment or reassessment proceedings.Whereas in this case the very competence of the complainant isquestioned. It is his further contention that the position oflaw in this regard has been adopted as a policy of theGovernment for launching the prosecution. It is the policy ofthe Government that the prosecution has to be launched after theassessment of tax or penalties imposed by the ITAT. It is hissubmission that the Revenue mainly relied upon the case ofP.Jayappan Vs. S.K.Perumal, First Income-Tax Officer, Tuticorin[1984 (Supp) Supreme Court Cases 437] wherein it is held thatthe prosecution can be launched irrespective of pendency of theassessment or re-assessment proceedings. His contention is thatthe above case is distinguished by the subsequent judgements ofthe Apex Court. At any event, his contention is that theprosecution at this stage is premature and launched by theincompetent person. It is also submitted by the learned SeniorCounsel that the Department cannot avoid the rigour of Section195 of Cr.P.C. by avoiding the IPC Offences. 6(c). It is his further contention that the materials reliedby the prosecution is not admissible in evidence. The so calledprint outs allegedly taken from the cloned copies are notadmissible. Further, third party statements also cannot bepressed into service as against the assessee. Assessees neverincriminated themselves in the statement recorded by theDepartment. Further, electronic records are not admissiblewithout the originals being produced by the owners. Wherein inthis case, the alleged search said to have been taken in thepremises of the purchaser of the land from the assessee has notsupported the prosecution. They have not even come before theCourt to substantiate their version. Therefore, without anymaterials and with the inadmissible documents the prosecutionhas to fail. 6.(d) In support of his contentions, the learned SeniorCounsel Mr.Kapil Sibal relied on the following judgments :1. Basir-Ul-Huq and others Vs. The State of WestBengal, Nur-Ul-Hudav, The State of West Bengal[1953 AIR 293]2. Lalji Haridas Vs. State of Maharashtra andanother [1964 AIR 1154] 3. Babita Lila and another Vs. Union of India[2016 (9) Supreme Court Cases 647] 4. Uttam Chand and others Vs. Income Tax Officer,Central Circle, Amridsar [1982 (2) Supreme CourtCases 543] 5. G.L.Didwania and another Vs. Income TaxOfficer and another [1995 Supp. (2) Supreme CourtCases 724] 6. Harish Dahiya @ Harish & Another vs. Teh Stateof Punjab and Ors. [2019 SCC Online Sc 1452] 7. Commissioner of Income Tax, Mumbai Vs. BhupenChampak Lal Dalal and another [2001 (3) SupremeCourt Cases 459] 8. Commissioner of Income Tax , Bhopal vs.Shelly Products and Another [(2003) 5 SCC 461] 9. Thanjai Murasu and others Vs. Income TaxOfficer [1998 SCC OnLine Mad 1393] 10. Arjun Panditrao Khotkal Vs. Kailash KushanraoGorantyal and others [Decision of the SupremeCourt in C.A.No.20825 – 20826 of 2017.] 7(a) Mr.P.S. Raman learned Senior Counsel appearing for the1[st]Petitioner in Crl.R.C.No.511 of 2020 adopting the argumentsof Mr.Kapil Sibal in entirety also submitted that as far aspetitioner in Crl.R.C.No.511 of 2020, Returns filed by her inthe year 2015-16 holds good and his further submission is thatthe entire complaint against the petitioner in the aboverevision is also do not contain any material to proceed. Thereis no evidence available on record to show that she has given afalse declaration or evidence before the authority. No falsestatements given before the so called Deputy Director of IncomeTax. Hence, the complaint lodged by him is not maintainable andshe has to be discharged from the complaint. 7(b) The learned Senior Counsel further submitted that theoriginal Returns filed in the year 2015-16 has not been setaside and still holds good. Reassessment is lapsed by period oflimitation. Once assessment is confirmed, there cannot beparallel prosecution. Even in the complaint lodged by theDeputy Director of Income Tax Act, there is no materialavailable to show that the Revision Petitioner in Crl.R.C.No.511of 2020 made false declaration or given a false evidence before https://hcservices.ecourts.gov.in/hcservices/ the authority. Hence, it is submitted that the so calledalleged false declaration given before some other officer, onlysuch officer has to give a finding as to the nature of falsedeclaration and returns. Then only the complaint can belaunched by such officer or any other officer authorised by theassessing officer. Whereas in this case the assessing officerhas not even reassessed the Return filed by the husband andwife. Such view of the matter, the officer who have no wayconnected with the passing Assessment Order cannot come to theconclusion that there is false verification or false evidenceand abetment of such offence. Hence the complaint is notmaintainable. https://hcservices.ecourts.gov.in/hcservices/ the authority. Hence, it is submitted that the so calledalleged false declaration given before some other officer, onlysuch officer has to give a finding as to the nature of falsedeclaration and returns. Then only the complaint can belaunched by such officer or any other officer authorised by theassessing officer. Whereas in this case the assessing officerhas not even reassessed the Return filed by the husband andwife. Such view of the matter, the officer who have no wayconnected with the passing Assessment Order cannot come to theconclusion that there is false verification or false evidenceand abetment of such offence. Hence the complaint is notmaintainable. 7(c) It is the further submission of the learned SeniorCounsel that the very complaint lodged by the Deputy Director ofIncome Tax Department indicates that no false statement madebefore him. Therefore, the very complaint lodged by the DeputyDirector of Income Tax Department should not have been takencognizance by court below. Being a search officer he cannotmake a complaint for filing false return. It is his contentionthat to show that there is a wilful suppression or falsedeclaraion, the prosecution must show that the loss should haveoccasioned to Government. In the absence of any finding in thatregard, the prosecution cannot be maintainable for the allegedfalse returns. It is his contention that the capital gain alsocan be set off as against capital loss. Therefore, merely onthe basis of some third party statements, which also notsubstantiated by the so called maker of the statement, the trialcourt ought not to have taken cognizance of the offence. Re-assessment period is also lapsed. Therefore, without anycategorical finding by the Assessing Officer as to the falsedeclaration or suppression of income or capital gain, theprosecution is not maintainable. Learned Senior Counsel hasalso submitted that the documents relied upon and said to havebeen seized during search in third party firm is not at alladmissible in view of the fact that no certificate as requiredunder Section 65B of the Evidence Act is appended to thosedocuments. 7(d) The learned Senior Counsel also submitted that theassessment has not been reopened and assessment under Section148 of the Income Tax Act even after the search is also lapsed.Therefore, without any finding as to the nature of theconcealment of income or false declaration there cannot be anyprosecution by the third party officer who never dealt with suchassessment. Merely because the power has been granted to theofficer to conduct the search, without recording the finding asto the nature of the concealment of income or false declaration,the prosecution cannot be maintained. It is his furthersubmission that notice has been issued under Section 153(C) Income Tax Act. Unless orders are passed recording specificfinding as to the nature of the false declaration andconcealment of income, the prosecution would not bemaintainable. Any assessment order passed either under Section148 or 153(A) of Income Tax Act will be subject to the orderspassed by the appellate authority. If such orders are set asideby the Appellate Authority, the prosecution will not bemaintainable. Even prosecution is launched after such ordersunder Section 153-A of Income Tax Act, even those orders areappealable. Therefore, without any order being passed as tonature of false declaration or false returns by Assessingofficer it is premature to file a complaint by incompetentofficer. Income Tax Act. Unless orders are passed recording specificfinding as to the nature of the false declaration andconcealment of income, the prosecution would not bemaintainable. Any assessment order passed either under Section148 or 153(A) of Income Tax Act will be subject to the orderspassed by the appellate authority. If such orders are set asideby the Appellate Authority, the prosecution will not bemaintainable. Even prosecution is launched after such ordersunder Section 153-A of Income Tax Act, even those orders areappealable. Therefore, without any order being passed as tonature of false declaration or false returns by Assessingofficer it is premature to file a complaint by incompetentofficer. 7(e) It is further contention of the learned Senior Counselthat the so called print outs taken from the cloning copy of thehard disk, such print outs acquired the character of print outtaken from the secondary evidence, which is not admissible inevidence. The owner of the hard disc was never examined norgiven any certificate as required under section 65-B of theEvidence Act. Therefore, those documents cannot be used inevidence. He also relied on the judgments placed by learnedSenior Counsel Mr.Kapil Sibal. 8(a). The learned Senior Counsel Mr.N.R.Elango appearing forthe 2[nd ] Petitioner in Crl.R.C.No.511 of 2020 submitted that inthe First Law Commission Report, reasons were given as to whythe Income Tax Department officer is to be treated as a CivilCourt under Section 136 of the Income Tax Act. In fact the LawCommission has recommended for including Chapter XXVI of theCode of Criminal Procedure. Whereas Chapter XXVI has not beenincluded in the Act only for the purpose to reduce the work ofthe officer to record a finding with regard to the “Interest ofjustice require to lodge a complaint”. Whereas, the appeal inthe Appellate Tribunals such Chapter XXVI was included. Merelybecause Chapter XXVI is not in the Section 136 of the Incom TaxAct, it cannot be said that the different authority can file acomplaint for the alleged false declaration, false statementetc., Hence, his contention is that the defacto complainant inthe given cases never recorded any finding as to the nature ofthe concealment of income or false declaration. Without anyfinding, the very prosecution itself is not maintainable by thedifferent authority, who has no right to launch the prosecution. 8(b) In support of his contention the learned Senior Counselrelied upon the following judgments: 2. Y.B. Mahadeva Royal vs Virabasava CHikka Roayal and another [AIR 1948 Privy Counsel 114 ] 3. H.Siddiqui vs. A. Ramalingam [2011 (4) SCC 240] 4. J. Yashoda vs. Shobha Rani [2007 (5) SCC 730] 8(b) In support of his contention the learned Senior Counselrelied upon the following judgments: 2. Y.B. Mahadeva Royal vs Virabasava CHikka Roayal and another [AIR 1948 Privy Counsel 114 ] 3. H.Siddiqui vs. A. Ramalingam [2011 (4) SCC 240] 4. J. Yashoda vs. Shobha Rani [2007 (5) SCC 730] 9. It is the contention of the learned Standing Counsels ofthe Income Tax Mrs. Sheela and Mr.Baskaran that the complaintswere filed not based on any assessment, it is based on thematerials unearthed during the search. The Note Book, Harddiscs were seized. Statements under Section 131 of the IncomeTax was also recorded from the Petitioners and Purchaser of theland. When the materials show that there was evasion and underreport of income the prosecution is very well maintainable underSections 276C(1), 277 and 278 of the Income Tax Act. Theprosecution can be launched irrespective of any assessment orreassessment order. Therefore, it is not necessary thatassessment orders to be finalised to maintain the prosecution.Section 279 of the Income Tax Act authorises the DeputyDirector of Income Tax to launch the prosecution. Therefore,merely because the reassessment order has not been passed itcannot be said that the prosecution is not maintainable. Inthis regard the Apex court in P.Jayappan Vs. S.K.Perumal, FirstIncome-Tax Officer, Tuticorin [1984 (Supp) Supreme Court Cases437] this regard has held that prosecution is maintainable.Further contention that when the petitioners were examined underSection131 of the Income Tax Act, they just denied the nature ofthe materials unearthed during the search. That itself indicatethat they filed false Return and Declaration.The materialsseized can be tested only in the trial, now the prima facie caseis made out. Merely because third parities who given statementshave not been examined that cannot be a ground to discharge theaccused. It is their further contention that what has to beseen in a discharge application is a prima facie materials andsuspicion. There cannot be any roving enquiry as to the validityof the documents. Hence, submitted that the Deputy Director iscompetent to lodge the complaint. Such power has been conferredby the Statute. 10. Further, it is their contention that the complaint isnot for the offence under Section 193 or 195 of the I.P.C. Itis lodged for the specific offence under the Income Tax Act,which is permissible under law and the petitioners during theexamination under Section 131 of the Income Tax Act have notgiven any explanation with regard to the seized materials fromthe third parties. According to the learned standing counselsthere is no bar to proceed under Sections 276, 277 and 278 ofthe Income Tax Act without IPC offences, which has been held in various judgements. It is their further conention that thenotice issued under Section 148 of the Income Tax Act has notbeen lapsed as contended by the Petitioners in fact same hasbeen abated since the notice under Section153 was issued. Henceit is their submission that once the materials were unearthedduring search proceedings conducted by such officer. Suchsearchalso deemed to be judicial proceedings. The statement recordedunder Section 132(4) of the Income Tax is admissible inevidence. Therefore, submitted that the prosecution is very wellmaintainable. 11(a). With regard to the electronic evidence, it is thecontention that certificate and original can be produced anyany stage to prove the contents. Therefore, at this stage it isnot germane for consideration to contend that the documents areinadmissible. Hence prayed for dismissal. 13. Before discussing the issues on merits it is alsorelevant to record that the accused an earlier occasion filed anapplications for quash the prosecution in Crl.O.P.No.22136,22137 of 2019, 1526 and 1527 of 2019 on the ground that the https://hcservices.ecourts.gov.in/hcservices/ 11(a). With regard to the electronic evidence, it is thecontention that certificate and original can be produced anyany stage to prove the contents. Therefore, at this stage it isnot germane for consideration to contend that the documents areinadmissible. Hence prayed for dismissal. 13. Before discussing the issues on merits it is alsorelevant to record that the accused an earlier occasion filed anapplications for quash the prosecution in Crl.O.P.No.22136,22137 of 2019, 1526 and 1527 of 2019 on the ground that the https://hcservices.ecourts.gov.in/hcservices/ transfer of the cases from the Additional MetropolitanMagistrate court to Sessions Court was not according to law.They also took a stand that since the original Returns stillholds good, the prosecution launched on the basis of thestatements from the 3[rd] parties not maintainable. The prosecutionwas launched even before the reasons for issuing 148 notice wasissued. This Court dismissed the above applications. Whiledismissing the above applications this Court has held thatsince the complaints were not based on the assessment, they arebased on search and seizure, their contention was negatived.Similarly held that third parties statements cannot be gone atthis stage, only it has to be seen in the trial for evidentaryvalue. Apart from that Transfer of cases also upheld. Now itappears that the appeal is pending before Honourable SupremeCourt. It is relevant to note that the two grounds viz., thethird party statements on which the prosecution is relied, andthe absence of assessment order the prosecution not maintainableone, already decided in the above O.P., which is pending beforethe Apex Court. Therefore,this Court is of the view that thesame cannot be once again urged in the revision petition.Though much reliance has been placed by Senior Counsels on thejudgment Harish Dahiya @ Harish & Another vs. Teh State ofPunjab and Ors. [2019 SCC Online Sc 1452] wherein the ApexCourt has held that refusing to discharge the Appellants on theground that the application to quash the entire prosecutionalready dismissed is not correct such order suffers fromabdication of jurisdiction. In the above judgement the ApexCourt has held that since the ground for quashing criminalproceedings and reasons for allowing the applications fordischarge preferred by the accused are completely different.Order of refusal to discharge is set aside and the matter isremitted back. In the above case makes it clear that thedischarge was sought on the entirely different grounds.Therefore, this Court is of the view that the two of the groundsraised before this Court were already decided in the O.P.However, it is fairly submitted by both sides that that theother grounds namely inadmissibility of electronic evidence andthe competency of the Deputy Director of the Income Tax, tolodge the prosecution was not raised in earlier occasions, ithas been raised only in the discharge application. In view ofthe above, this Court is inclined to decide the competency ofthe officer to lodge a prosecution and admissibility ofelectronic evidence. 14. The main reason for lodging the prosecution appears tobe some search conducted in two firms by the Income TaxDepartment and Enforcement Department simultaneously. Based oncertain excel sheets and hard discs said to have been seized inthe search, the prosecution said to have unearthed the escaped 14. The main reason for lodging the prosecution appears tobe some search conducted in two firms by the Income TaxDepartment and Enforcement Department simultaneously. Based oncertain excel sheets and hard discs said to have been seized inthe search, the prosecution said to have unearthed the escaped income. In fact it is the case of the prosecution that thoughthe husband and wife have filed a return for the assesment year2014-15 and 2015-16 respectively, they shown the saleconsideration as Rs.15.33 Crores and Rs.3.65 Crores as againstthe original sale consideration of Rs.21.7175 and Rs.5.01 Croresrespectively. In nutshell, it is the contention of theprosecution that both the husband and wife received cashconsideration other than the cheque payment shown in the Returnfiled for the year 2014-15 and 2015-16 respectively. The paymentreceived in cash were suppressed and not shown. Thereby theprosecution has been lodged at the instance of the DeputyDirector of Income Tax Department. He has lodged a complaint asper the power vested in Section 279 of the Income Tax Act.Section 279 of the Income Tax Act deals with the previoussanction of the principal commissioner or Commissioner (Appeals)or the appropriate authority to proceed against for an offenceunder section 275A (275B), section 276, section 276A, section276B, section 276BB, section 276C, section 276CC, section 276D,section 277 section 277A or section 278 of the Income Tax Act.The very reading of the Section 279 of the Income Tax Actclearly indicates that to proceed against any person for theoffences referred in Section 279 of the Income Tax Act, previoussanction of the Principal Commissioner or Commissioners (appeal)or the Appropriate Authorities is required. In the given case,the prosecution has been launched for the offences underSection 276C(1) and 277 of the Income Tax Act as against thehusband Mr. Karti P Chidambaram Revision Petitioner inCrl.R.C.No.510 of 2020 and for the offences under Section 276C(1), 277 and 278 of the Income Tax Act as against both the wifeand husband viz., Mr. Karti P Chidambaram and Tmt. SrinidhiKarti Chidambaram, the Revision Petitioners in Crl.R.C.No.511 of2020. 15. It is useful to refer Section 276 C(1) and 276C(2) ofthe Income Tax Act.“276C.Wilful attempt to evade tax, etc.(1) If a person wilfully attempts in any mannerwhatsoever to evade any tax, penalty or interestchargeable or imposable under this Act, he shall,without prejudice to any penalty that may beimposable on him under any other provision of thisAct, be punishable,- (i) in a case where the amount sought tobe evaded exceeds one hundred thousandrupees, with rigorous imprisonment for aterm which shall not be less than six months but which may extend to sevenyears and with fine; (ii) in any other case, with rigorousimprisonment for a term which shall notbe less than three months but which mayextend to three years and with fine.” (2) If a person wilfully attempts in any mannerwhatsoever to evade the payment of any tax, penaltyor interest under this Act, he shall, withoutprejudice to any penalty that may be imposable onhim under any other provision of this Act, bepunishable with rigorous imprisonment for a termwhich shall not be less than three months but whichmay extend to three years and shall, in thediscretion of the court, also be liable to fine. Explanation.- For the purposes of this section, awilful attempt to evade any tax, penalty or interestchargeable or imposable under this Act or thepayment thereof shall include a case where anyperson- (2) If a person wilfully attempts in any mannerwhatsoever to evade the payment of any tax, penaltyor interest under this Act, he shall, withoutprejudice to any penalty that may be imposable onhim under any other provision of this Act, bepunishable with rigorous imprisonment for a termwhich shall not be less than three months but whichmay extend to three years and shall, in thediscretion of the court, also be liable to fine. Explanation.- For the purposes of this section, awilful attempt to evade any tax, penalty or interestchargeable or imposable under this Act or thepayment thereof shall include a case where anyperson- (i) has in his possession or control anybooks of account or other documents(being books of account or otherdocuments relevant to any proceedingunder this Act) containing a false entryor statement; or(ii) makes or causes to be made any falseentry or statement in such books ofaccount or other documents; or(iii) wilfully omits or causes to beomitted any relevant entry or statementin such books of account or otherdocuments; or (iv) causes any other circumstance toexist which will have the effect ofenabling such person to evade any tax,penalty or interest chargeable orimposable under this Act or the paymentthereof.]16. On perusal of the above, to attract the offence underSection 276 (C) the following ingredients must be available. a) Wilfully attempts to evade any taxb) wilfully attempts to evade any penalty; or c) wilfully attempts to evade any interestchargeable https://hcservices.ecourts.gov.in/hcservices/ or imposable under this Act; or d) under reports his income. 17. The explanation further indicates that the expression"wilfully attempts" employed in the above provision is aninclusive one. The explanations makes it very clear that tomaintain the prosecution, the so called false entry or statementcontaining the books or account or other documents ought to havebeen in the possession or control of such person or and suchperson makes any false entry or statement in such a books ofaccount or other document or wilfully omitted or caused to beomitted any relevant entry or statement in such books of accountor other documents; or causes any other circumstance to existwhich will have the effect of enabling such person to evade anytax, penalty or interest chargeable or imposable under this Act.The essential ingredients of the above sections makes it clearthat any statements or incriminating materials either shouldcome from the accused or very strong material unearthed duringsearch or survey are required to maintain prosecution underSection 276C or 277 of the Income tax Act. 18. In the light of the above provision when entirecomplaint read same show that the Survey under Section 133(A)was carried out in the case of M/s. Advantage StrategicConsulting Pvt. Ltd., and other entities on 01.12.2015 and theso called excel sheets containing certain entries with regard tosale of the properties said to have been unearthed by thedepartment and the department were aware of these documents asearly as in the year 2015. Thereafter, the search said to havebeen carried out in M/s Agni Estates and Foundation Pvt. Ltd.,the so called purchaser of the property on 5.7.2018. It isrelevant to note that the complaint is totally silent about thefact that whether the assessees, i.e., the accused are eitherdirector or control over the said firms. Whereas in theevidence in the pre-stage congnizance it is introduced that thedifferent entity said to have been searched and the materialswere seized. That apart the entire reading of the complaintmakes it clear that the accused never incriminated themselves inthe statements recorded by the raiding officers at any point oftime. When the officers confronted the accused KarthiChidambaram he denied the complicity and maintained that whatwas the Return filed by him is correct and the statementsrecorded from the third parties is no way connected his Return.In the entire proceedings while examining the accused KarthiChidambaram has maintained that the Return filed by him for theAssessment Year 2014-15 is correct and denied the prosecutionversion. In fact the officer who had lodged the complaint infact formed the opinion that there is an offence. He hasrecorded in his very complaint itself that mere denial of suchstatements and records seized reflected the cash component cannot be accepted. He has recorded as follows: "since theaccused has denied the receipt of cash portion and it is clearthat the accused has wilfully attempted to evade the payment oftax by concealing the income through sale of the property. ThisCourt is also conscious of the fact the while deciding theapplication for discharge only the complaint and materialsplaced by the prosecution are germane for consideration. Thebasis for lodging the complaint on the entirety read indicatethat it is only a formation of the opinion by the DeputyDirector of the Income Tax Department to lodge the complaint. 19. It is to be noted that all the proceedings before theIncome Tax Officer, particularly, assessment proceedings aredeemed to be a civil proceedings as per Section 136 of theIncome Tax Act. Section 136 of the Income Tax reads as follows:"136.Proceedingsbeforeincome-taxauthorities to be judicial proceedings: Any proceeding under this Act before anincome- tax authority shall be deemed to be ajudicial proceeding within the meaning of sections193 and 228 and for the purposes of section 196 ofthe Indian Penal Code, 18603 (45 of 1860 ) 4 andevery income- tax authority shall be deemed to be aCivil Court for the purposes of section 195, but notfor the purposes of Chapter XXVI of the Code ofCriminal Procedure, 1973 (2 of 1974 )]. D.-Disclosure of information." Any proceeding under this Act before anincome- tax authority shall be deemed to be ajudicial proceeding within the meaning of sections193 and 228 and for the purposes of section 196 ofthe Indian Penal Code, 18603 (45 of 1860 ) 4 andevery income- tax authority shall be deemed to be aCivil Court for the purposes of section 195, but notfor the purposes of Chapter XXVI of the Code ofCriminal Procedure, 1973 (2 of 1974 )]. D.-Disclosure of information." 20. As indicated above Section 136 of the Income Tax Act,clearly spelt out the nature of the proceedings under the IncomeTax Act. When all the proceedings before the Assessment Officerunder the Act deemed to be judicial proceedings and officerdeemed to be a civil court, any such false declaration or falsereturns filed before the Assessing Officer such act of theassessee certainly punishable under Section 193 of I.P.C. Insuch case there must be finding to the effect that the statementgiven by the assessee during the assessment proceeding is false,has to be recorded by the officer concerned in the reasseementproceedings. Without finding recorded, this Court is of the viewthat the prosecution cannot be launched by merely on the basisof some statements said to have been recorded from thirdparties. 21. Even Income Tax search proceedings also held to be ajudicial proceedings and such authority deemed to be a judicialauthority within the meaning of Section 193 and 196 of I.P.C.as held in Bapitha Lila and Another vs. Union of India [(2016) 9SCC 647] Now it is the contention of the prosecution that onthe basis of the false statement and under reporting the sale component, the prosecution has launched. It is to be noted thatboth the assessees never incriminated before the raiding officeror the Deputy Director during the search. What was stated inthe statement that, one of the assessees reiterated his Returnsfiled earlier is correct and denied the prosecution version.The spouse of the one of the assessees has given a statement tothe effect that all transaction is known to her husband only.Such statement cannot be construed to be a false statement evenbefore the authority or to be construed an abetment for falsereturn etc., Further the assessees never done any act before theauthority who lodged the complaint to attract the offence underSection 276 of the Income Tax Act also. Even Raiding Officer isdeemed to be a civil court and the proceedings before are to bea judicial proceedings any offence committed before suchauthority, the complaint can be lodged only following theprocedure under section 195 Cr.P.C. 22. Section 195(b) of Cr.P.C. Deals with taking cognizanceof the certain category of offences i.e.,under Section 193 to196 (both inclusive) 199, 200, 205 to 211(both inclusive) and228 of I.P.C., alleged to have been committed in, or in relationto, any proceeding in any Court. Section195 (b) reads asfollows: "195. Prosecution for contempt of lawful authorityof public servants, for offences against publicjustice and for offences relating to documentsgiven in evidence. (1) No Court shall take cognizance-(a) (i) of any offence punishable under sections172 to 188 (both inclusive) of the Indian PenalCode (45 of 1860 ), or (ii) of any abetment of, or attempt to commit, suchoffence, or (iii) of any criminal conspiracy to commit suchoffence, except on the complaint in writing of thepublic servant concerned or of some other publicservant to whom he is administratively subordinate;(b) (i) of any offence punishable under any of thefollowing sections of the Indian Penal Code (45 of1860 ), namely, sections 193 to 196 (bothinclusive), 199, 200, 205 to 211 (both inclusive)and 228, when such offence is alleged to have beencommitted in, or in relation to, any proceeding inany Court, or (1) No Court shall take cognizance-(a) (i) of any offence punishable under sections172 to 188 (both inclusive) of the Indian PenalCode (45 of 1860 ), or (ii) of any abetment of, or attempt to commit, suchoffence, or (iii) of any criminal conspiracy to commit suchoffence, except on the complaint in writing of thepublic servant concerned or of some other publicservant to whom he is administratively subordinate;(b) (i) of any offence punishable under any of thefollowing sections of the Indian Penal Code (45 of1860 ), namely, sections 193 to 196 (bothinclusive), 199, 200, 205 to 211 (both inclusive)and 228, when such offence is alleged to have beencommitted in, or in relation to, any proceeding inany Court, or (ii) of any offence described in section 463, orpunishable under section 471, section 475 orsection 476, of the said Code, when such offence isalleged to have been committed in respect of adocument produced or given in evidence in aproceeding in any Court, or (iii) of any criminal conspiracy to commit, orattempt to commit, or the abetment of, any offencespecified in sub- clause (i) or sub- clause (ii),except on the complaint in writing of that Court,or of some other Court to which that Court issubordinate." 23. Admittedly, in this case neither the false Return norany false statement or verification done before the DeputyDirector of Income Tax Act to invoke such provision.Prosecution stand is that since some materials have seized inconnection with the under Reporting by the accused, prosecutionis very well maintainble. In Basir-Ul-Huq and Ors. vs. TheState of West Bengal [1953 AIR 293] the Honourable Supreme Courthas held as follows: "Though, in our judgment,section 195does notbar the trial of an accused person for a distinctoffence disclosed by the same facts and which isnot included within the ambit of that section, ithas also to be borne in mind that the provisions ofthat section cannot be evaded by resorting todevices or camouflages. The test whether there isevasion of the section or not is whether the factsdisclose primarily and essentially an offence forwhich a complaint of the court or of the publicservant is required. In other words, the provisionsof the section cannot be evaded by the device ofcharging a person with ail offence to which thatsection does not apply and then convicting him ofan offence to which it does, upon the ground thatsuch latter offence is a minor offence of the samecharacter, or by describing the offence as beingone punishable under some other section of theIndian penal Code,, though in truth and substancethe offence falls in the category of sectionsmentioned insection 195,Criminal Procedure