2020 (7) TMI 646 - HC - Income Tax

High Court grants Criminal Revision Petition, allowing crucial additional evidence for fair adjudication.

M/s. Gangothri Textiles Limited, Sri Manoj Kumar Tiberwal, Sri Mohanlal Tiberwal Versus The Assistant Commissioner of Income Tax Corporate Circle, Coimbatore

M/s. Gangothri Textiles Limited, Sri Manoj Kumar Tiberwal, Sri Mohanlal Tiberwal Versus The Assistant Commissioner of Income Tax Corporate Circle, ... Issues Involved:1. Validity of the order dismissing the petition for additional evidence under Section 391 of Cr.PC.2. Relevance and necessity of the additional evidence sought to be introduced by the Petitioners.3. Allegation of willful concealment of income and evasion of penalty under Sections 276C(2) and 278B of the Income Tax Act, 1961.4. Mens rea and responsibility of the Petitioners in the alleged offense.5. Procedural aspects and discretion of the Appellate Court under Section 391 of Cr.PC.Detailed Analysis:1. Validity of the Order Dismissing the Petition for Additional Evidence:The High Court reviewed the order dated 29.08.2019, which dismissed the petition filed under Section 391 of Cr.PC by the Petitioners seeking to introduce additional evidence. The Court emphasized that Section 391 of Cr.PC allows the Appellate Court to take additional evidence if it deems necessary for the just disposal of the appeal. The Petitioners argued that the documents were essential to prove the absence of mens rea and to show that the third Petitioner was not responsible for the day-to-day affairs of the company. The Court found that the Appellate Court had dismissed the petition on the wrong assumption that it was intended to protract the proceedings. The dismissal was set aside, recognizing the necessity of additional evidence to secure the ends of justice.2. Relevance and Necessity of the Additional Evidence:The Petitioners sought to introduce 45 documents, including Income Tax returns, net worth certificates, and annual reports, to substantiate their claim of no willful concealment of income. The Respondent contended that many of these documents were irrelevant as they pertained to years other than the assessment year 2012-2013. The Court, however, acknowledged that these documents were crucial to demonstrate the Petitioners' financial status and to prove that the third Petitioner was not involved in the company's daily operations during the relevant period. The Court held that these documents were necessary for a fair adjudication of the appeal and allowed them to be introduced as additional evidence.3. Allegation of Willful Concealment of Income and Evasion of Penalty:The Respondent had filed a complaint against the Petitioners for willful default in payment of penalty and concealment of capital gains amounting to Rs. 22,97,21,611/-. The Judicial Magistrate found the Petitioners guilty under Sections 276C(2) read with 278B(3) of the Income Tax Act, 1961, and imposed fines and imprisonment. The Petitioners argued that the concealment was not willful and that they had surrendered the concealed income during the assessment proceedings. The Court noted that the additional evidence sought to be introduced could potentially demonstrate the absence of mens rea, thereby impacting the conviction.4. Mens Rea and Responsibility of the Petitioners:The Petitioners contended that the third Petitioner was not responsible for the company's daily operations and that there was no willful intention to conceal income. The Respondent argued that the annual report indicated the third Petitioner's involvement in the company's affairs. The Court found that the additional evidence, including the annual reports and net worth certificates, was necessary to clarify the third Petitioner's role and to determine the presence or absence of mens rea. The introduction of this evidence was deemed essential for a just decision.5. Procedural Aspects and Discretion of the Appellate Court under Section 391 of Cr.PC:The Court emphasized that Section 391 of Cr.PC provides the Appellate Court with wide discretion to take additional evidence if it is necessary for the just disposal of the appeal. Citing various precedents, the Court highlighted that the power to take additional evidence should be exercised to avoid a failure of justice and should not be used to fill lacunae or protract proceedings. The Court concluded that the Appellate Court's refusal to allow the additional evidence was arbitrary and that the Petitioners should be given an opportunity to present the additional evidence to secure the ends of justice.Conclusion:The High Court allowed the Criminal Revision Petition, set aside the impugned order, and directed the Appellate Court to record the additional evidence as sought by the Petitioners. The Appellate Court was instructed to complete the recording of additional evidence expeditiously and dispose of the appeal within one month after the completion of recording. The decision underscores the importance of allowing relevant additional evidence to ensure a fair trial and just disposal of the appeal.