For the assessment years 2014-15 and 2015-16, notices under section 148 of the Income-tax Act, 1961 were issued to the assessees, in response to which the original returns were filed without changes. The assessees requested for the reasons recorded for issuance of the notices under section 148 . Before the issuance of the reasons the assessees received notices from the magistrate’s court for appearance in criminal complaints filed by the Dy. DCIT(Investigation) under section 200 of the Code of Criminal Procedure, 1973 . Thereafter the Department supplied the reasons for the issuance of notices under section 148 of the Act. These were to the effect that the assessees had received some part of the sale consideration of the immovable property in cash but had not disclosed it. It was also the case of the Department that search and seizure operations had been conducted by the Enforcement Directorate in the office of a company in which one of the assessees was a director, that some materials (soft copies) were shared with the Department by the Enforcement Department, that searches were conducted in the office of the purchaser company under section 132 during which some small note books were recovered which as explained by the accountant of the purchaser company led to the belief that the assessees had received part of the sale consideration for sale of the immovable property in cash and was not disclosed in their returns. One of the assessees was elected Member of Parliament in May 2019 and took oath as Member of Parliament on June 18, 2019. In the interregnum, the Registrar General of the High Court issued a letter dated July 9, 2019 which pertained to transfer of the criminal complaints from the Economic Offences court to the designated court for trying the offences against Members of Parliament and Members of Legislative Assemblies pursuant to orders of the Supreme Court. The assessees filed petitions under section 482 of the Code of Criminal Procedure, 1973 assailing the transfer on the grounds that the designated court did not have original jurisdiction, that only one of the assessees had become a Member of Parliament, that he was also neither a sitting nor a former Member of Parliament or Member of Legislative Assembly on the date of complaint and that the assessees were deprived of one tier of remedy by transfer from the economic offences court to the designated court which was a sessions court. The assessees submitted that (a) if the returns filed in response to the notice under section 148 of the 1961 Act were treated as returns under section 139 , then the original returns ceased to exist and consequently, the criminal complaints were to be quashed, (b) in the absence of at least one assessment order, there could be no prosecution, (c) the entire prosecution was based on statements given by third parties and this was impermissible, and (d) the complaints were barred by limitation as they were launched after the prescribed period for reassessment . Dismissing the petitions the Court held that(i) that the complaints for the offences under sections 276C(1) and 277 read with section 278 of the 1961 Act having been instituted otherwise than on a police report were not bound by limitation and were not barred by limitation. The Schedule to the Economic Offences (Inapplicability of Limitation) Act, 1974 included the 1961 Act.
(ii) That there being corroboration between the soft copies seized from the company in which one of the assessees was a director and the purchaser, the assessees’ contention that the prosecution had been launched solely based on the statements made by some third parties in the search and seizure of the purchaser company was not sustainable.
(iii) That the statement of the Registrar General of the High Court made it clear that if the complaint regarding the offences under sections 276C(1) and 277 read with section 278 of the 1961 Act, were to be tried in the adjoining judicial district or in any one of the 31 judicial districts in Tamil Nadu (other than Chennai district), the assessees would stand trial before a Judicial Magistrate, whereas in Chennai alone, the assessees would stand trial in a sessions court. In the absence of a special court under section 280A of the 1961 Act, section 26 of the Code of Criminal Procedure, 1973 operated and according to section 26(b) of the Code the offences were “offences under any other law” and triable in accordance with the First Schedule to the Code. The designated court was a court of sessions within the meaning of section 6(i) of the Code and not a court constituted under any law other than the Code within the meaning of section 6 of the Code.
(iv) That the only difference between standing trial in a magistrate’s court and standing trial in a sessions court was the further revision under section 397 . Revision was not a right unlike an appeal but a discretionary relief. Therefore, as far as the assessees were concerned, there was no difference between standing trial in a magistrate’s court and standing trial in a sessions court.
(v) That the contention that only one of the assessees had become a Member of Parliament was of no avail to the assessees, as the Supreme Court had directed the transfer of all the cases involving sitting or former Members of Parliament and Members of Legislative Assemblies. No prejudice had been shown by the assessees owing to being asked to stand trial in a sessions court.
(vi) That though the Metropolitan Magistrate was designated as a court on the date of the actual transfer on July 10, 2019, the transfer to the sessions court did not infract the rights of the assessees owing to section 292 of the 1961 Act. The contention that the sessions court lacked jurisdiction was not tenable as committal was not necessary in a transfer.( AY.2014-15, 2015-16)
Leave a Reply