The Single Bench of the Delhi High Court in the case of Rajinder Kumar vs State & Anr. consisting of Justice Suresh Kumar Kait, while upholding the prosecution for an undisclosed foreign bank account, held that age at the time of the commission of offence has to be taken and not when the proceedings are initiated.
Facts:
Respondent No.2- Income Tax Office ("ITO") filed a complaint Case u/s 276C (1)/276D and 277 of the Income Tax Act, 1961 against the petitioner in respect of Income Tax Return pertaining to the financial year 2006-07. The ITO alleged that the Petitioner had opened an undisclosed account in HSBC Bank, London in 1991 with a maximum credit balance of USD 575,010, equivalent to Rs.2,53,00,440/- at the exchange rate (F.Y. 2005-06). On 23.08.2011, a search and seizure were conducted at the Petitioner's home and business u/s 132 of the Act, and he was notified u/s 153-A of the Income Tax Act, 1961 to file his tax return.
In the Income Tax Return, Rs.6,47,19,401/- was stated, but the Respondents said that the Petitioner offered the peak balance in the HSBC account in 2007-08. The Petitioner allegedly filed a revised income tax return on 16.05.2015 for the assessment year, citing a USD 575,010 balance in HSBC bank, London as his income. Petitioner was sent a notice u/s 274d of the Income Tax Act and fined Rs.10,000/- u/s 271(1)(b).
Procedural History:
The Petitioner was fined Rs.90,45,966 u/s 271(1)(c) of the Income Tax Act, 1961 for not revealing his genuine income. The trial court took note of the alleged offence in 2016. The Petitioner appeared in court after receiving a summons and was granted bail with surety.
He was exempted from personal attendance due to his age (80) and medical concerns. He also asked the trial court to discontinue the case based on his age and Circular/Instruction No. 5051 dated 07.02.1991, but the request was denied. Via this petition, Petitioner sought quashing of the "ITO vs. Rajinder Kumar" complaint case filed under Sections 276C (1)/ 276D and 277 of the Income Tax Act and all subsequent processes.
Contentions Made:
Petitioner: To buy peace in his old age, the petitioner paid all the taxes and interest on the assessment year 2006-07 based on documents provided to him during search and proceedings on 16.05.2012, but the respondents took the stand that despite payments of taxes, petitioner would not be absolved of the offences he committed. There was no provision for the Assessee to report foreign accounts until 2013, but the petitioner paid taxes, proving that the default was not purposeful and deliberate to escape tax. Finally, it was argued that the challenged complaint should be quashed and this petition permitted.
Respondent: It was contended that the petitioner's overseas account was opened on 20.08.1991 and his birthday was 30.03.1936. Using his birthdate of 30.03.1936, the Assessee was 55 when the foreign account was opened. So, his age cannot be considered when filing the 2006-07 return.
Observations of the Court:
The Bench noted that the sole issue to be examined by this Court is as to whether the Circular/ Instruction No. 5051 dated 07.02.1991 applied to the present case or not.
Using the petitioner's reported date of birth (30.03.1936), the court found that he was over 55 at the time of the 1991 offence. Circular/Instruction No. 5051 dated 07.02.1991 states that prosecution normally may not be initiated against a person who has attained the age of 70 years at the time of the commission of the offence. Meaning thereby, in terms of Circular/ Instruction No. 5051 dated 07.02.1991, the age at the time of the commission of offence has to be taken and not when the proceedings were initiated.
It further noted that even though the Petitioner claimed to have filed a revised income tax return on 16.02.2015 declaring his additional income as Rs.2,53,00440/- under "income from other sources," i.e. the maximum credit balance in the undisclosed bank account maintained in HSBC, on 26.09.2013 Show Cause Notice under Section 274 r/w 271 of the Act was issued against him and that penalty under Section 271 (1) (b) of the Act. The Petitioner has only recently filed an amended income tax return, thus he cannot dodge legal consequences for not revealing his correct income and foreign account since 1991.
Judgment:
The Bench found that Petitioner cannot be permitted to take benefit of Circular/ Instruction No. 5051 dated 07.02.1991 to find an escape route for the wrong committed by him. The petition was accordingly dismissed.
Case Title: Rajinder Kumar vs State & Anr.
Coram: Justice Suresh Kumar Kait
Case No.: CRL.M.C. 462/2017 & CRL.M.A. 2055/2017
Advocates for Petitioner: Advs. Mr. Mohit Mathur, Mr. Abhilash Mathur, Mr. Harsh Gautam
Advocate for Respondents: Advs. Mr. Abhishek Maratha
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