1 REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO(s). 8 OF 2005

INCOME TAX OFFICER, JIND                          Appellant (s)

                VERSUS

M/S. MANGAT RAM NORATA RAM NARWANA & ANR          Respondent(s)

O  R D E R

The  

Income  

Tax  

Officer,  

aggrieved  

by  the  

acquittal  

of  the  

respondents has preferred this appeal with leave of the Court.

According to the prosecution, respondent no.1 M/s. Mangat  

Ram Norata Ram is a partnership firm carrying on the business  

of sale and  purchase of machinery, iron pipes and spare parts.  

Respondent No. 2 accused Hem Raj happened to be one of its  

partner.  M/s. Mangat Ram Norata Ram (hereinafter referred to  

as “the Firm”) filed its income tax return for the assessment  

year 1988-89 on 14th July, 1988 through its counsel, which was

2 signed and verified by Hem Raj, its partner.  The income-tax  

return showed the income of the firm Rs.1,02,800/-. Return was  

accompanied by statement of income, trading accounts,  profit &  

loss account, partnership account and balance sheet for the  

assessment year 1988-89.  The assessment was completed by the  

then Income Tax Officer under Section 143(3) of the Income Tax  

Act for Rs.1,47,370/-.

Further  

case  of  

the  

prosecution is that the books of the accounts of the firm were  

taken into possession by the Sales Tax Department, which were  

obtained  by  the  Income  Tax  Department  and  on  its  perusal  

discrepancies relating to entries of income, sale and purchase,  

bank account etc. were noticed and accordingly a notice under  

Section 148 of the Income Tax Act (hereinafter referred to as  

'the Act') was issued requiring the respondents to furnish a  

revised return  within 30 days.  The respondents did not comply

3 with the notice and thereafter notice under Section 142(1) of  

the Act was issued and the assessee firm ultimately filed its  

income tax return declaring its income of Rs.1,47,870/-.  The  

prosecution has alleged that this return was duly signed and  

furnished by accused Hem Raj, which was accompanied by revised  

statement  of  income,  trading  account  and  profit  and  loss  

account.  All these documents, according to the prosecution  

were also signed by accused Hem Raj.  On consideration of the  

same,  the  

Assistant  

Commissioner of Income Tax made addition of  Rs.1,28,000/- with  

trading account, Rs.1,10,000/- in bank account and Rs.19,710/-  

as  additional  income  and  assessed  the  total  income  to  

Rs.3,68,200/- and directed for initiating penalty proceedings.  

     Ultimately, the minimum penalty of Rs.1,24,950/- was  

imposed under Section 271(1)(c) of the Act and further a sum of  

Rs.7890/- and  Rs.12,680/- under Section 271(1)(a) of the Act.  

The  respondent  firm  filed  appeal  against  the  imposition  of

4 penalty which was dismissed by the Commissioner of Income Tax  

(Appeals).  The respondents had paid the penalty inflicted on  

the firm.

A complaint was also lodged for prosecution of respondents  

under Section 276C (i), 277 and 278 of the Act.  The trial  

court on appraisal of the evidence held both the respondents  

guilty  and  awarded  a  fine  of  Rs.1000/-  each  under  Section  

276C(1), 277 and 278 of the Act to respondent no.1, the firm,  

whereas,  

respondent no.2 was sentenced to undergo rigorous imprisonment  

for one year and to pay a fine of Rs.1,000/- on each count and  

in default to suffer simple imprisonment for three months.

Respondents  aggrieved  by  their  conviction  and  sentence  

preferred  appeal  and  the  Appellate  Court  set  aside  the  

conviction  and  sentence  on  the  ground  that  sanction  for  

prosecution was not valid.  The Appellate Court further held  

that the prosecution has not been able to prove the signature

5 of  respondent  no.2  in  the  return  filed,  and  hence,  the  

conviction is bad on that ground also.  The Income Tax Officer  

aggrieved by the acquittal of the respondents preferred appeal  

and the High Court by its impugned judgment upheld the order of  

the acquittal and while doing so observed that the sanction is  

valid but maintained the order of acquittal on the ground that  

the prosecution has not been able to prove that the return was  

signed/verified by respondent no.2.  The observation of the  

High  

Court  in  

that  

regard  

reads  as  

follows:

“Irrespective  of  the  above  decision  as  regards  grant  of  sanction  and  the  requirement  for hearing the accused, fact remains that there  was insufficient proof that the return had been  signed/verified by Hem Raj.  Statement of Desh  Bandhu Goyal (PW 2), the officer who made the  final  assessment,  was  to  the  effect  that  the  return  had  not  been  signed/verified  in  his  presence.  Furthermore, other witnesses namely  Satish Kumar, UDC (PW1), J.K.Sahni (PW 3) and  Satish Luthra (PW 4) had not proved Hem Raj's  signatures.  The prosecution case was that the  return had been revised and submitted through a  counsel  and  returns  were  never  signed  by  the  partners  in  the  presence  of  the  Income  tax

6 Officer.   Therefore,  the  learned  Additional  Sessions Judge held that it had not been proved  that the return had been signed/verified by Hem  Raj as the counsel who had filed the return had  not been examined and there was no evidence that  it was Hem Raj who had signed the return even  though the name Hem Raj appeared on the return.  The  prosecution  could  have  examined  a  hand  writing expert but failed to do so.  For all  these  reasons  the  learned  appellate  court  accepted  the  appeal  and  acquittal  the  respondents.  The appellate court had taken a  plausible  view.   It  was  neither  perverse  nor  illegal.  No ground exists to interfere with the  decision of the appellate court”.

Mr.  Mukul  Gupta,  learned  Senior  Counsel  appearing  on  

behalf of the appellant submits that the accused invited the  

order of the Income Tax Authority on the return so filed and  

aggrieved by the order of Income Tax Officer preferred appeal.  

According  to him  after the  dismissal of  the appeal  by the  

Appellate Authority, the accused paid the penalty and these  

facts  having  been  proved  by  the  evidence  laid  by  the

7 prosecution  it  was  for  the  accused  to  disprove  that  the  

signature on the income tax return was not his.

Mr.S.S.Khanduja, learned counsel appearing on behalf of  

respondent  submits  that  in  the  case  of  prosecution  of  an  

accused the onus is always on the prosecution to prove all the  

ingredients to bring home the act within the mischief of penal  

provision  and  the  prosecution  having  not  proved  that  the  

signatures are of accused Hem Raj, the order of acquittal does  

not  call  

for  

interference by this Court in the present appeal.

We  have  bestowed  our  thoughtful  consideration  to  the  

submission advanced.

  True it is that PW 2 Desh Bandhu Goyal, who made the final  

assessment did not state in his evidence that the return was  

signed or verified by the accused Hem Raj in his presence.  

Further the witnesses; namely Satish Kumar (PW1), J.K.Sahni (PW  

3) and Satish Luthra (PW 4) have not proved the signatures of

8 Hem Raj.  But this, in our opinion would not be sufficient to  

throw  out  the  case  of  the  prosecution.   The  prosecution  

undoubtedly is to prove its case beyond all reasonable doubt to  

bring home the charge. The evidence for that purpose could be  

admission of the accused also. Here  in  the  present  case,  

prosecution had led evidence to prove that revised return was  

filed by the firm under the name of accused Hem Raj and on that  

basis assessment was made by the assessing authority.  There is  

further  

evidence  

to  show  

that  

aggrieved  

by  the  

order  of  

asssessing authority, appeal was preferred before the appellate  

authority under the signature of the accused Hem Raj, which was  

dismissed  and  the  penalty  was  paid.   At  no  point  of  time  

accused Hem Raj made any objection that the return did not bear  

his signature and was not filed by  him.  It is trite that  

admission is best evidence against the maker and it can be  

inferred from the conduct of the party.  Admission implied by  

conduct  is strong  evidence against  the maker  but he  is at

9 liberty to prove that such admission was mistaken or untrue.  

By proving conduct of the accused Hem Raj in not raising any  

dispute  at  any  point  of  time  and  paying  the  penalty,  the  

prosecution has proved his admission of filing and signing the  

return.  Once the prosecution has proved that,  it was for the  

accused Hem Raj to demonstrate that he did not sign the return.  

There is no statutory requirement that signature on the return  

has  to  be  made  in  presence  of  the  Income-tax  authority.  

Nothing  

has  been  

brought  

in  

evidence  

by  the  

accused  

Hem  Raj  

that  

signature  

did not belong to him on the return and the penalty was paid  

mistakenly.  We are of the opinion that the appellate court  

misdirected itself in not considering the evidence in right  

perspective and acquitting the accused, so also the High Court  

which failed to correct the apparent error. This render their  

judgments  unsustainable.  Any  other  view  may  induce  the  

appellant  to  compel  the  assessee  to  file  return  in   the  

presence of the authority so that the signature is proved by

10 direct evidence by such authority in trial.  This will lead to  

a difficult situation not contemplated under the Act.

Accordingly, this appeal is allowed, impugned orders are  

set aside and the judgment of conviction passed by the Chief  

Judicial  Magistrate  is  restored.  However,  we  reduce  the  

substantive sentence from one year to six months on each count  

and they are directed to run concurrently.  

........................J (HARJIT SINGH BEDI)

......................... J

(CHANDRAMAULI KR. PRASAD) NEW DELHI

   MAY 5, 2011