Ishwarlal Girdharlal Parekh Vs. State of
Maharashtra & Ors [1968] INSC 135 (1 May 1968)
01/05/1968 VAIDYIALINGAM, C.A.
VAIDYIALINGAM, C.A.
RAMASWAMI, V.
CITATION: 1969 AIR 40 1969 SCR (1) 193
CITATOR INFO :
F 1977 SC1174 (6)
ACT:
Indian Penal Code, s. 30 and s. 420-Causing
income-tax Officer to make under assessment of income by misrepresentation
whether-cheating'--Assessment order whether `Property'--Communication of such
order to assess whether `delivery' of property-Assessment order whether valuable
security' as defined in s. 30 I.P.C.
HEADNOTE:
The appellant along with certain others was
tried for the offence of entering into a conspiracy to cheat the incometax
-authorities in respect of the income-tax assessment of a firm. The prosecution
levelled against him a charge inter alia, of the offence under s. 420 I.P.C.
The appellant raised before the Special Judge an objection to the effect that
the terms of s. 420 I.P.C. were not satisfied inasmuch as (i) an assessment
order was not 'property', (ii) its communication to him was not 'delivery',
(iii) an assessment order was also not a 'valuable security'. The Special Judge
and the High Court rejected these contentions. The appellant came to this Court
by special leave.
HELD : (i) Even if an assessment order is not
'property' in the hands of the Income-tax Officer, it is 'property' in the
hands of the assessee because it contains a computation of his assessable
income and a determination of his tax liability. The word property occurring in
s. 420 I.P.C.
does not necessarily mean that the. thing, of
which a delivery is dishonestly desired by the person who cheats, must have a
money value or a market value in the hands of the person cheated. [196 G-197 A]
(ii) Communication or service of an assessment order is part of the procedure
itself. But if the necessary allegations are established, the accused must be
held to have dishonestly induced the Income-tax Officer to 'deliver' the
particular property viz. the assessment order. Nor could the contention be
accepted that the deception, if at all, is practised not when the assessment
order is delivered, hut at the stage when the computation of the total income
is made by Income-tax Officer, for, the process of 'cheating' employed by an
assessee, if successful, would have the result of dishonestly inducing the
Income-tax Officer to make a wrong assessment order and communicate the same to
an assessee. [197 C-D] (iii) An order of assessment is a 'valuable security'
under s. 420 [.P.C. because@ it creates a right in the assessee in the sense
that he has right to pay tax only on the total amount assessed therein and his
liability to pay tax is also restricted to that extent. [197 F-G] On the above
reasoning, framing of a charge for an offence under 420 I.P.C. is correct.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 09 of 1966.
Appeal by special leave from the judgment and
order dated November 24, 1965 of the Bombay High Court in Criminal Reviion
Application No. 232 of 1965.
194 A.S. R. Chari, N. C. Maniar, P. C.
Bhartari and J. B. Dada. chanji, for the appellant.
G. L. Sanghi and S. P. Nayyar, for respondent
No. 1.
N. C. Maniar, K. L. Hathi and Atiqur Rehman,
for respondent No. 2.
The Judgment of the Court was delivered by
Vaidialingam, J. In this appeal, by special leave, on behalf of the appellant,
the fifth accused in Special Case No. 9 of 1963. in the Court of the Special
Judge for Greater Bombay, Mr' -A. S. R. Chari, learned counsel, challenges the
order, dated November 24, 1965, passed by the High Court of Bombay, in
Criminal, Revision Application No. 232 of 1965.
There are five accused, in Special Case No. 9
of 1963. The appellant, and accused No. 4, are partners of an industrial
concern, known as 'Premier Industries'. Accused No. 1 is an Income-tax
Consultant, and accused Nos. 2 and 3, are clerks.
in the Income-tax Department. The substance
of the prosecution case. against these five accused, is that they formed a
conspiracy, to cheat the income-tax authorities, in respect of the income-tax
assessments, of the Premier Industries, for the assessment year 1960-61, and,
in pursuance of the said conspiracy, committed ,offences, under s. 420 IPC.,
and s. 5(1)(d) read with s. 5(2). of the Prevention of Corruption Act, 1947
(Act 11 of 1947).
(hereinafter called the Act). They have also
been charged with an offence, under s. 468 IPC., alleged to have been
committed, by them, in furtherance of the said conspiracy.
The allegations, relating to the commission
of the offence,.
under S. 420 IPC., is comprised in charge No.
2. That charge ends up by saying that, by the various acts, mentioned therein.
the appellant, along with accused No. 1, who is the Income-tax Practitioner,
and accused No. 4, dishonestly or fraudulently induced the income-tax authorities
and obtained assessment order for less income-tax than due by accused Nos. 4
and 5, and that. all the three of them, have committed an offence, under s.
420. IPC. It is not necessary to refer to the other charges.
The appellant raised an objection, to the
framing of a charge. under s. 420 IPC. According to him, the charge should
really have been framed under s. 417, on the ground that the assessment order,
in this case, is not 'property'.
He also raised an objection, that the
assessment order, is -not 'valuable security'.
The Special Judge, by his order, dated
February 3, 1965, rejected the preliminary objections, raised by the appellant.
He held that the assessment order was
'property', and that it was also 'valuable security'. Therefore, he held that
the charge, framed 195 under s. 420 IPC., was correct. There were certain other
objections, raised 'by the appellant, viz., that sanction had not been
obtained, under s. 196A, Cr.P.C., that where the offence itself was alleged to
have been committed, in pursuance of the conspiracy, and was the subject matter
of charge, no charge of conspiracy could still be maintained, and that the
period of conspiracy had been artificially fixed, in the charge. These
objections have also been overruled, by the Special Judge.
The appellant carried the, matter, in
revision, before the High Court of Bombay. The learned Judge, by his order,
dated November 24, 1965, which is under attack, has confirmed the order of the
Special Judge. Here again, the High Court has taken the view that the
assessment order is 'property' and it is also 'valuable security', under S. 30,
IPC. The High Court is further of the view that the allegations, contained in
the material charge, do prima facie disclose an offence, under s. 420 IPC.
Certain other objections, raised before the High Court, were also negatived.
Mr. A. S. R. Chari, learned counsel for the
appellant, has again reiterated the same objections. Except for the question,
relating to the charge framed under s. 420 IPC., we make it clear that we are
not expressing any opinion, regarding the other points, raised by Mr. Chari. If
any other objections are available to the appellant, or any other accused, he
or they, will be perfectly entitled to raise the same, during the course of the
trial.
The argument, regarding the invalidity of the
charge, framed under S. 420, runs as follows. The essential ingredient of an
offence, under S. 420 IPC., is that the person cheating, must thereby,
dishonestly induce, the person deceived, to deliver any property, or to make
the whole or any part of a valuable security. We are not referring to the other
matters, contained in s. 420 IPC. The issue or delivery of an order of
assessment, by an Income-tax Officer is not in consequence of the cheating,
committed by a party, though it may be that the computation of income, as found
in the assessment order, may be the result of cheating, practised by the
accused. Therefore, the accused cannot be considered to have, by creating,
dishonestly induced the Income-tax Officer, to deliver the assessment order,
because that is issued, to a party, as a matter of routine. The assessment
order, cannot also be considered to be 'property', within the meaning of S. 420
IPC. It cannot also be stated, that the accused, by cheating have dishonestly
induced the Income-tax Officer to make a valuable security, because an
assessment order, can, in no sense, be considered to be a valuable security. No
legal right is created by an assessment order. The liability to payment of
income-tax is created by the charging section, s. 3, of the Indian 196
Income-tax Act, 1922, and the demand, for payment of tax is made, on the basis
of a notice of demand, issued by the Income-tax Officer, concerned. At the
most, the accused will be guilty of ' cheating', as defined under s. 415, IPC,
inasmuch as they may have intentionally induced the Income tax Officer, who is
deceived, to do or omit to do, anything which he would not do, or omit. if he
were not so deceived, and they will be liable for punishment, under S. 417,
IPC.
Mr. G. L. Sanghi, learned counsel for the
State, has supported the views, expressed by the High Court.
We are not inclined to accept the contentions
of Mr. Chari, that there is any error, or illegality, in framing a charge,
under S. 420 IPC. As to whether the prosecution is able to make out its case,
or not, is a different point. We are only concerned, at this stage, to consider
as to whether, under the circumstances, a charge, under s. 420, could have been
framed.
It is well-known, that, under the Indian
Income-tax Act, liability to pay income-tax arises on the accrual of the
income, and not from the computation, made by the taxing authorities, in the
course of assessment proceedings, and that it arises, at a point of time, not
later than the close of the year of account. It has also been laid down, by
this Court, that assessments particularise the total income of an assessee and
the amount of tax, payable. But it is not as if that the assessment order is
valueless, as is sought to be made out. The question, that arises for
consideration, in this case, is whether there is any 'delivery of property',
or, at any rate, whether the Income-tax Officer has been induced 'to make a
valuable security'.
'Movable property' is defined, in S. 22, IPC;
'Document' and 'valuable security' are defined in ss. 29 and 30, IPC,
respectively. Under the scheme of the Income-tax Act, it is clear that the
assessment order determines the total income of the assessee, and the tax
payable, on the basis of such assessment. The assessment order has to be
served, on the assessee. The tax is demanded, by the issue of a notice, under
S. 29; but the tax demanded, is on the basis of the assessment order,
communicated to an assessee. The communicated order of assessment, received by
an assessee, is in our opinion, 'property', since it is of great importance, to
an assessee, as containing a computation, of his total assessable income and,
as a determination, of his tax liability. In our view, the word 'property',
occurring in S. 420, IPC, does not necessarily mean that the thing, of which a
delivery is dishonestly desired by the -person who cheats, must have a money
value or a market value, in the hand of the person cheated. Even if the thing
has no money value, in the hand of the person cheated, but becomes 197 a thing
of value, in the hand of the person, who may get possession of it, as a result
of the cheating practised by him, it would still fall within the connotation of
the term 'property', in s. 420, IPC.
Once the assessment order is held to be
'property', the question arises as to whether there is a 'delivery', of the,
same, to the assessee, 'by the Income-tax Officer. It is argued that the order
is communicated, in the usual course, and that irrespective of any ,cheating',
the officer is bound to serve the assessment order. This argument, though
attractive, has no merit. Communication, or service of an assessment order, is
part of the procedure of the assessment itself. But it can be held that, if the
necessary allegations are established, the accused have dishonestly induced the
Income-tax Officer, to deliver the particular property, viz., the assessment
order, as passed by him, in and by which a considerably low amount has been
determined, as the total income of the assessee, on the basis of which the
amount of tax, has been fixed. Nor are we impressed with the contention, that
the deception, if at all, is practised, not when the assessment order is
delivered, but at the stage, when the computation, of the total income, is
made, by the Income-,tax Officer. The process of 'cheating', employed by an
assessee, if successful, would have the result of dishonestly inducing the
Income-tax Officer to make a wrong assessment order and communicate the same to
an assessee.
An offence under s. 420, IPC, will also be
made out, if it is established that the accused have cheated and, thereby,
dishonestly induced the Income-tax Officer to make a 'valuable security'. This
takes us to the question : "Is the assessment order. 'valuable security'
?" We have already referred to s. 30, IPC, defining, valuable security'.
The assessment order is certainly a 'document', under s. 29, IPC. The order of
assessment does create a right, in the assessee, in the sense that he has a
right to pay tax only on the total amount assessed therein and his liability to
pay tax is also restricted to that extent.
Therefore an 'order of assessment' is a
'valuable security', under s. 420, IPC. Therefore, if the cheating, employed by
the accused, resulted in inducing the Income-tax Officer to make a wrong
assessment order, it would amount to inducing the Income-tax Officer, to make a
'valuable security'.
Considering the question, from either point
of view, as indicated above, it follows that the framing of a charge, for an
offence, tinder s. 420 IPC., is correct. The appeal, accordingly, fails, and is
dismissed.
G.C. Appeal dismissed.
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