Report No. 47
15.51 Maximum punishment under the Essential Commodities Act.-
The maximum period of imprisonment under the Essential Commodities Act requires increase from five to seven years. Here, of course the pecuniary test cannot be applied. But an increase is needed in view of the increased importance of checking these offences. Of course, the structure of the relevant section1 is capable of improvement in certain matters of detail also; but such an inquiry would take us far beyond the scope of this Report. We, therefore, recommend that in section 7(1)(a)(ii) of the Essential Commodities Act, for the words "five years", the words "seven years" should be substituted.
1. Section 7, Essential Commodities Act, 1955.
15.52. Bailability under Essential Commodities Act.-
Under section 10A, Essential Commodities Act, the offences under the Act are cognizable and bailable. This provision was not found in the Act as originally enacted and was inserted by a later amendment in 1967. We have not been able to discover, either from the Statement of Objects and Reasons to the Amending Bill of 1967 or from any other source, the reason why a special provision as to bail was considered necessary. Perhaps, it was thought that many offences under the Act would be committed by persons who could be safely released on bail.
We are, however, of the view that the matter should be left to be governed by the general provision in the relevant Schedule to the Criminal Procedure Code under which, if the maximum punishment exceeds three years, the offence is non-bailable. We do not see any great hardship as likely to result from such a course, as the court has always a discretion to release the accused on bail even if the offence is non-bailable. Accordingly, we recommend that section 10A of the Essential Commodities Act should be revised so as to delete the words "and bailable".
15.53. Abetment in Wealth Tax Act.-
As regards the Wealth Tax Act, we do not consider it necessary to discuss the amendments in detail, as what we are going to say regarding the Income-Tax Act1 is applicable to the Wealth Tax Act also.
1. See paras. 15.54 to 15.76, infra.
15.54. Recommendation as to Income-Tax Act.-
In the Income-Tax Act, the following provisions are absent:
(i) Elimination or modification of mens rea:
(iii) Stoppage of business;
(iv) Higher powers of Magistrates;
(v) Special rules of evidence.
As regards point (i), no change is proposed as to mens rea,1 or shifting the burden of proof, having regard to the complicated nature of the offences under the Act. For the same reason, provisions as to points (ii) to (v) would also not be appropriate for these offences.
1. Para. 7.12, supra.
15.55. Income-tax and Wealth Tax Act-Increase in punishment considered.-
It has been stated1 that under the Income-Tax Act and the Wealth Tax Act, the punishment on prosecution for the offence of tax evasion as also for abetment of tax evasion is, at present, rigorous imprisonment for a minimum of six months and a maximum of two years. The punishment is less severe for other offences under these Acts, such as, failure to furnish the return of income or produce accounts and documents called for by notice, as also failure to deduct tax at source and pay it to the credit of the Government. It has been suggested that these provisions may be modified on the following lines:-
(a) For the offence of tax evasion and abetment of tax evasion under the Income-Tax Act and Wealth tax Act, the minimum punishment may be raised to rigorous imprisonment for one year and the maximum be raised to rigorous imprisonment for 7 years.
(b) For the offence of failure to furnish the return of income or the return of net wealth, where called for by notice, the minimum punishment may be raised to rigorous imprisonment for one year and the maximum to rigorous imprisonment for 7 years. It is further stated that in view of the proposed increase in the term of imprisonment, there is no need for continuing the existing provision for the levy of a fine ranging from a minimum of Rs. 4 to a maximum of Rs. 10 per day for the period of default. There exist already provisions for penalty for late submission or non-submission of returns.
(c) For the offence of failure to pay, to the Government, the tax deducted at source under the Income-Tax Act, the suggestion made is that the minimum punishment may similarly be increased to rigorous imprisonment for one year and the maximum to rigorous imprisonment for 7 years. The existing provision for fine at the rate of 15% per annum on the amount of the tax for the period of the delay, need not (if the suggestion is accepted) be continued, in view of the suggested increase in the term of imprisonment. There already exists provision for imposing interest at the rate of 9% and penalty.
1. Suggestion of a Ministry of the Government of India.
15.56. Assumption as to applicability of sections 191-193, 195.-
As regards the first point1, it seems to have been assumed that a person who makes a false statement in a return of Income-tax commits an offence under sections 191 to 193, Indian Penal Code. This however, requires examination. While such a person can be prosecuted2 under section 1773, Indian Penal Code, the position regarding section 191 is less certain.
1. Para. 15.55(a), supra.
2. See Baliah v. Rangachari, AIR 1969 SC 701 (On appeal from AIR 1969 Mad 145).
3. Section 177, Indian Penal Code reads as follows:-
"Whoever, being legally bound to furnish information on any subject to any public servant, as such, "furnishes, as true, information on the subject which he knows or has reason to believe to be false, shall be punished with simple imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees, or with both:
or, if the information which he is legally bound to give respects the commission of an offence, or is required for the purpose of preventing the commission of an offence, or in order to the apprehension of an offender, with imprisonment of either description for a term which may extend to two years, or with fine, or with both."
15.57. Giving false evidence.-
Section 1911 of the Indian Penal Code applies only when there is an obligation to state the truth, imposed by law or by oath or when a declaration is required by law. A verification is not an oath, and the Income-Tax Act does not contain a provision requiring the assessee to state the truth in the return. The Act, read with the rules, does require a verification, but that is not enough to attract the first part of section 191. Of course, if the assessee makes a false statement on oath before the Income-tax Officer, sections 191-193 apply2. If the verification is false, the sanction provided in section 177, Indian Penal Code also applies.
1. Section 191, Indian Penal Code reads as follows:-
"191. Whoever, being legally bound by an oath or by an express provision of law to state the truth, or being bound by law to make a declaration upon any subject, makes any statement which is false, and which he either knows or believes to be false or does not believe to be true, is said to give false evidence.
Explanation 1.-A statement is within the meaning of this section, whether it is made verbally or otherwise.
Explanation 2.-A false statement as to the belief of the person attesting is within the meaning of this section, and a person may be guilty of giving false evidence by stating that he believes a thing which he does not believe, as well as by stating that he knows a thing which he does not know."
2. Cf the discussion in Lalji Haridas v. State of Madras, AIR 1964 SC 1154 (On appeal from AIR 1963 Bom 70).
15.58. The latter part of section 191, which relates to a 'declaration', may apply, though even here the position, is not beyond controversy1.
1. Cf decisions as to verification of pleadings.
15.59. Punishment for false evidence.-
Even if section 191 applies, it is not clear which part of section 193 will apply to a false statement in a return1.
1. Section 193, Indian Penal Code reads as follows:-
"193. Whoever intentionally gives false evidence in any stage of a judicial proceeding, or fabricates false evidence for the purpose of being used in any stage of a judicial proceeding, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine; and whoever intentionally gives or fabricates false evidence in any other case, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine.
Explanation 1.-A trial before a Court-martial is a judicial proceeding.
Explanation 2.-An investigation directed by law preliminary to a proceeding before a Court of Justice, is a stage of a judicial proceeding, though that investigation may not take place before a Court of Justice.
Explanation 3.-An investigation directed by a Court of Justice according to law, and conducted under the authority of a Court of Justice, is a stage of a judicial proceeding though that investigation may not take place before a Court of Justice."
15.60. Recommendation to increase the maximum punishment under Income-Tax Act.-
We have ourselves recommended1 an increase in punishment based on the pecuniary test (and also minimum imprisonment), which will meet the requirements of justice2.
1. Para. 7.20, supra.
2. Amendments to the indicated separately.