In a recent ruling, the Supreme Court of India has held that, the Deputy Director of Income Tax (Investigation) is not competent to file criminal complaint for the contempt against the Income Tax Officers under section 195 of the Criminal Procedure Code.
The Supreme Court bench comprising of Justice P C Ghose and Justice Amitava Roy while quashing the complaint held that a complaint of above nature is illegal since the Deputy Director is not authorized by law.
In consequent to a search conducted in the residents of the appellants, their statements were recorded on oath under section 131 of the Act. Subsequently, the Deputy Director of Income Tax (Investigation)-I, Bhopal registered a complaint before the Chief Judicial Magistrate, Bhopal alleging that the statements given by the appellants before the ITOs were false and misleading, which constitutes offence under sections 109, 191, 193,196, 200, 420, 120B read with section 34 of the Indian Penal Code.
The Trial Court found that the proceedings initiated against the assessee are sufficient since the search proceedings undertaken by the authorities under Section 132 of the Act were deemed to be judicial proceedings in terms of Section 136 and it is apparent that the assessees had made false statements before the authorities.Against the said order, the appellants failed to secure relief from the High Court. Further, the matter was brought before the Supreme Court.
Referring to the various judicial pronouncements, the Court opined that, “there is thus no escape from the proposition that for a valid complaint under Section 195 of the Code, the mandate thereof has to be essentially abided and as is easily perceivable this is to prevent frivolous, speculative and unscrupulous allegations relating to judicial proceedings in any court, lest the process of law is abused and public time is wasted in avoidable litigation”.
While admitting the fact that the search proceedings are ‘judicial proceedings’ within the meaning of sections 193 and 196 and all the income tax authorities would be deemed to be a ‘civil court’for the purpose of section 195, the Court found that the main issue is regarding the competency of the Deputy Director of Income Tax (Investigation)-I, Bhopal, who is, according to the appellants, not an appellate authority who is empowered todecide appeals against the decisions of the ITO’s who conducted search in the instant case.
While accepting the contention of the appellants, the Court observed that “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.”
It is in this context, the Court also opined that, “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 decisionof 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.”
Based on the above findings, the two-judge bench set aside the impugned orders.
Read the full text of the Judgment below.
