Income Tax-Officer, Sirsa vs Shiv Lal Murari Lal

V.S. Aggarwal, J.

M/s Shiv Lal Murari Lal is the partnership firm. It is carrying on the business of commission agency at New Mandi, Sirsa. Respondents No. 2 to 4 are its partners. All the partners were stated to be taking keen interest in the conduct of the business of the partnership. For the assessment year 198889 return was filed declaring an income of 1,83,600/. On going through the accounts, it was found that the partnership had credited/paid interest of Rs. 3240/ to Smt. Geeta Devi and Kamal Kishore on 31.3.1988, Rs. 5000/ to Sh. Ganga Jal Kalra on 29.3.1988, Rs. 3183/ to Ashok Kumar Chachan on 31.3.1988; Rs. 6387/ to Pardip Kumar Chachan on 31.3.1988; Rs. 7166/ to Rakesh Kumar on 31.3.1988; Rs. 9803/ to Seeta Devi on 19.3.1988; Rs. 2880/ to Smt. Bala Devi on 31.3.1988; Rs. 7103/ to Bharat Bhushan on 31.3.1988 and Rs. 7920/ to Yogesh Kumar on 29.3.1988. In accordance with Section 194A of the Income Tax Act, respondent No. 1 did not deduct the amount of tax. It did not obtain Form No. 15A from the persons mentioned above, when the payments were made to them. However, form No. 15A were obtained later on in the months of May, 1988 and July, 1988. A show cause notice was issued to the respondents on 20.3.1989. Their explanation was not satisfactory and was rejected. Since the respondents had not complied with the provisions of Section 194A of the Income Tax Act, a complaint was filed with respect to the offences punishable under Section 276B read with Section 278B of the Income Tax Act.

Notice of the complaint was issued to the respondents. After the pre charge evidence, learned Chief Judicial Magistrate, Sirsa on 14.9.1991 held that respondents were not duty bound to deduct the incometax from the amount of interest paid. This was for the reason that respondents had obtained Form 15A from the persons to whom interest had been paid. Accordingly the respondents were discharged.

The petitioners preferred a revision petition in the Court of Sessions at Sirsa. Learned Sessions Judge Sirsa on 17.4.1992 dismissed the revision petition and held that since none of the persons to whom interest was paid had taxable income, therefore, there was no wilful default of the respondents. The revision petition was rejected. Aggrieved by the said order, the present petition for reassessing the orders passed by the learned Chief Judicial Magistrate and the Sessions Judge has been filed.

Learned counsel for the respondents took up the preliminary objection to the effect that since the revision petition had been dismissed and second revision petition is not maintainable, Section 482 Code of Criminal Procedure will not be attracted. Subsection 3 to Section 397 bars second revision petition by the same person. It reads :

"397. (1) xx xx xx xx

(2) xx xx xx xx

(3) If an application under this Section has been made by any person either to the High Court or to the Sessions Judge, no further application by the same person shall be entertained by the other of them.

In the same breath it would be proper to reproduce Section 482 Code of Criminal Procedure, which is also reproduced below for the sake of facility :

"482. Saving of inherent powers of High Court: Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice."

Reading of the two together shows that when the revision petition has been dismissed by the Court of Sessions, he will not approach the High Court. Subsection (3) to Section 397 is a bar. The inherent powers of the Court would only be used to prevent abuse of process of Court or to secure ends of justice. In normal circumstances, the Court will not use the inherent powers.

The Supreme Court considered this dispute in the case of Raj Kapoor and others v. State (Delhi Administration) and others, AIR 1980 Supreme Court 258. The practice of using the inherent powers and interfering in daytoday working was not appreciated. The Supreme Court held as under :

"In short, there is no total ban on the exercise of inherent power where abuse of the process of the Court or other extraordinary situation excites the Court''s jurisdiction. The limitation is selfrestraint, nothing more. The policy of the law is clear that interlocutory orders pure and simple, should not be taken up to the High Court resulting in unnecessary litigation and delay. At the other extreme, final orders are clearly capable of being considered in exercise of inherent power, if glaring injustice stares the Court in the face. In between is a tertium quid, as Untwalia, J. has pointed out as for example, where it is more than a purely interlocutory order and less than a final disposal."

The same question was again considered by the Supreme Court in the case of Dharampal and others v. Smt. Ramshri and others, 1993(1) RCR (Crl.) 696 AIR 1993 Supreme Court 1361. After scanning through the provisions of Code of Criminal Procedure the Supreme Court held as under :

"The Sessions Judge had dismissed the said application on 14th May, 1979. Section 397(3) bars a second revision application by the same party. It is now well settled that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code. Hence the High Court had clearly erred in entertaining the second revision at the instance of Ist respondent. On this short ground itself, the impugned order of the High Court can be set aside."

Subsequently the same reasoning found favour with the Supreme Court in the case of Ganesh Narayan Hegde v. S. Bangarappa and others, 1995(2) Recent Criminal Reports 373. It was held that the High Court will not act as revisional court under the garb of exercising inherent powers. In paragraph 12, the Court had drawn the following conclusions :

"While it is true that availing of the remedy of the revision to the Sessions Judge under Section 399 does not bar a person from invoking the power of the High Court under Section 482, it is equally true that the High Court should not act as a second Revisional Court under the garb of exercising inherent powers. While exercising its inherent powers in such a matter it must be conscious of the fact that the learned Sessions Judge has declined to exercise his revisory power in the matter. The High Court should interfere only where it is satisfied that if the complaint is allowed to be proceeded with, it would amount to abuse of process of Court or that the interests of justice otherwise call for quashing of the charge. A few decisions of this Court may usefully be referred at this stage".

This Court had considered the earlier precedents in the case of Gurmel Singh v. Gurmail Kaur, 1995(3) RCR 594 and in paragraph 8, it was held as under :

"8. It is apparent from the perusal of the case of Ganesh Narayan Hegde (supra) that the legal position that emerges is in line with the case of Charanjit Singh (supra) that where second revision petition is not maintainable, the High Court would be slow to act while exercising its inherent powers. In extreme cases where it is satisfied that it amounts to total abuse because the interests, of justice so require, would the High court interfere particularly when the proceedings are vexatious or without jurisdiction. Merely because the High Court comes to a differing conclusion or likely to come at different conclusion, will not permit the Court to interfere as such."

It is obvious from the aforesaid that where the revision petition had been dismissed by the Court of Sessions, the aggrieved person can approach this Court only where there is an abuse of process of Court or interest of justice so require. This Court will not act as if it is the Court of appeal. Merely because this Court would come to a different conclusion will not permit it to entertain the petition under section 482, Code of Criminal Procedure.

In the persent case in hand, it has been pointed that there are many such cases and if this Court does not interfere on a question of law, it may cause great injustice. It becomes necessary in the interest of justice that this Court may interfere while exercising its inherent powers. The said argument cannot be ignored to secure the ends of justice and ensure that injustice is not perpetuated. This Court must exercise its inherent powers. In this background, the merits of the petition have to be considered.

Subsection (1) to Section 194A of the Income Tax Act is to the following effect :

"194A. (1) Any person, not being an individual or a Hindu undivided family who is responsible for paying to a resident any income by way of interest other than income (by way of interest on securities), shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

(Explanation For the purposes of this section where any income by way of interest as aforesaid is credited to any account, whether called ''Interest payable account'' or ''Suspense account'' or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.")

The penalty is provided under Section 276B, which is as under :

"276B. If a person fails to pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVIIB, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine."

Bare reading of both these provisions shows that when interest is payable, deduction has to be made and failure to do so is punishable. Admittedly in the present case in hand, when the interest was paid, the deduction had not been effected. This prompted and provided provocation to the department to file a complaint. The offence was complete, when deduction was not effected. This Court considered this aspect in the case of Jagmohan Singh v. Income Tax Officer, AWard Hoshiarpur, (1992) 196 Income Tax Reports 473. The amount had not been deposited within the stipulated date. It was held that offence was complete when it was not so done. It had again come up for consideration before this Court in the case of Deputy Commissioner of Income Tax v. Modern Motor Works and others, 1996(220) Income Tax Reports 415. This Court held that when the person failed to deduct the tax at the rate prescribed and deposited in accordance with law, the offence would be complete and charges should be framed. The same is the position in the present case.

The attention had been drawn to the fact that later on, respondents had obtained Form 15A from the concerned persons and therefore, since they were not liable to pay the tax, interest should not be deducted, but I am afraid this Court will not absolve the respondents from their liability. The offence was complete when deduction was not made. Interest was paid contrary to law without deduction. Afterwards obtaining the necessary forms will not help the respondents; therefore, the orders passed by the trial court cannot be sustained. Since the judgments rendered by the trial Court and Sessions Court were totally contrary to law, it becomes necessary that inherent powers should be exercised. But in the facts of the case, it is only to ensure that the law took a shape in a settled form.

It was urged that in any case this happened about 10 years ago and, therefore, it will not be proper to reinitiate the proceedings because the whole matter has become stale. Indeed expeditious disposal of cases has assumed great importance. Stale cases cannot be revived particularly when they are technical in nature. The Supreme Court in the case of Hussainara Khatoon and others v. Home Secretary, State of Bihar, Patna, AIR 1979 Supreme Court 1360 decried the delay in disposal of the cases and with reference to Article 21 of the Constitution, held as under :

"Now obviously procedure prescribed by law for depriving a person of his liberty cannot be ''reasonable, fair or just'' unless that procedure ensures a speedy trial for determination of the guilt of such person. No procedure which does not ensure a reasonably quick trial can be regarded as ''reasonable, fair or just and it would fall foul of Article 21. There can, therefore, be no doubt that speedy trial, and by speedy trial we mean reasonably expeditious trial, is an integral and essential part of the fundamental right to life and liberty enshrined in Article 21."

More near to the facts of the present case would be the decision of S. Guin and others v. Grindlays Bank Ltd. AIR 1986 Supreme Court 289. Therein the accused faced the trial for obstructing the bank officers from entering bank premises and transacting normal business. They were acquitted. In appeal the High Court had set aside the judgment of the trial Court. The appeal was heard after six years. The Supreme Court held as under :

"Having regard to the inordinate delay of nearly six years that had ensued after the judgment of acquittal, the nature and magnitude of the offences alleged to have been committed by the appellants and the difficulties that may have to be encountered in securing the presence of witnesses in a case of this nature nearly 7 years after the incident. The termination of the criminal proceedings in that way would secure the ends of justice as it would bring about reconciliation between the management and the employees and also put an end to a stale criminal proceedings in which the public had no longer sufficient interest."

In this process, the stale claim was not allowed to be restored. Similarily in the case of Chander Bhan v. State of Haryana, 1992(2) All India Criminal Law Reporter 315, the case was under Prevention of Food Adulteration Act. Ordinarily procedure for warrant case was followed. It was converted later on and procedure of summary trial was adopted. 8 years had passed, the proceedings were quashed.

Reference with advantage may also be made to the decision in the case of Banwari v. Income Tax Officer, (1992) Income Tax Reports 651. The appellants therein were carrying on business in manufacture of bidis in partnership. It stopped business on 31.12.1972. In the return filed the date when the business was stopped was given as 31.12.1969. Mistake was detected in 1974. A complaint was filed in 1977 that false statement and verification had been made. The Magistrate had discharged the accused holding that it was a bona fide mistake. The High Court had set aside the order. Appeal was filed in the Supreme Court. Supreme Court held that for more then a decade, proceedings were pending in the trial Court. No useful purpose would be served by proceeding with the complaint. Consequently the order of High Court was set aside.

A similar dispute arose before the Madras High Court in the case of Fourth IncomeTax Officer, City CircleIII v. A.K. Srinivasan, (1994), Income Tax Reports 64. The concerned person had already undergone the imprisonment till the rising of the Court. The High Court refused to interfere despite the minimum punishment having been prescribed.

Reverting back to the facts of the present case, it is obvious that 10 long years have elapsed. Basically it was a technical offence. Despite the minimum punishment having been prescribed, allowing the retrial would mean increasing the agony of the persons facing the trial. It will not be in the interest of justice, thus to place the respondents in the same position as it was years ago. Therefore, in the facts and circumstances, retrial is not being ordered from the stage when the respondents were discharged despite the judgments of trial Court and Sessions Court being not in accordance with law.

With these observations, petition is disposed of.