2024 (3) TMI 907 - SCH - Indian Laws

SC upholds trial for disproportionate assets charges despite Income Tax Authority orders favoring accused architect

PUNEET SABHARWAL Versus CBI And R.C. SABHARWAL Versus CBI

SC dismissed appeals challenging trial court's refusal to quash charges for possessing disproportionate assets. The accused, an Additional Chief Architect ... Framing of charges - Owning of assets disproportionate to known sources of income - Whether the courts below were justified in refusing to quash and set aside the order on charge dated 21.02.2006 and the charges as framed on 28.02.2006? - Case against the Additional Chief Architect in New Delhi Municipal Corporation - HELD THAT:- In the present case, the probative value of the Orders of the Income Tax Authorities, including the Order of the Income Tax Appellate Tribunal and the subsequent Assessment Orders, are not conclusive proof which can be relied upon for discharge of the accused persons. These orders, their findings, and their probative value, are a matter for a full-fledged trial. In view of the same, the High Court, in the present case, has rightly not discharged the appellants based on the Orders of the Income Tax Authorities. In RADHESHYAM KEJRIWAL VERSUS STATE OF WEST BENGAL [2011 (2) TMI 154 - SUPREME COURT], this Court was concerned with a fact situation where the Petitioner therein was being prosecuted under the Foreign Exchange Regulation Act, 1973 for payments made by him in Indian currency in exchange for foreign currency without any general or specific exemption from the Reserve Bank of India. The Enforcement Directorate had commenced both an adjudication proceeding and a prosecution under the provisions of the Foreign Exchange Regulation Act, 1973. It so transpired that the Adjudicating Officer found that no documentary evidence was available to prove the foundational factum of the Petitioner therein entering into the alleged transactions which fell foul of the Act and thereafter directed that the proceedings be dropped. There are no merit in these appeals and the appeals are dismissed. Issues Involved:1. Validity of the High Court's judgment dated 01.12.2020.2. Examination of charges framed on 28.02.2006 by the Special Judge, Delhi.3. Impact of Income Tax Appellate Tribunal's order on the criminal proceedings.4. Applicability of legal precedents in the context of discharge from criminal prosecution.5. Consideration of appellant Puneet Sabharwal's minority during the check period.Summary:1. Validity of the High Court's Judgment:- The Supreme Court examined the correctness of the High Court's decision which dismissed the petitions challenging the charges framed by the Special Judge, Delhi. The High Court upheld the charges against R.C. Sabharwal and Puneet Sabharwal under various sections of the Prevention of Corruption Act and IPC.2. Examination of Charges by the Special Judge:- The charges included R.C. Sabharwal possessing disproportionate assets and Puneet Sabharwal abetting the offense. The Special Judge found sufficient material to show grave suspicion against both appellants, justifying the framing of charges under Section 109 IPC read with Section 13(1)(e) and 13(2) of the PC Act.3. Impact of Income Tax Appellate Tribunal's Order:- The appellants argued that the Income Tax Appellate Tribunal's order, which found no basis for adding the income of certain entities to R.C. Sabharwal's income, should lead to their discharge. The Supreme Court, however, held that income tax returns and orders are not conclusive proof of lawful sources of income under Section 13 of the PC Act. The probative value of such orders is a matter for trial.4. Applicability of Legal Precedents:- The appellants cited several cases to argue that exoneration in civil adjudication should lead to discharge in criminal prosecution. The Supreme Court distinguished these cases, noting that the scope of adjudication under the Income Tax Act and the Prevention of Corruption Act is different. The Court emphasized that income tax findings are not binding on criminal courts and cannot be used to quash criminal proceedings.5. Consideration of Appellant Puneet Sabharwal's Minority:- The Supreme Court dismissed the argument that Puneet Sabharwal's minority for a large part of the check period should lead to his discharge. The Court noted that he was a major for the last seven years of the check period, and all defenses can be raised during the trial.Conclusion:- The Supreme Court dismissed the appeals, upholding the charges framed by the Special Judge and the High Court's judgment. The trial was directed to be concluded expeditiously by 31.12.2024. The Court clarified that its observations were limited to the context of the discharge proceedings.