|CORAM:||Amitava Roy J, Pinaki Chandra Ghose J|
|DATE:||August 31, 2016 (Date of pronouncement)|
|DATE:||September 8, 2016 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|Prosecution: Important law relating to the territorial jurisdiction and competence of the Deputy Director of Income-tax to lodge a complaint for evasion of tax explained|
(i) The essence of the discord is the competence of the Deputy Director, Income Tax (Investigation)-I, Bhopal (M.P.) to lodge the complaint. Whereas, according to the appellants, he is not the authority or the forum before which appeals would ordinarily lie from the actions/decisions of the I.T.Os. who had recorded their statements, as mandated by Section 194(4) of the Code, it is urged on behalf of the respondent that having regard to the overall scheme of the Act, he indeed was possessed of the appellate jurisdiction to maintain the complaint. As nothing much turns on the ingredients of the offences under Sections 193,196,200 IPC qua the issue to be addressed, detailed reference thereto is considered inessential. The relevant provisions of the Act next demand attention.
(ii) As enumerated under Section 116 of Chapter XIII of the Act, Deputy Director of Income tax/Deputy Commissioner of Income Tax/Deputy Commissioner of Income Tax (Appeals) amongst others are the designated income tax authorities. Section 118 authorises the Central Board of Direct Taxes constituted under the Central Board of Revenue Act, 1963 (hereinafter referred to as “the Board”) to direct by notification in the official gazette that any income tax authority or authorities specified therein would be subordinate to such other income tax authority or authorities as may be specified in such notification.
(iii) As would be evident from the above extract, it deals exclusively with the inter se subordination of the authorities mentioned therein so much so that Income Tax Officers have been made subordinate to Assistant Directors or Assistant Commissioners within whose jurisdiction they perform their functions or other income tax authorities under whom they are appointed to work and to any other income tax authority to whom the Assistant Director or the Assistant Commissioner as the case may be or other income tax authority is subordinate. Noticeably this clause does not spell out any territorial barriers but logically warrant some order/notification to activate the functional mechanism in order to address the institutional exigencies.
(iv) Our attention has not been drawn to any document to this effect. Additionally as well, the decisive and peremptory prescription of Section 195(4) of the Code is not merely the levels of the rank inter se but the recognised appellate jurisdiction ordinarily exercised by the authority or the forum concerned for a complaint to be validly lodged by it, if in a given fact situation, the initiation of prosecution is sought to be occasioned not by the court in the proceedings before which the contemplated offence(s) had been committed, but by a court to which ordinarily appeals therefrom would lie.
(v) Considerable emphasis has been laid on behalf of the respondent on the provisions of the Act outlining the jurisdiction of the income tax authorities as encompassed in Sections 120 and 124 of the Act in particular. Section 120 provides that income tax authorities would exercise all or any of the powers and perform all or any of the functions conferred on or as the case may be assigned to such authorities under the Act in accordance with such directions as the Board may issue in this regard. The factors to be taken note of by the Board or any other income tax authority authorised by it for such purposes have also been prescribed. As a necessary corollary, the Board can also by general or special order and subject to such conditions, restrictions or limitations as may be specified therein, authorise such authorities as enumerated in sub-section (4) thereof to perform such functions, as may be assigned. 54. The powers of an assessing officer vested with the jurisdiction as permitted by Section 120 of the Act, extends as is clarified by Section 124, to any person carrying on business or profession, if the place at which he carries on his business or profession is situated within the limits of the area over which such officer had been vested with the jurisdiction or if the person concerned carries on business in more places than one, if the principal place of his business or profession is situated within the area over which the assessing officer has jurisdiction. In addition, such officer would have also jurisdiction in respect of any other person residing within the area. Sub-section 3 of Section 124 debars a person to call in question the jurisdiction of an assessing officer in the eventualities as mentioned in sub-clauses (a) and (b) thereof. 55. The power with regard to discovery, production of evidence etc. and the officer empowered to exercise the same has been dealt with in details in Section 131 of the Act. The procedure to be complied with in Page 27 27 conducting search and seizure has been delineated in Section 132 of the Act. Seemingly, to this extent, the parties are one and ad idem.
(vi) The bone of contention lies in the interpretation of Section 246 of the Act in particular which is contained in Chapter XX dealing with Appeals and Revision. Whereas Section 246 catalogues the orders of an assessing officer other than those of the Deputy Commissioner from which appeal would lie to the Deputy Commissioner (Appeals), Section 246A lists the orders from which appeal would lie to the Commissioner (Appeals). Admittedly, the categories of orders specified under Section 246(1) of the Act do not include one stemming from any proceeding before an assessing officer under Section 132 of the Act pertaining to search or seizure. Noticeably though under Section 116 of the Act, as referred to hereinabove, under clause (d) thereof, Deputy Director of Income Tax, Deputy Commissioner of Income Tax and Deputy Commissioner of Income Tax (Appeals) have been bracketed together, it is only the Deputy Commissioner (Appeals), as is apparent from Section 246(1), who has been conferred with the appellate jurisdiction to entertain appeals, albeit from specified orders passed by an assessing officer as mentioned in that sub-section. The Deputy Director of Income Tax in particular, has not been designated to be the appellate authority or forum from such orders or any other order of the assessing officer. Having regard to the issue to be addressed, it is considered inessential to dilate on Section 246A which deals with the appeals to the Commissioner (Appeals).
(vii) Our attention has not been drawn to any provision of the Act whereunder the Deputy Director of Income Tax has been designated to Page 28 28 be an authority or forum before whom an appeal would lie from any order of any subordinate officer including the I.T.O.. To reiterate, I.T.Os. are included in the classes of income tax authorities as per Section 116 of the Act and having regard to the hierarchy designed, they are subordinate in rank to the Deputy Director of Income Tax, Deputy Commissioner of Income Tax and the Deputy Commissioner of Income Tax (Appeals).
(viii) On a conjoint reading of the above provisions of the Act, it is thus patent that the statute has not only identified the income tax authorities but also has specified their duties and jurisdiction, territorial and otherwise. It has stipulated as well the eventualities and the pre-requisites, for the exercise of such jurisdiction or performance of the duties assigned to ensure effective and purposeful implementation of the provisions thereof. These functional framework indubitably has been made for the desired conduct of the organisational affairs as legislatively intended.
(ix) The word “ordinary” as defined in Blacks Law Dictionary, 10th Edition, reads thus: “Ordinary: occurring in regular course of events; normal; usual. The word “ordinarily” is a derivative of this word (adverb) carrying the same meaning.
(x) The word “ordinarily” therefore would denote developments which are likely to occur, exist or ensue in the regular or normal course of events as logically and rationally anticipated even though not set out or expressed in categorical terms. This is a compendious expression to encompass all events reasonably expected to occur in the usual and common course of occurrences and are expected to so happen unless prohibited, prevented or directed by some express and unexpected interventions to the contrary.
(xi) As adverted to hereinabove, Section 195 of the Code read as a whole unambiguously impose restrictions in the matter of lodgement of complaint qua the offences as mentioned in sub-section (1)(b) thereof in particular and therefore as a corollary, any interpretation for identifying the court/authority/forum contemplated thereby to be competent has to be in furtherance of the restraint and not in casual relaxation thereof. Consequently, therefore the exposition of the provisions of the corresponding substantive law which designs the forums or authorities and confers original and appellant jurisdiction has also to be in aid of the underlying objectives of the restrictions stipulated. Any postulation incompatible with the restrictive connotations would be of mutilative bearing thereon and thus frustrate the purpose thereof, a consequence not approvable in law. To reiterate, Section 195 of the Code clearly carves out an exception to the otherwise conferred jurisdiction on a court under Section 190 to take cognizance of an offence on the basis of the complaints/information from the sources as enumerated therein.
(xii) Viewed in this context, in our estimate, the notification issued under Section 118 of the Act cannot be conceded an overriding effect over the scheme of the statute designating the appellate forums more particularly in absence of any order, circular, notification of any authority thereunder to that effect. The Deputy Director of Income Tax for that matter, as the framework of the Act would reveal, has not been acknowledged to be the appellate forum from any order or the decision of the assessing officer/I.T.O., notwithstanding several other provisions with regard to conferment of various powers and assignments of duties on the said office. In the teeth of such mindful and unequivocal module of the Act, recognition of the Deputy Director of Income Tax to be a forum to whom an appeal would ordinarily lie from any decision or action of the assessing officer/income tax officer would not only be inferential but would also amount to unwarranted judicial legislation by extrinsic additions and doing violence to the language of the law framed. On the contrary, acceptance of the Deputy Commissioner (Appeals) as the forum to which an appeal would ordinarily lie from an order/decision of the assessing officer/I.T.O., would neither be inconsistent with nor repugnant to any other provision of the Act and certainly not incompatible with the legislative scheme thereof. Mere silence in Section 246 of the Act about any decision or order other than those enumerated in sub-section (1) thereof as appealable /decision to the Deputy Commissioner (Appeals), does not ipso fact spell legislative prohibition in that regard and in our comprehension instead signifies an affirmative dispensation.
(xiii) It is a trite law that there is no presumption that a casus omissus exists and a court should avoid creating a casus omissus where there is none. It is a fundamental rule of interpretation that courts would not feel the gaps in statute, their functions being jus discre non facere i.e. to declare or decide the law. In reiteration of this well-settled exposition, this Court in (2008) 306 ITR 277 (SC) Union of India and others vs. Dharmendar Textile Processors and others had ruled that it is a well settled principle in law that a court cannot read anything in the statutory provision or a stipulated provision which is plain and unambiguous. It was held that a statute being in edict of the Legislature, the language employed therein is determinative of the legislative intent. It recorded with approval the observation in Stock v. Frank Johns (Tipton) Limited (1978) 1 All ER 948 (HL) that it is contrary to all rules of construction to read words into an Act unless it is absolutely necessary to do so. The observation therein that, rules of interpretation do not permit the courts to do so unless the provision as it stands meaningless or doubtful and that the courts are not entitled to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the statute, was underlined. It was proclaimed that a casus omissus cannot be supplied by the court except in the case of clear necessity and that reason for is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose, all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute.
(xiv) More recently this Court amongst others in Petroleum and Natural Gas Regulatory Board vs. Indraprastha Gas Limited and Others (2015) 9 SCC 209 had propounded that when the legislative intention is absolutely clear and simple and any omission inter alia either in conferment of power or in the ambit or expanse of any expression used is deliberate and not accidental, filling up of the lacuna as perceived by a judicial interpretative process is impermissible. This was in reiteration of the proposition in Sree Balaji Nagar Residential Association vs. State of Tamil Nadu and Others (2015) 3 SCC 353 to the effect that casus omissus cannot be supplied by the court in situations where omissions otherwise noticed in a statute or in a provision thereof had been a conscious legislative intendment.
(xv) The judicial formulations on the theme is so consistent and absolute in terms that no further dilation is essential. The scheme of the Act and the legislative design being unreservedly patent in the instant case, that it is plainly impermissible to acknowledge the Deputy Director of Income Tax to be the forum to which an appeal would ordinarily lie from an order/decision of an assessing officer/I.T.O. The present is thus not a case where this Court can premise that the statute suffers from casus omissus so as to recognise the Deputy Director of Income Tax as such an appellate forum.
(xvi) In this persuasive backdrop, the conferment of appellate jurisdiction on the Deputy Commissioner of Appeals from the orders/decisions of the assessing officers as is apparent from Section 246 of the Act, has to be construed as a conscious statutory mandate. This is more so as noticed hereinabove, the Deputy Director of Income Tax, Deputy Commissioner of Income Tax and the Deputy Commissioner of Income Tax (Appeals) have been otherwise placed at par in the list of income tax authorities provided by Section 116 of the Act. The omission to either vest the Deputy Director of Income Tax with the appellate powers or to contemplate the said post to be an appellate forum from the orders/decisions of the assessing officers cannot thus be accidental or unintended. The relevant provisions of the Act pertaining to the powers, duties and jurisdiction of the various income tax authorities do not leave any room for doubt, in our estimate, to conclude otherwise. True it is, that the Deputy Commissioner of Appeals has been construed in terms of Section 246 of the Act to be an appellate forum from the orders as enumerated in sub-section (1) thereof, but in absence of any provision in the statute nominating the Deputy Director of Income Tax to be an appellate forum for any order/decision of the assessing officer/I.T.O., the inevitable conclusion is that the said authority i.e. Deputy Director of Income Tax cannot be construed to be one before whom an appeal from any order/decision of any income tax authority, lower in rank would ordinarily lie.
(xvii) The Parliament has unmistakably designated the Deputy Commissioner (Appeals) to be the appellate forum from the orders as enumerated under Section 246(1) of the Act. This however, in our view, as observed hereinabove does not detract from the recognition of this authority to be the appellate forum before whom appeals from the decisions of an assessing officer or of an officer of the same rank thereto would generally and ordinarily lie even in the contingencies not referred to in particular in sub section 1 of Section 246. This is more so, to reiterate, in absence of any provision under the Act envisaging the Deputy Director of Income Tax to be an appellate forum in any eventuality beyond those contemplated in Section 246(1) of the Act. Neither the hierarchy of the income tax authorities as listed in Section 116 of the Act nor in the notification issued under Section 118 thereof, nor their duties, functions, jurisdictions as prescribed by the cognate provisions alluded heretobefore, permit a deduction that in the scheme of the legislation, the Deputy Director of Income Tax has been conceived also to be an appellate forum to which appeals from the orders/decisions of the I.T.Os./assessing officers would ordinarily lie within the meaning of Section 195(4) of the Code. The Deputy Director of Income Tax (Investigation)-I Bhopal, (M.P.), in our unhesitant opinion, therefore cannot be construed to be an authority to whom appeal would ordinarily lie from the decisions/orders of the I.T.Os. involved in the search proceedings in the case in hand so as to empower him to lodge the complaint in view of the restrictive preconditions imposed by Section 195 of the Code. The complaint filed by the Deputy Director of Income Tax, (Investigation)-I, Bhopal (M.P.), thus on an overall analysis of the facts of the case and the law involved has to be held as incompetent.
(xviii) The cavil on the competence of the Court of the Chief Judicial Magistrate, Bhopal to entertain the complaint and take cognizance of the offences alleged, though reduced to an academic exercise, in view of the above determination needs to be dealt with in the passing.
(xix) In Y. Abraham Ajith (supra), the issue of territorial jurisdiction of the Trial Court in which a complaint had been filed by the respondent No. 2 under Sections 498A and 406 IPC, in the face of Sections 177 and 178 of the Code surfaced for scrutiny. The defence raised the plea that as no part of the cause of action constituting the alleged offence had arisen within the jurisdiction of the court before which the complaint had been filed, it lacked competence to entertain the same and conduct the trial following the submission of the charge-sheet. The complaint had disclosed that the allegations levelled therein related to the incident that had happened at her previous place of stay beyond the territorial limits of the court in which it had been filed. This Court after dilating on the scope and purport of Sections 177 and 178 of the Code as well as the judicially expounded connotation of the expression “cause of action” sustained the objection to the maintainability of the complaint. It was noticed that there was no whisper of any allegation relatable to the offences imputed at the place of stay of the complainant where the complaint had been filed. It was thus held that no part of cause of action did arise within the jurisdiction of the Trial Court before which the complaint had been filed and the proceedings resultantly were quashed.
(xx) A similar fact situation obtained in Bhura Ram (supra) also Page 36 36 involving offences under Sections 498A/406/147 IPC. In the attendant facts, it being apparent that no part of the cause of action for the alleged offence had arisen or no part of the offence had been committed within the jurisdiction of the court before which the complaint had been filed, the proceedings were quashed.
(xxi) Both these decisions on territorial jurisdiction, to start with having regard to the facts involved herein are distinguishable and are of no avail to the appellants. As hereinbefore stated, the appellants as assesses, had residences both at Bhopal and Aurangabad and had been submitting their income tax returns at Bhopal. The search operations were conducted simultaneously both at Bhopal and Aurangabad in course whereof allegedly the appellants, in spite of queries made, did not disclose that they in fact did hold a locker located at Aurangabad. They in fact denied to hold any locker, either individually or jointly. The locker, eventually located, though at Aurangabad, has a perceptible co-relation or nexus with the subject matter of assessment and thus the returns filed by the appellants at Bhopal which in turn were within the purview of the search operations. The search conducted simultaneously at Bhopal and Aurangabad has to be construed as a single composite expedition with a common mission. Having regard to the overall facts and the accusation of false statement made about the existence of the locker in such a joint drill, it cannot be deduced that in the singular facts and circumstances, no part of the offence alleged had been committed within the jurisdictional limits of the Chief Judicial Magistrate, Bhopal.
(xxii) Chapter XIII of the Code sanctions the jurisdiction of the criminal courts in inquries and trials. Whereas Section 177 of the Code stipulates the ordinary place of inquiry and trial, Section 178 enumerates the places of inquiry or trial. In terms of Section 179, when an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be inquired into or tried by a court within whose local jurisdiction such thing has been done or such consequence has ensued. For immediate reference, Sections 177 and 178 are extracted hereinbelow. “177: Ordinary place of inquiry and trial – Every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed.
178: Place of inquiry or trial – (a) When it is uncertain in which of several local areas an offence was committed, or (b) where an offence is committed partly in one local area and partly in another, or (c) where an offence is continuing one, and continues to be committed in more local areas than one, or (d) where it consists of several acts done in different local areas, it may be inquired into or tried by a court having jurisdiction over any of such local areas. 73. As would be evident from hereinabove, ordinarily every offence ought to be inquired into and tried by a court within whose local jurisdiction it had been committed as is mandated by Section 177 of the Code. Section 178, however marks a departure contingent on the eventualities as listed in clauses (a),(b), (c) and (d) of Section 178 to identify the court that would have the jurisdiction to try the offences as contemplated therein.
(xxiii) Though the concept of “cause of action“ identifiable with a civil action is not routinely relevant for the determination of territoriality of criminal courts as had been ruled by this Court in Dashrath Rupsingh Rathod vs. State of Maharashtra and Another , (2014) 9 SCC 129, their Lordships however were cognizant of the word “ordinarily” used in Section 177 of the Code to acknowledge the exceptions contained in Section 178 thereof. Section 179 also did not elude notice.
(xxiv) Be that as it may, on a cumulative reading of Sections 177, 178 and 179 of the Code in particular and the inbuilt flexibility discernible in the latter two provisions, we are of the comprehension that in the attendant facts and circumstances of the case where to repeat, a single and combine search operation had been undertaken simultaneously both at Bhopal and Aurangabad for the same purpose, the alleged offence can be tried by courts otherwise competent at both the aforementioned places. To confine the jurisdiction within the territorial limits to the court at Aurangabad would amount, in our view, to impermissible and illogical truncation of the ambit of Sections 178 and 179 of the Code. The objection with regard to the competence of the Court of the Chief Judicial Magistrate, Bhopal is hereby rejected. 76. The inevitable consequence of the determination in its entirety however is that the complaint is unsustainable in law having been filed by an authority, incompetent in terms of Section 195 of the Code.
Kuldip Singh vs. The State of Punjab and Another 1956 SCR 125,
Lalji Haridas vs. State of Maharashtra and Another 1964 (6) SCR 700,
Rajesh Kumar and Others vs. Deputy C.I.T. and Others (2007) 2 SCC 181,
Y. Abraham Ajith and Others vs. Inspector of Police, Chennai and Another (2004) 8 SCC 100 and Bhura Ram and others vs. State of Rajasthan and Another (2008) 11 SCC 103