Income-Tax Officer v. Emerson Paul Plastic Company And Others.

A.P Chowdhri, J.:— Facts necessary for the disposal of these two Crl. Misc. Nos. 2467-M and 2468-M of 1987 are as follows:

There is a firm called M/s Emerson Paul Plastic Company with Sat Paul Singh Alang and Smt. Kaushalya Wati as partners dealing in electric and automobile components at Faridabad. The firm was assessed to income-tax and, for the assessment year 1976-77, return of income was filed by the firm on September 1, 1987, duly signed and verified by Sat Paul Singh Alang. Along with the return, the firm filed balance-sheet, profit and loss account and lists of sundry creditors and sundry debtors. The said copies of accounts were duly signed by the aforesaid partner. Assessment was completed on March 21, 1977, and total income computed was Rs. 35,130. Later on, it came to the knowledge of the Department that the assessee had furnished different figures for the sale, purchase, net profit, gross profit, capital, sundry creditors, etc., to the State Bank of India, Fari-dabad. Copies of accounts submitted to the State Bank of India were at variance with the copies of accounts submitted to the Department along with the return. After obtaining proper sanction, a complaint for offence under section 276C of the Income-tax Act, 1961 (for short, “the Act”), was filed by the Income-tax Officer, B-Ward, Faridabad, against the firm and both partners in the court of JMIC, Faridabad.

2. A similar complaint was filed in the court of JMIC, Faridabad, relating to the subsequent period. In that case also, it was alleged that the accounts filed with the return were at variance with the accounts filed with the State Bank of India and the firm and the partners had committed an offence under section 276C of the Act. On behalf of the complainant, Shri K.C Arora, Income-tax Officer, who had signed the complaint, appeared as PW-1 and examined Shri K.K Arora, Field Officer of the State Bank of India, Faridabad, as PW-2. Besides, Shri R.P Dhanda, Inspector, Income-tax Department, appeared as PW-3. The documents purported to have been submitted by Sat Paul Singh Alang to the State Bank of India which had been impounded and copies obtained were produced.

3. By order dated August 11, 1985, the Chief Judicial Magistrate, Faridabad, held that the evidence led by the prosecution was not sufficient in tne sense that if the same was unrebutted, it would not warrant conviction of the accused. The complaint was, accordingly, dismissed. Revision filed against the order of the Chief Judicial Magistrate, Faridabad, was dismissed by the Additional Sessions Judge, Faridabad, by order dated November 18, 1986. The present petitions have been filed under section 482 of the Code of Criminal Procedure for setting aside the orders of the courts below in exercise of the inherent powers of this court.

4. Shri Lakhminder Singh, learned counsel for the respondents, has taken a preliminary objection that the petitioner having availed of the revision before the Court of Session, further revision filed by it, though described as a petition under section 482, was barred in view of the provisions of section 397(3) of the Code of Criminal Procedure. He placed reliance on Charanjit Singh v. Gursharan Kaur, [1990] Crl. LJ 1264 (P&H); [1991] 99 PLR 388.

5. The preliminary objection does not present any serious difficulty as far as the present case is concerned. After reviewing the case law, learned judges of the Division Bench summed up the legal position in the following words ([1991] 99 PLR 388, 393):

“The legal position that thus emerges is that the provisions of section 397 of the Code do not constitute or operate as a bar to the exercise by the High Court of its inherent powers under section 482 of the Code. The limitation here, as observed in Raj Kapoor's case, [1980] Crl. LJ 202; (1980) 1 SCC 43 : AIR 1980 SC 258, is self-restraint and no more. It must, of course, be observed that where ah order is amenable to revision, the order of the revisional court should be interfered with very sparingly and that too only for the purposes as envisaged by section 482 of the Code. Such cases would clearly be few and far between.”

6. After hearing learned counsel for both the parties, I am of the view that dismissal of the complaint at the threshold on an altogether erroneous view of the law has resulted in failure of justice and the inherent powers of this court should be invoked to secure the ends of justice.

7. Regarding the merits of the petitions, two points arise for consideration. One is—what is the precise connotation of the expression “no case against the accused has been made out which, if unrebutted, would warrant his conviction” occurring in section 245 of the Code of Criminal Procedure and, secondly, what is a prima facie case? Both the courts below have taken the view that the standard of proof required for framing the charge is more than that of a prima facie case. By doing so, both the courts fell into a grave error which has consequently resulted in failure of justice. The question as to the interpretation of section 245 of the Code is not res integra. In R.S Nayak v. A.R Antulay, (1986) 2 SCC 716 : AIR 1986 SC 2045, the Supreme Court pointed out that the provisions regarding discharge were contained in sections 227, 239 and 245 depending on the fact whether the case was triable by the court of session or it was instituted on a police report or otherwise than on a police report. It was further pointed out that the three provisions contained somewhat different languages in regard to the discharge of the accused. It was concluded in paragraph 44 of the report at page 2071: “…. Notwithstanding this difference in the position there is no scope for doubt that the stage at which the Magistrate is required to consider the question of framing of charge under section 245(1) is a preliminary one and the test of ‘prima facie’ case has to be applied. In spite of the difference in the language of the three sections, the legal position is that if the trial court is satisfied that a prima facie case is made out, charge has to be framed.” A question immediately arises that the stage for the accused to put forward his plea by making a statement under section 313 and of leading evidence in defence arises only on the conclusion of the prosecution evidence and what would be the meaning left “in rebuttal” referred to in section 245. This question was answered by their Lordships in para 47 at page 2072 by saying that there was no scope for doubt that the “rebuttal case” envisaged in section 245(1) was fairly clear from the cross-examination of prosecution witnesses as also from the documents, if any, exhibited before the court. The standard required to be applied in cases instituted otherwise than on a police report for purposes of framing a charge is thus a prima facie case.

8. This brings me to a consideration of the next question as to what is meant by a prima facie case.

9. In R.S Nayak's case, (1986) 2 SCC 716 : AIR 1986 SC 2045, the Supreme Court gave an illustration to bring out the meaning of the expression “prima facie case”. It was stated that if the scales of a pan as to the guilt or innocence of the accused are something like even, at the conclusion of the trial, then, on the theory of benefit of doubt, the case is to end in his acquittal. But, if, on the other hand, it is so at the initial stage of making an order under section 227 or section 228, then, in such a situation, ordinarily and generally, the order which will have to be made will be one under section 228 (charge to be framed) and not under section 227 (of discharge). Making a reference to Superintendent and Remembrancer of Legal Affairs v. Anil Kumar, (1979) 4 SCC 274 : AIR 1980 SC 52, in which State Of Bihar v. Ramesh Singh, (1977) 4 SCC 39 : AIR 1977 SC 2018 was quoted, it was observed that the truth, veracity and the effect of the evidence which the prosecution proposes to adduce are not to be meticulously judged. The standard of test, proof and judgment which is to be applied finally before finding the accused guilty or otherwise is not exactly to be applied. At this stage, even a very strong suspicion founded upon materials before the Magistrate which leads him to form a presumptive opinion as to the existence of the factual ingredients constituting the offence alleged may justify the framing of the charge. In determining whether a prima facie case had been made out, the evidence of the witnesses is entitled to a reasonable degree of credit. Where much can be said on both sides, it would be for the trial court to decide whether to accept the evidence or not. For purposes of prima facie case, the same would have been made out. A prima facie case is not made out where the evidence is totally unworthy of credit or the same is patently absurd or inherently improbable. It is obviously not possible to define the expression “prima facie case” because it will vary from case to case. Coming to the facts of the present case, a copy of the statement of accounts and related papers had been obtained from the bank. Those documents are purported to have been submitted to the bank by Sat Pal Singh Alang. A comparison of the figures occurring in the accounts submitted to the Income-tax Department on the one hand and those submitted to the bank on the other, as juxtaposed in paragraph 10 of the complaint, clearly brings out the significant features. For instance, the opening stock in the two sets of accounts is Rs. 2,26,415. The closing stock in both the accounts is again the same, namely, Rs. 2,73,200. Both the accounts relate to a firm by the name and style of M/s Emerson Paul Plastic Company. The accounts submitted to the Department is by a partnership concern with Sat Pal Singh Alang and his mother as the partners. The firm which submitted the accounts to the bank is said to be a sole proprietorship concern of Sat Pal Singh Alang. The point of significance again is that the name of the firm and the occurrence of Sat Pal Singh Alang in both is common.

10. For the reasons discussed above, the petitions are allowed and the orders of the Chief Judicial Magistrate and of the learned Additional Sessions Judge, Faridabad, are set aside. It is directed that the Chief Judicial Magistrate shall, after hearing learned counsel for the parties, proceed further with the case. It may be made clear that the discussion made in this order is in the limited context of the disposal of the petitions made in this court. They are not intended to prejudice the case of either party and it is expected that the matter will be dealt with and disposed of strictly on its merits according to law. Parties, through their counsel, are directed to appear before the Chief Judicial Magistrate, Faridabad, on March 11, 1991.