HON'BLE SRI JUSTICE K. LAKSHMAN
CRIMINAL PETITION No.722 OF 2021
ORDER:
This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.') to quash the proceedings in C.C.No.8140 of 2020 pending on the file of XII Additional Chief Metropolitan Magistrate at Nampally, Hyderabad. The petitioner herein is Accused No.11 in the said case. The offences alleged against the petitioner herein are under Sections 409, 420, 464, 465, 466, 468 and 471 read with 120-B of IPC.
2. Heard Sri A.Ramesh, learned senior counsel, representing M/s. Pillix Law Firm, for the petitioner, learned Assistant Public Prosecutor and Sri B.Narasimha Sharma, learned counsel for 2nd respondent and perused the record.
3. As per the charge sheet, the allegations against the petitioner are as follows:-
i) 2nd respondent is an entity registered with Income Tax Department under Section 80(G) and Section 12AA of the Income Tax Act, 1961 (for short, 'the Act'). Donations made to this firm will be entitled to 50% tax exemption. The petitioner herein/A.11, who has donated an amount of Rs.50,00,000/- during the financial year 2015-16, claimed tax exemptions through Income Tax Returns (ITRs) of Rs.87,50,000/-by submitting fake certificates under Section 35(i)(ii) of the Act, for the assessment year 2016-17. The modus operandi adopted by 2 the petitioner herein is also specifically mentioned in the charge sheet. Therefore, the petitioner herein has committed the above said offences.
4. Sri A.Ramesh, learned Senior counsel would submit that the petitioner herein is having high profile and he is philanthropist. He is Managing Director of 'Mohan Mutha Exports Private Limited', which is a global business conglomerate with interest in various business segments including infrastructure projects, water energy, shipping and manufacturing. The Government of India has recognized this Company as 'Two Star Export house'. The petitioner herein is part of the present working Committee of FICCI, former Regional Chairman of EEPC India, former Vice President of SAARC Chamber of Commerce and Industry, Former President of Southern India Chamber of Commerce and Industry. The petitioner has held many business delegations sponsored by Ministry of commerce and Ministry of External Affairs. Thus the petitioner is having his own reputation in the society. Therefore, he has not committed any offences as alleged by the 2nd respondent. He has believed A.2 and made donations. There is no mens rea in giving donations to A.2 and the petitioner never claimed any exemption illegally on the said donations. He would further submit that the 2nd respondent has not made the said company i.e. Mohan Mutha Exports Private Limited, to which the petitioner herein is the Managing Director as accused. According to the 2nd respondent, donations were made by the 3 said company and not by the petitioner herein in his individual capacity. Therefore, in the absence of any specific allegation against the petitioner herein, he is not vicariously liable for any offence.
5. Learned Magistrate has mechanically took cognizance of the offences against the petitioner herein by putting rubber stamp. The role played by the petitioner herein is also not explained in the charge sheet by the Investigating Officer. He has placed reliance on the principle laid down by the then High Court of Andhra Pradesh, reported in TGL Groundnut Corporation Vs. The Agricultural Market Committee1. Learned Senior counsel would further submit that the petitioner herein has withdrawn the said donations and submitted his revised returns. He has also paid tax. Learned senior counsel for the petitioner, referring to the contents of the charge sheet would submit that the said allegations lacks ingredients of the offences against the petitioner herein. With the said submissions, the learned counsel for the petitioner sought to quash proceedings in C.C.No.8140 of 2020.
6. On the other hand, Sri B.Narasimha Sharma, learned standing counsel appearing for the 2nd respondent would submit that the petitioner herein donated said amount of Rs.50,00,000/- and claimed an amount of Rs.87,50,000/- as exemption. Modus operandi in claiming bogus claim to get benefit by the petitioner herein is also specifically mentioned in 1 1985 (1) APLJ (HC) 368 4 the charge sheet. The petitioner herein has addressed a letter dated 18.11.2019 to the 2nd respondent informing that he is withdrawing the said donations and submitting fresh returns. The said facts would reveal that the petitioner herein has admitted his guilt and also commission of offence and therefore he has submitted fresh returns. There are several triable issues and the petitioner herein has to face trial and prove his innocence. There are specific allegations against the petitioner herein. Therefore, the said defence of vicarious liability has to be taken by the petitioner herein during the course of trial in the said Calendar Case. Instead of doing so, he has filed the present Criminal Petition to quash the proceedings in C.C.No.8410 of 2020. With the said submissions, he sought to dismiss the present petition.
7. In view of the above stated rival submission, it is not in dispute that the petitioner herein has donated an amount of Rs.50,00,000/- on 24.03.2016 i.e. during the financial year 2015-16 and claimed tax exemption through ITRs for Rs.87,50,000/- by submitting certificate under Section 35(i)(ii) of IT Act for the assessment years 2016-17. According to the 2nd respondent, it is a fake certificate. According to the petitioner, it is a genuine certificate. Therefore, it is a triable issue.
8. The petitioner herein has filed returns on 30.11.2016. He has claimed exemption of Rs.87,50,000/- and according to the 2nd respondent, the petitioner has submitted a fabricated certificate. In the charge sheet and also in the counter, there is 5 specific allegation that the petitioner is a part of a large rocket involving bogus claim of deduction under Section 35(1)(ii) of the I.T. Act, 1961. He was a beneficiary during the assessment year 2016-17. Only after the action of the department which revealed the fraudulent activity, the petitioner came forward to forego the claimed bogus deduction. The action of the petitioner is an afterthought to absolve himself from prosecution as a partner in larger criminal conspiracy to evade taxes due to the Government.
9. There is also specific allegation that the petitioner is a part of syndicate which has hatched criminal conspiracy to evade taxes. In the present case, the tax advantage derived is around Rs.22.43 Crores. The Government is deprived of to the said extent. The petitioner herein has claimed said exemption by producing false certificate. The petitioner herein has not voluntarily withdrawn bogus claim of deduction under Section 35(i)(ii) of the I.T.Act,1961. It was only during assessment proceedings when the petitioner was asked to prove genuineness of the donation to A.2-the RDS, he came forward to withdraw of bogus claim with deduction. The same was after departmental action of the beneficiaries and principal conspirator including the petitioner herein. There is a specific allegation that the action of the petitioner is well planned afterthought rather than bona fide mistake which is being claimed by the petitioner herein. Thus, the petitioner herein claimed advantage of 6 Rs.87,50,000/- in his original returns under Section 35(i)(ii) of the I.T.Act.
10. Thus, the above said discussion would reveal that, prima facie, there are serious allegations against the petitioner herein. There are several triable issues. The total tax advantage derived was around Rs.22.43 Crores which would have accrued to the Government. Thus, Government is deprived to the said extent. It is loss to public exchequer. The petitioner has not voluntarily forgone the claim of exemption claimed on the basis of false donation certificate received by him and when he was asked to prove the genuineness of the said certificate during the assessment procedure, then only the petitioner agreed to forgo such exemption. Thus, the petitioner has to prove his innocence by facing trial. The contention of the petitioner that there is no mens rea is also triable issue in view of the facts stated supra.
11. In this regard, it is apt to refer to the decision rendered by the Hon'ble Supreme Court in Kamal Shivaji Pokarnekar v. The State of Maharashtra2, wherein the Apex Court has categorically held that quashing criminal proceedings was called for only in a case where complaint did not disclose any offence, or was frivolous, vexatious, or oppressive. If allegations set out in complaint did not constitute offence of which cognizance had been taken by Magistrate, it was open to High Court to quash same. It was not necessary that, a meticulous analysis of case 2 . AIR 2019 SC 847 7 should be done before trial to find out whether case would end in conviction or acquittal. If it appeared on a reading of complaint and consideration of allegations therein, in light of the statement made on oath that the ingredients of the offence are disclosed, there would be no justification for High Court to interfere. The defences that might be available, or facts/aspects which when established during trial, might lead to acquittal, were not grounds for quashing complaint at threshold. At that stage, only question relevant was whether averments in complaint spell out ingredients of a criminal offence or not. The Court has to consider whether complaint discloses that prima facie, offences that were alleged against Respondents. Correctness or otherwise of said allegations had to be decided only in trial. At initial stage of issuance of process, it was not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of Accused. Criminal complaints could not be quashed only on ground that, allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out in complaint, criminal proceeding shall not be interdicted.
12. In Skoda Auto Volkswagen India Private Limited Vs. The State of Uttar Pradesh and Ors3, the Hon'ble Apex Court referring to the various judgments rendered by it categorically held that the High Courts in exercise of its inherent powers 3 AIR 2021 SC 931, 8 under Section 482 of Cr.P.C has to quash the proceedings in criminal cases in rarest of rare cases with extreme caution.
13. In view of law laid down by the Hon'ble Apex Court and in view of the above said discussion, as there are serious allegations against the petitioner herein and there are several triable issues, this Court is not inclined to quash the proceedings in C.C.No.8410 of 2020 and the petitioner failed to make out any case to quash the said proceedings. Therefore, this Criminal Petition is liable to be dismissed.
14. In the result, the Criminal Petition is accordingly dismissed.
As a sequel, miscellaneous petitions, if any, pending in the Criminal Petition shall stand closed.
____________________ K. LAKSHMAN, J Date:05 .07.2021.
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