Delhi High Court

Paraminder Singh Kalra vs The Commissioner, Income Tax on 24 November, 2020

                              *   IN THE HIGH COURT OF DELHI AT NEW DELHI

                          %                                     Pronounced on: November 24th, 2020

                          +       W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018

                                  PARAMINDER SINGH KALRA                          .... Petitioner
                                                         Through:     Mr. R.K. Hando, Mr. Aditya
                                                                      Chaudhary & Mr. Yoginder
                                                                      Handoo, Advocates
                                                         Versus

                                  THE COMMISSIONER, INCOME TAX                        ... Respondent

                                                         Through:     Mr. Vibhooti Malhotra &
                                                                      Mr. Shailendera Singh,
                                                                      Advocates
                                  CORAM:
                                  HON'BLE MR. JUSTICE BRIJESH SETHI
                                                              JUDGMENT

BRIJESH SETHI, J.

1. The petitioner is said to be the Director/EEO of one M/S

Consortium Securities Pvt. Ltd. On 28th July, 2011 the respondent/

department conducted a search on the premises of petitioner on the

allegation that an information was received from the Government of

France that petitioner is having an account in HSBC Bank, Zurich,

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.1 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 Switzerland with the mala fide intention to evade tax and to hide

money transactions.

2. The respondent/department preferred a criminal complaint being

CC No.511538/16 (Old CC No.131/2014), under Section 276-D of the

Income Tax Act on 28th February, 2015 against the petitioner. The

respondent/ department also preferred two separate criminal

complaints under Section 276-C (1) and Section 277 of the Income

Tax Act being CC No. 528982/16 (Old CC No.157/4) and CC

No.528983/16 (Old CC No.158/4) on 12th January, 2016. In this

petition, the stand of the petitioner is that the respondent/department

has preferred these complaints on the very same material, evidence,

witnesses and documents and the allegation in all the three complaints

are to a large extent word to word same.

3. The petitioner is facing three separate trials in all the three

complaints before the same Magistrate for allegedly not declaring the

fact of having a foreign account to the Income Tax authorities, though

the material and evidence relied upon by the respondent/department is

similar in all the three complaints. Petitioner stated that he had filed an

application before the learned Magistrate for clubbing of the three

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.2 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 complaints and joint trial, which was rejected by the learned

Magistrate on 30th June, 2018 while observing as under:-

"7. Keeping foreign funds for number of years might be part of same transaction but not declaring the same in the Income Tax file for each specific year under prosecution is a distinct offence. Each instance of filing of income tax return without disclosing foreign funds is a separate and different act and same cannot held in part of same transaction.

8. In the present case I am of the opinion that the test of each offences being part of same transaction fails. As in the present case the accusations are for evasion of income tax for the different assessment years or for false statement given on oath before the income tax authorities.

9. Accordingly, in my humble opinion, no prejudice would be caused to the accused if he is tried in the separate complaints."

4. Vide this petition, petitioner is seeking quashing of the aforesaid

order of 30th June, 2018 passed by the learned Magistrate on the

ground that petitioner cannot be subjected to several criminal

prosecutions for the same offence on the basis of same material,

evidence and list of witnesses under the same enactment merely on the

basis that the financial years of the complaints are different. It is

submitted on behalf of the petitioner that the filing of three different

complaints by the respondent/Department is abuse of process of law

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.3 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 and is in contravention of Article 20(2) of the Constitution of India,

Section 71 of IPC, Section 300 of Cr.P.C and Section 26 of General

Clauses Act.

5. It is averred on behalf of the petitioner that first the existence of

the alleged foreign account for funding of amount from India has to be

proved and only thereafter the other two complaints, which are based

on mere assumption of petitioner having a foreign account funded

from India, have to follow. It is stated that such an assumption has to

be dealt with in one complaint instead of all the three complaints and

in case the respondent/department fails to prove that the petitioner has

suppressed holding of a foreign account or the income, the subsequent

complaints shall cease to exist, for which petitioner has been forced to

undergo trial.

6. It is urged on behalf of the petitioner that the learned trial court

in para-7 of the impugned order dated 30th June, 2018 has returned the

finding that each instance of filing of income tax return without

disclosing foreign funds is a separate and different act and same cannot

form part of same transaction, which is an erroneous conclusion

inasmuch as that in the very same paragraph the learned trial court has

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.4 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 concluded that keeping of foreign funds for number of years is part of

the same transaction. It is stated that filing of income tax returns for

each financial year cannot give rise to a separate cause of action for

filing prosecution for each financial year, particularly when the core

allegation is of keeping a foreign account, which the court itself

concluded to be part of the same transaction.

7. It was submitted on behalf of the petitioner that the respondent

has not been able to distinguish between 'assessment proceedings' and

the 'prosecution proceedings'. The assessment proceedings are

conducted by an Assessment Officer as designated under the Income

Tax Act while an "offence" is triable by a Court of Law. Assessment

proceedings conducted by competent authority known as Assessment

Officer as defined u/s 2(7A) is an assessment for the purposes of

calculating/assessing any tax or any other sum of money payable under

the Income Tax Act, be it interest or penalty."Tax" is defined u/s 2(43)

of Income tax Act to mean as income tax chargeable in any

Assessment Year and subsequent years under the provisions of Income

Tax Act, which may be of one year or spread over to several years.

Such "tax" does not include "interest" or "penalty". Interest is defined

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.5 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 under section 2(28A) of Income Tax. There can be prosecution only

for payable interest or penalty or tax, as stipulated u/s 276C of Income

Tax Act. Assessment proceedings are dealt under separate chapters of

Income Tax Act whereas penalties imposable are dealt under Chapter

XXI of Income Tax Act from sections 270 to 275 of the said Act.

Learned counsel for the petitioner, therefore, submitted that importing

the concept of "Assessment Year" into the definitions of "offences"

triable by Special Courts is reading something in the definition which

does not exists and which is contrary to constitutional safeguards and

criminal jurisprudence.

8. It was submitted on behalf of the petitioner that it is laid down in

law that if different cases are filed on same cause of action, 'Doctrine

of Issue Estoppel' prevents second prosecution on the same sets of

facts for which a person could be prosecuted. The petitioner relied

upon decision of Hon'ble Apex Court in State of 'Andhra Pradesh vs.

Cheemalapati Ganeswara Rao & Anr., 1964 (3) SCR 297' and a

decision dated 9th February, 2016 of a Coordinate Bench Of this Court

in 'Chandni Srivastava Vs. CBI & Ors.' to submit that allowing of

several complaints on same cause of action would lead to re-

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.6 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 appreciation of evidence several times on one issue of fact which is

against the principle of "Doctrine of Issue Estoppel". Hence, dismissal

of impugned order of 30th June, 2018 passed by the learned trial court

is sought and it is prayed that a common trial in all the three

complaints be conducted.

9. On the other hand, respondent /department has alleged that

during search proceedings on 28th July, 2011, the petitioner in his

statement had admitted of having an undeclared account in HSBC

Bank, Zurich, Switzerland and disclosed the entire modus operandi of

opening the account with the help of an introducer, one Charlie with

the mala fide intention to evade tax. It is the stand of respondent that

during the financial year 2006-07, notices dated 9th May, 2013 and 15th

July, 2013, under Sections 142(1) of the Income Tax Act, 1961

(henceforth referred to as the "Act") were issued to the petitioner to

furnish the details of the foreign accounts held by him. In addition, he

was also asked to provide consent letter to procure details from HSBC

bank, Zurich, Switzerland. Since the petitioner failed to respond to the

aforesaid, notice under Section 274 r/w Section 271 of the Act was

issued for non compliance of Section 142(1) of the Act, which is

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.7 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 punishable with rigorous imprisonment for a term upto one year under

section 276D of the Act. It is alleged that the petitioner did not disclose

the foreign bank account in return of income and balance appearing in

the said foreign account was also not taken into account in his balance

sheet and thus, the petitioner made a "willful attempt to evade income

tax" thereby committed substantive offence under section 276C(1) of

the Act for which the he is liable to be prosecuted u/s 276C(1) of the

Income Tax Act for both the assessment years i.e. A.Y. 2006-07 and

A.Y. 2007-08. Besides, the petitioner is also alleged to have committed

the offence under Section 277 of I.T. Act for making a false statement/

false verification in the respective returns of income for both the

assessment years 2006-07 and 2007-08. Resultantly, criminal

complaint C.C. No. 511538/16, under Section 276D of the Act for the

assessment year 2006-07 was preferred by the respondent/department

against the petitioner. In addition, two separate criminal complaints

C.C. Nos. 528983/16 and 528982/16 for the assessment years 2006-07

and 2007-08, u/s 276C(1) and 277 of the Act were preferred by the

respondent/department.

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.8 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11

10. It was further submitted on behalf of respondent/department that

no illegality has been committed by the department by filing three

different complaints, as the offence committed in each complaint is

separate and distinct. Attention of this Court was drawn to the

provisions of Sections 276C, 276D and 277 of the Income Tax Act.

11. Learned counsel for respondent/department submitted that

every assessment year is separate and distinct year under the

provisions of the Income Tax Act. The proceeding under the Act

initiates with filing of return by the assessee and culminates at framing

of assessment order (including the appellate proceedings) determining

the correct tax liability of an assessee and recovery of pursuant

demand arising thereto. The offence under Section 276C of the Act

can only be in respect of particular assessment year alone as the

quantum of sentence depends upon the amount of tax, penalty or

interest sought to be evaded. Similarly, the offence under Section 277

of the Act is also assessment year specific, as the misdeclaration or

furnishing of false account or statement is assessment year specific

and such misdeclaration etc. are committed while the assessee files the

return for a particular assessment year or during the course of

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.9 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 assessment proceedings of a particular assessment year. Depending

upon the nature of offences committed, there can be more than one

offence in respect of any particular assessment year for which separate

complaint can be preferred within the same assessment year also.

12. Learned counsel for respondent/department further submitted

that Section 276D of the Act provides for punishment for failing to

comply with the notice under Section 142(1) of the Act or failing to

produce within the time specified such accounts or documents as are

referred in the notice under section 142(1) and for each default, a

separate complaint can be instituted by the department, which in the

instant case was instituted for the assessment year 2006-07. It was

further submitted on behalf of respondent that by not taking into

account the transactions in the said foreign bank account in his return

of income and by not taking into account the balance appearing in the

said foreign bank account in his balance sheet, petitioner had

committed the offence under section 277 of the Act by making false

statement/ false verification in the respective returns of income for

both the assessment years 2006-07 and 2007-08. Therefore, separate

criminal complaints C.C. Nos. 528982/16 and 528983/16 for

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.10 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 assessment years 2006-07 and 2007-08 u/s 276C(1) and u/s. 277 of the

Act was preferred by the Department. Learned counsel pointed out that

as per the provisions of Code of Criminal Procedure, the offence under

Section 256D of I.T. Act is a summons triable offence and Sections

276C and 277 I.T. Act are warrant triable cases and these cannot be

tried together. It is also pointed out that Section 220 Cr. P.C is an

exception to section 218 Cr.P.C. which provides for one trial for every

such offence if these are a part of the same transaction. It was

submitted that offence under Section 276C I.T. Act and Section 277

I.T. Act are premised on different transactions in the said undisclosed

foreign account and non disclosure thereof in the income tax returns

for different assessment years. It was stated that these transactions are

not part of same transaction warranting joint trial under Section 220

Cr.P.C and thus, this petition deserves dismissal.

13. I have heard the rival submissions made by learned counsel for

the parties and gone through the material placed on record. The genesis

of trial of three petitions before the trial court is the complaint bearing

CC No.511538/16 (Old CC No.131/2014), under Section 276-D of the

Income Tax Act dated 28th February, 2015 and the other two

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.11 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 complaints rest on the same. Whether the petitioner is holding a

foreign account or not is a matter of trial in the first complaint and the

assumption that he holds an undisclosed foreign account, which forms

basis of other two complaints, is also subject matter of trial.

14. The following chart will reveal that facts and evidence are the

same in all the complaints.

CC No. 511538/16 CC No. 528982/16 (Old CC No. 528983/16 (Old S.No. (Old No. 131/4) No. 157/4) No. 158/4)

1. Information received That information received That information from the Government from the Government of received from the of France in 2011 France in 2011 under Government of France in under Double Tax double tax avoidance 2011 under double tax Avoidance convention with India avoidance convention Convention with India revealed that certain Indians with India revealed that revealed that certain including the accused, held certain Indians including Indian including or were beneficial owners the accused, held or were accused, held or were of Bank account(s) with beneficial owners of beneficial owners of HSBC, Switzerland. The Bank account(s) with bank account(s) with information/documents HSBC, Switzerland. The HSBC, Switzerland. received, contained the information/documents personal information of the received, contained the accused viz. his name, personal information of address, nationality, date of the accused viz. his birth, place of birth, name, address, profession, place of office, nationality, date of birth, passport no. etc. The place of birth, profession documents also contained placed of office, passport details of the entities which no. etc. the documents were held by the accused as also contained details of trustee viz. 'Nine on Ten the entities which were Foundation' and "Burnfield held by the accused as Invest SA' etc. trustee viz. "Nine on Ten

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.12 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 Foundation' and Burnfield Invest SA' etc.

2. That a search action That a search action was That a search action was was carried out carried out on 28.07.2011 at carried out on on28.07.2011 at the the residence of the 28.07.2011 at the residence of the accused, A-29 Friends residence of the accused, accused, A-29 Friends Colony (East), New Delhi. A-29 Friends Colony Colony (East), New (East), New Delhi.

Delhi.

3. During the search That during the search That during the search proceedings statement proceedings statement u/s proceedings statement of the accused was 132(4) of the I.T. Act dated u/s 132(4) of the I.T. Act recorded on oath, in 28.07.2011 of the accused dated 28.07.2011 of the which he had written was recorded on oath, in accused was recorded on all the answers in his which he had written oath, in which he had own handwriting. On answers to question 5 to 34 written answers to the basis of in his own handwriting. question 5 to 34 in his information received On the basis of information own handwriting. On regarding his account received regarding his the basis of information with HSBC Bank, account with HSBC Bank, received regarding his Zurich he was Zurich he was questioned account with HSBC questioned about his about his foreign bank Bank, Zurich he was foreign bank accounts. He admitted that questioned about his accounts. He he had opened a bank foreign bank accounts.

admitted that he had account with HSBC Bank, H admitted that he had
opened a bank Zurich, Switzerland in 2002 opened a bank account
account with HSBC when he visited there.... with HSBC Bank,
Bank, Zurich, Zurich, Switzerland in
Switzerland in 2002 when he visited
December 2002, when ...He further said that the there.....
visited there. .... account is not into existence
as on today and should have
been closed. He further ...He further said that the
...He further said that stated that the said bank account is not into
the account is not into account with HSBC Bank existence as on today and
existence as on today was not disclosed in his should have been closed.
and should have been return of income. He further stated that the

Signature Not Verified
Digitally Signed
W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.13 of 17
By:PRADEEP SHARMA
Signing Date:25.11.2020
13:50:11
closed. He further Regarding mode of said bank account with
stated that the said operation he submitted that HSBC Bank was not
bank account with he used to give cash on the disclosed in his return of
HSBC Bank was not instruction of the introducer income. Regarding
disclosed in his return at Delhi, who arrange to mode of operation he
of income. Regarding deposit the same in his bank submitted that he used to
mode of operation he account at Zurich/ he has give cash on the
submitted that he used further stated that he had instruction of the
to give cash on the given at Delhi in the year introducer at Delhi, who
instruction of the 2002 amount ranging from arrange to deposit the
introducer at Delhi, Rs. 2-5 crores. same in his bank account
who arrange to at Zurich. He has further
deposit the same in stated that he had given
his bank account at at Delhi in the year 2002
Zurich. He further amount ranging from Rs.
stated that he has 2-5 Crores.
given at Delhi in the
year 2002 amount
ranging from Rs. 2-5
crores.

15. Perusal of the above table reveals that the respondent has

preferred these complaints on the very same material, evidence and

documents and allegations in all the three complaints are to a large

extent quite same. The petitioner is, thus, facing three separate trials in

all the three complaints before the same Magistrate for not declaring

the fact of having a foreign account to the Income Tax Authorities.

16. The ingredients of Section 220 of Cr.P.C. have been defined in

Chandni Srivastava Vs. CBI & Ors. decided on 9th Feb., 2016 in

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.14 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 WP(Crl.) 743/2013 in which it was held that Sec. 220 of the Cr.P.C.

permits of one trial even if many offences are committed, if such

offences form part of the same transaction, the rationale for such an

exception being that in such circumstances, separate trials may lead to

conflicting judgments.

17. In 'Mohan Baitha vs. State of Bihar, AIR 2001 SC 1490', the

Supreme Court interpreted Section 220 of the Code and observed as

under:-

"It may be noticed that under Section 220 of the Code of Criminal Procedure, offences more than one committed by the same persons could be tried at one trial, if they can be held to be in one series of acts, so as to form the same transaction. The expression "same transaction" from its very nature is incapable of an exact definition. It is not intended to be interpreted in any artificial or technical sense. Common sense and the ordinary use of language must decide whether on the facts of a particular case, it can be held to be in one transaction. It is not possible to enunciate any comprehensive formula of universal application for the purpose of determining whether two or more acts constitute the same transaction. But the circumstances of a given case indicating proximity of time, unity or proximity of place, continuity of action and community of purpose or design are the factors for deciding whether certain acts form parts of the same transaction or not. Therefore, a series of acts whether are so connected together as to

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.15 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 form the same transaction is purely a question of fact to be decided on the aforesaid criteria".

18. The broad test, therefore, for ascertaining whether offences

charged form part of the same transaction is whether the other set of

offences, even though distinct and separate, have been committed for

facilitating the commission of the main offence. If the offences alleged

involve similar persons and there is a hint of continuity of action, it is

then part of the same transaction. Thus, if the substratum of the series

of acts is common, then those acts do constitute same transaction.

19. As discussed above, the three complaints in fact are a part of the

same transaction. The first complaint has been filed on the assumption

that petitioner is holding an undisclosed foreign account and two

subsequent complaints are nothing but to arrive at a figure to meet the

ingredients of the first offence. The chart given above reveals that the

allegations, documents and nature of evidence are same in all the three

complaints. In these circumstances, it will be in the interest of justice

to have a common trial for all the three complaints.

20. In view of the above discussion, this petition is allowed. The

order dated 30th June, 2018 passed by the Ld. Trial Court rejecting the

Signature Not Verified Digitally Signed W.P.(CRL) 3486/2018 & Crl.M.A. 47373/2018 Page no.16 of 17 By:PRADEEP SHARMA Signing Date:25.11.2020 13:50:11 application of the petitioner for clubbing of the three complaints and

joint trial is set aside. Vide order dated 25 th February, 2020,

proceedings before the learned Trial Court were directed to be stayed.

The stay order stands vacated. It is now directed that common trial in

CC No.511538/16 (Old CC No.131/2014), under Section 276-D of the

Income Tax Act dated 28th February, 2015; CC No.528982/16 (Old CC

No.157/4) and CC No.528983/16 (Old CC No,158/4) dated 12 th

January, 2016, under Section 276-C (1) and Section 277 of the Income

Tax Act shall take place before the court concerned.

21. With aforesaid directions, this petition along with pending

application, is disposed of.

22. The order be uploaded on the website of this Court forthwith.

BRIJESH SETHI, J NOVEMBER 24th, 2020 r/AP