Chainchal Singh vs R.S.Walia, Income Tax Officer, A-Ward, Hoshiarpur

B.S. Yadav, J.

This order will dispose of the above titled Criminal Revision No. 1488 of 1980, Chanchal Singh v. R.S. Walia, as the law point involved in both the petitions is the same.

In the present petition, the prosecution case, in brief, is that the present petitioner, Chanchal Singh was the principal officer of Messrs Hoshiarpur Express Transport Company Ltd., Hoshiarpur (for short the Company). The said Company paid dividends to its shareholders on various dates falling between 7.8.1967 to 20.11.1967. Th Company deducted at the source Rs. 1,540/ as incometax from the dividend. The petitioner did not deposit the amount of incometax so deducted and also did not file the relevant returns within the statutory period. He filed the return Ex. PB. It was signed by him as, its principal officer. Ex. PD is the copy of the assessment order dated 31.1.1970. In that order the Income Tax Officer ordered that the Company had declared dividend on the paid up capital and tax be charged accordingly. Vide order, copy of which is Ex. PE, dated 23.12.1970, the Income Tax Officer ordered that the Company was liable to pay simple interest on the amount of Rs. 1,540/ for the period it had withheld the income tax deducted at source upto the date on which it was actually paid and thus, a demand for Rs. 33/ was created against the Company under section 201(1A) of the Income Tax Act, 1961 (for short the Act).

On 30.3.1978 the present respondent, Shri R.S. Walia, Income Tax officer filed a complaint in the Court of the Chief Judicial Magistrate, Hoshiarpur. According to the complaint, the petitioner Company had committed a default by not discharging its legal obligations under section 194 of the Act read with Rules 30 and 37 of the Income Tax Rules, 1962 and section 286 of the Act read with Rule 117 of the said Rules and thus, committed an offence falling under section 276(b) and 276B of the Act.

In Criminal Revision No. 1487 of 1980, the case of the prosecution was that the Company had paid dividends to the shareholders on various dates from 15.8.1968 to 26.3.1969 and had deducted at the source Rs. 7,873/ as income tax, but failed to pay the said tax in the treasury within the prescribed period under the Act. In that case, the Company filed a return, copy of which is Ex. PB. It was signed by the petitioner as its Principal Officer. Ex. PD is a copy of the assessment order dated 28.2.1970 passed on the basis of that return. In that order, the Income Tax Officer ordered that the Company had declared dividends on the paid up capital and tax be charged accordingly. Ex. PE is the copy of the order dated December 23, 1970 passed by the Income Tax Officer, requiring the company to pay simple interest upon Rs. 7,873/ for the period the amount had been withheld and upto the date the amount was actually paid. Thus, a demand of Rs. 392/ was created. In that case also Shri R.S. Walia, Income Tax Officer filed a similar complaint, as to the one filed in the other case, on 30.3.1978.

In both the cases, the learned Chief Judicial Magistrate held that the Company had committed an offence falling under section 276B of the Act and the petitioner, being its Principal Officer, was liable to punishment in view of section 278B of the Act. In each case, the petitioner was convicted accordingly and sentenced to undergo rigorous imprisonment for three months and to pay a fine of Rs. 200/.

In both the cases, the petitioner filed separate appeals which were heard by the learned Sessions Judge, Hoshiarpur. He dismissed both the appeals vide separate orders announced on the same date.

The petitioner has now filed these two revision petitions. The only point raised by learned counsel for the petitioner in both the petitions was that the Magistrate could not take cognizance of the offences on account of the bar of limitation.

The learned counsel for the petitioner argued that at the time the offence was committed, the maximum punishment which could be awarded under Section 276B of the Act was six months (in 1975 the sentence was increased, but we are not concerned with it). The learned counsel for the petitioner further argued that in the present case, the offences came to the knowledge of the Income Tax officer when the assessment orders were passed and in any case on 23rd December, 1970 when he created a demand in each case under section 201(1A) of the Act in respect of any tax deducted at the source in connection with the dividends paid by the Company. He, therefore, argued that in view of the section 468 of the Code of Criminal Procedure, 1973 (for short the Code), both the complaints were barred by limitation on the date these were filed.

For the first time period of limitation was prescribed for certain types of offences by the Code of 1973. Provisions relating to limitation find place in CHAPTER XXXVI, of the Code under the caption : "LIMITATION FOR TAKING COGNIZANCE OF CERTAIN OFFENCES". The aforesaid Chapter is presently comprised of seven sections, viz. sections 467 to 473. Section 467 define "period of limitation" as meaning, "the period specified in Section 468 for taking cognizance of an offence." Section 468(1) bars the taking of cognizance of certain offences after the expiry of the period of limitation prescribed under section 468(2).

According to the learned counsel for the petitioner, the present cases are governed by section 468(2)(b) which prescribes period of limitation of one year if an offence is punishable with imprisonment for a term not exceeding one year. He further relied upon clauses (a) and (b) of subsection (1) of Section 469 of the Code. The said section deals with the commencement of the period of limitation. According to the learned counsel for the petitioner, the period of limitation in relation to an offender shall commence under clause (a) when the offence was committed or under clause (b) where the commission of the offence was not known to the person aggrieved by the offence or to any police officer, the first day on which such offence comes to the knowledge of such person or to any police officer, whichever, is earlier. According to the learned counsel for the petitioner in the present case, the offences were committed during the financial years 196768 and 196869 and if it is held that the period of limitation in the present cases would run when the offence came to the knowledge of the concerned authorities, then those dates have already been noticed earlier and from those dates, the limitation expired long before the filing of the complaint.

I am of the opinion that the above argument has no force. Under the Code of Criminal Procedure, 1898 (since repealed), there was no period of limitation for taking cognizance of an offence. The prosecution for an offence could be launched any time after its commission. Though period of limitation was prescribed for certain offences under some special and or local laws, no limitation was prescribed for the offence committed under the Act.

The new Code came into force on the 1st day of April, 1974. However, in the meantime, the Parliament enacted. The Economic Offences (Inapplicability of Limitation) Act, 1974 (No. 12 of 1974). That Act also came into force on the 1st day of April, 1974. Section 2 of that Act reads as follows :

"2. Nothing in Chapter XXXVI of the Code of Criminal Procedure, 1973 shall apply to :

(i) any offence punishable under any of the enactments specified in the Schedule; or

(ii) any other offence which under the provisions of that Code, may be tried along with such offence, and every offence referred to in clause (i) or in clause (ii) may be taken cognizance of by the Court having jurisdiction as if the provisions of that Chapter were not enacted."

In the Schedule of that Act, the Income Tax Act, 1961 (43 of 1961), finds mention at serial No. 2. Thus so, far as the offences under the Act are concerned, it will be deemed that Chapter XXXVI of the Code never came into existence. The learned Counsel for the respondent has cited Friends Union Oil Mills and others v. Income Tax Officer and others, 1975 KLT 596. In that case return concealing the entire income was filed on 6.1.1971 and the prosecution was launched on 14.11.1974. The offender filed an application before the Court under section 245(2) and 482 of the Code for their discharge on the ground that cognizance of the offence under sections 193 and 196 of the Code was barred under section 468(2) of the Code. The trial Court overruled these objections. That order of the trial Court was challenged in the Kerala High Court. The High Court also overruled that objection. It was remarked :

"The petitioners have a formidable difficulty in seeking the benefit of S. 468 of the Code in view of the provisions contained in S. 2 in the Economic Offences (Inapplicability of Limitation) Act, 1974 (Act 12 of 1974). S. 2 of this Act reads as follows :

Schedule to Section 2 of the Act contains various enactments; including the Indian Income Tax Act, 1922 and the Income Tax Act, 1961. Section 468 occurs in Chapter XXXVI of the Code. Clause (1) of Section 2 of the above Act states that the provisions of Chapter XXXVI shall not apply to enactments contained in the Schedule. Clause (ii) of Section 2 says that the provisions of Chapter XXXVI shall not apply to any other offence which under the provisions of that Code may be tried along with such offence. It is therefore clear that Section 468 will not apply to a prosecution under the Income Tax Act 1961."

Thus from the above it is clear that in the present case the Court can take cognizance even after the expiry of the period of limitation prescribed under section 468 of the Code.

The learned counsel for the petitioner has cited Surinder Mohan Vikal v. Ascharaj Lal Chopra, 1978(2) SCC 403. That case related to an offence under section 500, Indian Penal Code which was committed on March 15, 1972. Complaint was filed on February 11, 1976. The offender filed an application under section 482, Code of Criminal Procedure in the High Court which was rejected. The offender filed an appeal in the Supreme Court. Their Lordships of the Supreme Court held that the period of Limitation would be calculated with reference to the date of the commission of the offence for the purpose of the bar provided by section 468 and therefore, it was not permissible for the Court to take cognizance of the offence after the expiry of the period of limitation. The appeal was accordingly allowed. It appears that the above ruling was cited by the learned counsel for the petitioner to show that though the Code has no retrospective effect, but, if on account of bar of limitation prescribed under the Code, the taking of cognizance of the offence had already become barred, then the said Chapter of the Code would apply. I have not been able to understand how that ruling helps the present petitioner. As already held above, in the present case. Chapter XXXVI of the Code is not at all applicable and therefore, it is immaterial if the period for taking cognizance of the offence had become barred by time, or not, at the time of commencement of the Code.

The learned counsel for the petitioner has also cited State of Maharashtra v. P.D. Pujari, 1979 Cri. LJ 1152. That ruling deals with the interpretation of section 469 of the Code. It is not necessary to discuss that ruling, because in it it has been specifically remarked in relation to Chapter XXXVI of the Code as under :

"This period of limitation, however, is in respect of only the less serious offences viz., those which are punishable either with fine alone or with imprisonment for a term not exceeding three years. And further, these provisions do not apply to offences under the Economic Offences (Inapplicability of Limitation) Act, 1974, vide Section 2 thereof which specifically excludes such application."

Consequently it is held that the provisions of Chapter XXXXVI of the Code are not attracted to the present cases and therefore, it cannot be held that the Court was debarred from taking cognizance of the offence on account of bar limitation.

Lastly, the learned counsel for the petitioner argued that the offences were committed long time back and therefore, the petitioner be released on probation. Considering the fact that it is an economic offence, I do not think these cases are fit for releasing the petitioner on probation.

For the foregoing reasons, I do not find any force in the present petition, as well as the other petitions and dismiss the same.