TaxTMI 
TaxTMI 
2006 (12) TMI 84
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....ntend that while having to defend a wholly baseless and vexatious criminal proceedings, they are also expected to discharge the burden of not possessing the criminal intent and proving it beyond reasonable doubt. According to the petitioners, the impugned provision violates Article 21 of the Constitution of India and their right to pray for discharge from the criminal proceedings has been negated merely on the basis of the impugned provision. According to the petitioners, the guarantee against self-incrimination protected by Article 20(3) of the Constitution has also been taken away from them. 3. The following grounds are raised by the petitioners : (1) The procedure established by law must be just, fair and reasonable and not arbitrary, fanciful or oppressive. By shifting the burden of proving absence of culpable mental state on to the accused and requiring the same to be established beyond reasonable doubt, the rights guaranteed by the Constitution under Article 21 are violated. (2) The impugned provision runs counter to the well recognised principles of accusatorial system which requires the prosecution to establish the culpable mental state beyo....
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....mpugned provision is excessive since it applies to all offences under the Act, whereas the Statement of Objects and Reasons shows that it was intended to apply only to cases of evasion of tax. (12) The impugned provision offends the constitutionally guaranteed protection against self-incrimination. (13) The impugned provision also has the effect of rendering statutory remedies available to the accused illusory. (14) One cannot label a statute as one dealing with a grave social evil and from that, to infer strict liability - vide Lim Chin Aik v. Queen [1963 AC 160 (PC) ; that Courts should be slow to infer that Parliament intended to impose an onerous duty on the accused vide R. v. Hunt [1987 1 All ER 1 (HL) ; and that the ultimate test of constitutional validity is whether the device undermines the fact finder's responsibility ^___ vide County Court Ulster, New York vs. Samuel Allen [1970] 60 L. Ed. 2d. 777. 4. Briefly stated, the facts of the case are as follows : 5. The petitioner in W.P. No.23581 of 2006 (hereinafter referred to as 'the first petitioner') was required to file return of income for the assessment year 1993-94 under Section 139(1) of the Income....
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....under Section 245 of the Code for discharging her from the prosecution proceedings. Other petitions were also filed. The respondents filed petitions before this Court for a direction to the trial court to frame charges against the petitioners. The petitioners filed application under Section 482 of the Code to quash the proceedings. The petitions filed by the respondents were dismissed by this Court. Against this, the department filed Special Leave Petitions, which were disposed of by the Supreme Court, directing the trial court to consider the matter regarding framing of charge, after hearing the parties on the petition for discharge, within a period of two months. Thereafter, the trial Magistrate dismissed the discharge petitions and fixed the date for commencement of hearing as per the directions of the Supreme Court. The Magistrate directed the accused to be present in Court on August 25, 2006. The first petitioner has filed criminal revisions against the dismissal of the discharge petition and has also filed the present writ petition challenging the constitutional validity of Section 278E of the Act. 7. Mr. Guru Krishnakumar, learned couns....
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....hich may indict them at the time of trial and therefore, it offends Article 20(3) of the Constitution. For this purpose, he relied on State of Bombay v. Kathi Kalu Oghad AIR 1961 SC 1808 the Supreme Court held as follows : "In view of these considerations, we have come to the following conclusions :-. . . 'To be a witness' means imparting knowledge in respect of relevant facts by an oral statement or a statement in writing, made or given in Court or otherwise." 12. Learned counsel pointed out that section 4 of the Indian Evidence Act, 1872 defines the word "proved", and for an accused to prove the existence of the exception given under Section 105 of the Act, he is only expected to prove it on a preponderance of probabilities, i.e., it is sufficient if the accused proves the existence of those circumstances as so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that they did exist. To support this Dahyabhali Chhaganbhai Thakker v. State of Gujarat [1964] 7 SCC 361 K.M. Nanavathi v. State of Maharashtra [1962] Supp. 1 SCR 567 were relied on. 13. Learned counsel submitted that there is no willfulnes....
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....thulal v. State of M. P. AIR [1966] SC 43 ; State of Maharashtra v. Mayer Hans George [1965] 35 Comp Cas 557 (SC) ; [1965] 1 SCR 123 ; AIR 1965 SC 722 ; Pyarali K. Tejani v. Mahadeo Ramachandra Dange [1974] 1 SCC 167 ; Dahyabhali Chhaganbhai Thakker v. State of Gujarat[1964] 7 SCC 361 ; AIR 1964 SC 1563 ; State of U.P. vs. Ram Swarup [1974] 4 SCC 764 ; Periasami v. State of Tamil Nadu [1996] 6 SCC 457 ; A. Raghavamma v. A. Chenchamma AIR [1964] SC 136 ; Sucha Singh v. State of Punjab [2001] 4 SCC 375 ; Sanjay Dutt v. State through CBI, Bombay II [1994] 5 SCC 410 ; Uttam Chand v. Income Tax Officer [1982] 133 ITR 909 (SC) ; Asst. CIT v. BELCO Engineers P. Ltd. [1991] 54 Taxman 152 ; Smt. Pushpa Maini v. ITO [1993] (68) Taxman 300 ; Shastri Sales Corporation v. ITO [1996] Crl. L.J. 449 ; ITO v. Inderjit Chopra [1997] 224 ITR 691 (P & H) ; Mahadeo Lal Agarwala v. State of Bihar [1997] 224 ITR 119 (Patna) ; G.L. Didwania v. ITO [1997] 224 ITR 687 (SC) ; Sureshchand Gupta v. Union of India [1998] 233 ITR 783 (MP) ; Sheo Shankar Sah v. CIT [1999] (106) Taxman 536 ; CIT v. Bhupen Champak Lal Dalal [2001] 248 ITR 830 (SC); [2001] ....
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....r discussion hereinafter. 16. Learned counsel for the petitioners also referred to various decisions of Courts of other countries. They are listed hereunder : Woolmington v. Director of Prosecution [1935] AC 462 ; [1935] All ER 1 ; Jayasena v. Reginam [1970] 1 All ER 219 (PC) : R. v. Hunt [1987] 1 All ER 1 (HL) ; County Court Ulster, New York v. Samuel Allen [1970] 60 L. Ed. 2d. 777 Salabiaku v. France [1988] 13 E. H. R. R. 379 ; Mancini v. Director of Public Prosecution [1941] 3 All ER 272 (HL) ; George Morrison v. People of State of California [1933] 78 L. Ed. 664 ; Lim Chin Aik v. Queen [1963] AC 160 (PC) ; He Kaw Teh [1985] 157 CLR 527 ; Rex v. Wamfler [1987] 11 N. S. W. L. R. 541 ; Rex v. Hingi [1996] 3 SCR 1128 ; Jacob Bruhn v. The King on the Prosecution of the Opium Farmer [1909] AC 317 (PC) ; Brend v. Wood [1946] 175 Law Times Reports 306 ; Rex v. Greenberg [1942] 28 Crim. App. Rep. 160 ; Porter v. Honey [1988] 3 All ER 1045 (HL) ; Vane v. Yiannopoullos [1964] 3 All ER 820 (HL) ; X v. United Kingdom [1972] 42 Collection of Decisions 135 ; Sheldrake v. Director of Public Prosecutions [2004] 3 WLR 976 (HL) ....
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....e the trial, the principle that the prosecution must prove the guilt of the prisoner is part of the common law of England and no attempt to whittle it down can be entertained." 20. It will be seen that Woolmington's [1935] AC 462 case and the principle laid therein is constantly referred to and reiterated again and again, wherever the question of burden of proof arises. 21. In V.D. Jhingan v. State of Uttar Pradesh [1966] 3 SCC 736; AIR 1966 SC 1762, which arose out of the Prevention of Corruption Act, 1947, it was contended that (page 1763) "... mere receipt of money did not justify the raising of the presumption and that something more than the mere receipt of the money had to be proved." This argument was rejected and it was held that the mere receipt of the money was sufficient to raise a presumption. In this case, the Supreme Court again, on a construction of that particular provision, held that it was sufficient if the accused person proves the preponderance of probability for discharging the burden. Woolmington's [1935] AC 462 case is again quoted by the Supreme Court. 22. In Dr. S.L. Goswami v. State of Madhya Pradesh [1972] 3 SCC 22, the Supreme ....
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....nstituent part of a crime and this has been reiterated in many decisions. The following proposition of law as laid down in J.C. Smith and Brian Hogan's Criminal Law, 6th Edition, pg. 31 was referred to by the Supreme Court in R. Balakrishna Pillai v. State of Kerala [2003] 9 SCC 700, "It is a general principle of criminal law that a person may [not] be convicted of a crime unless the prosecution have proved beyond reasonable doubt both (a) that he caused a certain event or that responsibility is to be attributed to him for the existence of a certain state of affairs, which is forbiden by criminal law, and (b) that he had a defined state of mind in relation to the causing of the event or the existence of the state of affairs. The event, or state of affairs, is called the actus reus and the state of mind the mens rea of the crime." 25. Ravula Hariprasada Rao v. State [1951] SCR 322 ; Isak Solomon Macmull v. Emperor AIR 1948 Bom 364 and Nathulal v. State of M.P. A.I.R. 1966 SC 43 also deal with the requirement of mens rea. 26. In Lim Chin Aik v. Queen [1963] AC 160 (PC), the Privy Council reviewed the entire law on the question in an illuminating judgment an....
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....r 1950. The Supreme Court in that case held as follows : "By 'proportionality' we mean the question whether, while regulating exercise of fundamental rights, the appropriate or least-restrictive choice of measures has been made by the legislature or the administrator so as to achieve the object of the legislation or the purpose of the administrative order, as the case may be. Under the principle, the court will see that the legislature and the administrative authority 'maintain a proper balance between the adverse effects which the legislation or the administrative order may have on the rights, liberties or interests of persons keeping in mind the purpose which they were intended to serve'. The legislature and the administrative authority are, however, given an area of discretion or a range of choices but as to whether the choice made infringes the rights excessively or not is for the court. That is what is meant by proportionality." "Patanjali Sastri, C.J. in State of Madras v. V.G. Row AIR 1952 SC 196, observed that the Court must keep in mind the 'nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and ur....
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....ocence guaranteed by Article 6(2) because of the close link, in this context, between it and the rights guaranteed by Article 6(1). The European Court rejected the Irish government's contention that the enactment in question was justified by its security and public order concerns since the enactment extinguished the very essence of the applicants' rights to silence and against self-incrimination. . . . In order to maintain the balance between the individual and the society as a whole, rigid and flexible standards should not be imposed on the legislature's attempts to resolve the difficult and intransigent problems with which society is faced when seeking to deal with serious crime. The court will reach a different conclusion from the legislature only when it is apparent the legislature has attached insufficient importance to the fundamental right of an individual to be presumed innocent until proved guilty." 33. Repelling the arguments advanced on the side of the petitioners, learned Additional Solicitor General of India Mr. Gopal Subramaniam submitted that both the grounds of attack on the constitutionality of the offending Section are without merit. It was....
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....Magistrate [1998] 5 SCC 749 ; Umar Abdul Aakoor Sorathi v. Intelligence Officer, Narcotic Control Bureau [2000] 1 SCC 138 ; Kanti Bhadra Shah v. State of West Bengal [2000] 1 SCC 722 ; State of M. P. v. S.B. Johari [2000] 2 SCC 57 ; State of Tamil Nadu v. J. Jayalalitha (2000) 5 SCC 440 ; State of Delhi v. Gyan Devi [2000] 8 SCC 239 ; State of Bihar v. Baidnath Prasad [2002] 1 SCC 465 ; State of Orissa v. Debendra Nath Padhi [2005] 1 SCC 568 ; Maya Rani Punj v. CIT [1986] 157 ITR 330 (SC) [1986] 1 SCC 445 ; Mahant Abhey Dass v. S. Gurdial Singh AIR 1971 SC 834 ; Mohd. Iqbal Ahmad v. State of A. P. [1979] 4 SCC 172 ; Mansukhlal Vithaldas Chauhan v. State of Gujarat [1997] 7 SCC 622 ; Standard Chartered Bank v. Directorate of Enforcement [2006] 130 Comp Cas 341 (SC) ; [2006] 4 SCC 278 ; K.C. Builders v. CIT [2004] 265 ITR 562 (SC) 2 SCC 731 ; Asst. Customs Collector v. L.R. Melwani AIR 1970 SC 962 ; State of Madras v. A. Vaidyanatha Iyer AIR 1958 SC 61 ; Izhar Ahmad v. Union of India AIR 1962 SC 1052 ; Sodhi Transport Co. v. State of U.P.[1986] 62 STC 381 (SC) ; [1986] 2 SCC 486 ; State of A.P. v. Vasudeva Rao (V.) [2004] 9 SCC 31....
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....annot prevail, but however, on the scheme of the Act, found that the provisions cannot be successfully challenged as being either arbitrary or discriminatory. The Supreme Court bore in mind the object of the Act, which was to protect the economic interest of the country. According to the respondents, this approach would apply here too. 36. In State of Madras v. A. Vaidyanatha Iyer AIR 1958 S.C. 61, the Supreme Court set aside the acquittal order passed by the High Court on the ground that where there is a presumption of law, it is obligatory on the court to raise this presumption, which in that case was the presumption under Section 4 of the Prevention of Corruption Act, because unlike a case of presumption of fact, presumption of law constitutes a branch of jurisprudence and this special rule of burden of proof cannot be disregarded. The Supreme Court held that the approach of the High Court in that case had been on erroneous lines since the special rule of the burden of proof had been disregarded. 37. Izhar Ahmad v. UOI A.I.R. 1962 S.C. 1052 arose under the Citizenship Act. In this judgment, there is reference to various texts with regard....
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....asion of the tax cannot be considered as conferring on the authority concerned the power to levy a tax which the legislature cannot otherwise levy. A rebuttable presumption which is clearly a rule of evidence has the effect of shifting the burden of proof and it is hard to see how it is unconstitutional when the person concerned has the opportunity to displace the presumption by leading evidence." 39. An important decision that was cited was Collector of Customs v. Nathella Sampathu Chetty AIR 1962 SC 316, in which it was contended that the rule of evidence casts the burden of proof upon a person from whom specific goods have been seized, to establish that they are not smuggled. Various decisions of other courts were also cited in this case. The following observations are relevant : "These facts which justified the seizing officer to reasonably believe that the goods were smuggled would certainly impart a rational connection between the facts on which the presumption is raised and the fact to be proved, so that whatever other constitutional infirmity might attach to the impugned provision, the lack of rational connection is not one of them. It appears to us theref....
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....at is sought to be achieved. It was open to the Parliament to make the non-filing of a return ipso facto an offence without making mens rea a requirement. But, the Parliament chose to adopt a different standard, a less strict one, stipulating willfulness as a requirement, but raising a presumption and requiring the accused to discharge the burden. In this context, the respondents referred to Devchand Kalyan Tandel v. State of Gujarat [1996] 6 SCC 255 and R. Muthukrishnan v. Agricultural Officer [1999] Crl. L.J. 1252 which is a decision of this Court, wherein it has been held as follows : "Section 10C(2) made it clear that the Parliament made a significant departure from the usual approach by introduction of Section 10C of the Act in order to make the burden on the accused rigorous. In other words, the concept of mens rea in the commission of the offence under this Act is safeguarded again. The idea is to plug up possible loopholes through which economic offenders used to escape from the clutches of law." 42. Hence, it was contended that the impugned provision did not offend the principle of proportionality. It was submitted that, therefore,....
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....ished under section 139. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so." 47. Section 276CC of the Income Tax Act reads thus : "276CC. Failure to furnish returns of income.- If a person wilfully fails to furnish in due time the return of fringe benefits which he is required to furnish under sub-section (1) of section 115WD or by notice given under sub-section (2) of the said section or section 115WH or the return of total income which he is required to furnish under sub-section (1) of section 139 or by notice given under clause (i) of sub-section (1) of section 142 or section 148 or section 153A, he shall be punishable,^__ (i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. Provided that a person shall not be proceeded against under t....
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....ended to mainly implement certain proposals included in the long term fiscal policy. As per the existing provisions, penalty was leviable under section 270 of the Income Tax Act for failure to furnish information regarding securities, under section 271A for delay in filing return of income without reasonable cause, under section 271B for non-compliance of notice issued under section 143(2) or 142A(1) or 142A(2), under section 271A for failure to maintain books of account, under section 271B for failure to get the accounts audited, under section 272A for failure to answer queries, under section 272AA for failure to comply with the provisions of section 133B, under section 272B for non-compliance of the provisions of section 139A, under section 273(1)(b) for failure to furnish a statement of advance tax, under section 273(2)(b) for failure to furnish estimate of advance tax and under section 273(2)(c) of the Act for failure to furnish earlier estimate of advance tax. Originally, penalty was leviable under these provisions if the above defaults were committed without reasonable cause or excuse, as the case may be. But, by the amendment, the words "without reasonable ....
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....; 53. When we see the background within which the legislature decided to enact Section 278E of the Income Tax Act, the attack on its constitutionality loses strength, for as observed in the Sodhi Transport Co.'s case [1986] 2 SCC 486 ; [1986] 62 STC 381 (SC), when the person concerned has the opportunity to rebut the presumption, it is hard to see how the provision is unconstitutional. When the legislature has the power to make a law with respect to any subject, it equally has all the ancillary and incidental powers to make the law effective. In the words of Lord Dunedin in Whitney v. IRC [1925] 10 TC 88, 110 (HL) "My Lords, I shall now permit myself a general observation. Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective. A statute is designed to be workable and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable." 54. Once a liability is fixed, it is highly improbable that the statute should not go on to make that liability effective. ....
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.... for the prosecution to prove the guilt of the accused. This is the normal rule in criminal jurisprudence. However, there may be situations where the law provides, as in the case of statutory offences, that mens rea shall be presumed, which presumption will be rebuttable. The legislature may also provide that a particular act by itself without anything more will constitute the offence and attract the penalty, a penalty which may be quantified in terms of money or which may be a physical penalty, viz. Imprisonment. In this context, we may refer to the following observations in Sheldrake's case [2004] 3 WLR 976, 983 (supra) : "But it is of course the ordinary duty of the courts to give effect to what Parliament has by clear words or necessary implication enacted, and it is not hard to find instances in which Parliament has clearly intended to attach criminal consequences to proof of defined facts, irrespective of an individual's state of mind or moral blameworthiness. Many such instances are found in legislation regulating the conduct of economic and social life." 58. The argument that mens rea, which is an element of the offence, has been well nig....
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..... United Kingdom. [1972] 42 Collecting Decision 135], a provision under the Sexual Offences Act, which gives rise to a rebuttable presumption, was attacked as being violative of Article 6(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, 1950. The Commission rejected the attack holding that, what was created was a rebuttable presumption which the defendant should disprove and it was not a presumption of guilt and that in the present instance, the presumption was restrictedly worded and was neither irrebuttable nor unreasonable. The following sentence is very relevant - "To oblige the prosecution to obtain direct evidence of living on immoral earnings would, in most cases, make its task impossible". The following extract from the above judgment is relevant : "From this body of authority, certain principles may be derived. The overriding concern is that a trial should be fair, and the presumption of innocence is a fundamental right directed to that end. The convention does not outlaw presumptions of fact or law but requires that these should be kept within reasonable limits and should not be arbitra....
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....s to restrain fraudulent trading in counterfeit goods, the framing of offences as offences of 'near absolute liability' and the dependence of the defence on facts within the defendant's own knowledge and that it is to be expected that those who supply traders with counterfeit products are unlikely to be co-operative, so in practice, if the prosecution must prove that a trader acted dishonestly, fewer investigations will be undertaken and fewer prosecutions will take place. 66. In He Kaw Teh [1985] 157 CLR 527, the issue of mens rea in statutory offences was examined in some detail. The court stated that there are three matters to be considered while deciding whether presumption has been displaced and Parliament intended the offence created by legislation to have no mental ingredient. These are : (i) the words of the statute creating the offence; (ii) the subject matter of the statute; and (iii) whether imposing absolute liability will assist in enforcing the statute. In Rex v. Wamfler [1987] 11 N.S.W.L.R. 541, the statutory offences were divided into three categories for the purpose of determining whether mens rea is required to establish liability ....
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....vacuum, we can properly look for some evil or injurious or undesirable effect upon the public, against which the law is directed. That effect may be in relation to social, economic or political interests; and the legislature has had a duty to suppress the evil or to safeguard the interest thereunder." (Validity of S. SA of the Dairy Industry Act, 1949 In Re. [1949] SCR 1)." 68. It was held that the Parliament, therefore, retains the power to designate the specific acts which it considers harmful to the State. A Privy Council case was referred to, where it is stated that if Parliament genuinely determines that commercial activities which can be so described are to be suppressed in public interest, their lordships saw no reason why Parliament should not make them crimes. It is accepted that the (statute) is to be interpreted in the widest sense, "but that breadth of scope contemplates neither a static catalogue of offences nor of sanctions. Evolving and transforming types and patterns of social and economic activities are constantly calling for new penal controls and limitations and new modes of enforcement and punishment adapted to the changing condi....
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....nd 21; and when the intention to commit the crime was the sine qua non for prosecution, conviction without proof of intention was contrary to the settled principles of criminal jurisprudence. It was also contended that there should always be proof of culpable mental state of mind on the part of the accused; and any provision which imposes penalty by resorting to statutory presumption was per se unconstitutional. After giving their anxious and deep consideration to all the aspects, the Supreme Court rejected the contentions stating that, "They are unacceptable and if given credence, they would frustrate the very object of the amended Act" . The Supreme Court held that the liberty of the individual must be controlled in the interest of society and it cannot stand alone, but must be compared with the companion virtue liberty and morality, liberty and law, liberty and justice, liberty and common good, liberty and responsibility which are concomitants for orderly progress and social stability and that the concept of individual liberty in harmony with social order is in consonance with the universal declaration of human rights and other International Covenants. The Supreme Co....
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....] 1 All ER 219 (PC) and George Morrison v. People of State of California [1993] 78 L. Ed. 664. 71. The question that arose in Morrison's case [1993] 78 L. Ed 664) was whether placing the burden of proof on a co-accused of a charge of conspiracy so as to violate the Alien Land Law of California was violative of due process under Fourteenth Amendment. Cardozo, J. Speaking for the unanimous court held that within the limits of reason and fairness, the burden of proof may be lifted from the State in criminal prosecutions and cast on a defendant. The limits are in substance these^____that the State shall have proved enough to make it just for the defendant to be required to repel what has been proved with excuse or explanation, or at least that upon a balancing of convenience or of the opportunities for knowledge the shifting of the burden will be found to be an aid to the accuser without subjecting the accused to hardship or oppression. Special reasons are at hand to make the change permissible. The legislature may go a good way in raising a presumption or in changing the burden of proof, but there are limits. What is proved must be so related to ....
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....ight upset the scheme underlying the controls; and in a larger context, the penal provisions are aimed at eliminating smuggling which is a concomitant of controls over the free movement of goods or currencies." 74. In Pyarali K. Tejani v. Mahadeo Ramachandra Dange [1974] 1 SCC 167, which dealt with food adulteration, the Supreme Court held that it is trite law that in food offences, strict liability is the rule not merely under the Indian Act, but all the world over. Nothing more than actus reus is needed where regulation of private activity in vulnerable areas like public health is intended. The Supreme Court observed as follows : "Nothing more than the actus reus is needed where regulation of private activity in vulnerable likes public health is intended. In the words of Lord Wright in Mc Leod v. Buchanan [1940] 2 All ER 179, 186 (HL), 'intention to commit a breach of statute need not be shown. The breach in fact is enough.' Social defence reasonably overpowers individual freedom to injure, in special situations of strict liability." 75. In the above case, the constitutionality of the rules banning use of Saccharine and Cyclamate....
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....deal with the presumption under Section 4(1) of the Prevention of Corruption Act, 1947. The space occupied by the statutory presumption insofar as the prosecution's role of discharging its burden of proof is concerned, has been explained in this case. 79. In the present case, the prosecution must prove that the assessee has failed to furnish the returns in due time, which in law he was bound to do. From the attendant circumstances and in the absence of any defence evidence to the contrary, it is open to the Court to logically infer that there must have been a wilful disregard to comply with the legal requirement. But by the introduction of Section 278E, this inference is made a presumption as to the existence of the culpable mental state on the part of the assessee. This does not mean that the Court accepts the culpable mental state as an irrebuttable fact. All that the law requires is for the person or the assessee to prove that there were circumstances which prevented him from discharging his statutory duty. 80. What is reasonable doubt has been explained in Ramakant Rai v. Madan Rai [2003] 12 SCC 395 in the following words (page 40....
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.... act and it is for the person concerned to bring himself within the statutory defence, which in the present case was provided for in the proviso to Section 71(1). However, in view of Section 98-B, the accused had to prove beyond reasonable doubt that he had no knowledge of the possession of the unauthorised article." 83. The provision which was challenged in Bhanabhai Khalpabhai v. Collector of Customs [1994] Supp. 2 SCC 143, namely Section 138-A of the Customs Act, is identical to the provision impugned herein. In that case, the Supreme Court observed thus : "It is well known, that it is very difficult for the prosecution, to prove every link, in respect of the commission of the offence under the Act by direct evidence. The whole process of smuggling, for evading payment of custom duty consists of different links. The links aid and abate each other, sometimes through a remote control. That is why, Parliament has introduced Section 138-A in the Act. . . . . It can be said that the provision aforesaid is an exception to the general criminal jurisprudence that onus never shifts on the accused and he has only to raise a doubt in the mind of the court, in respect of the ....
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....t absolutely forbids it to be done; and if it is done the offender is liable to a penalty, whether he had any mens rea or not, and whether or not he intended to commit a breach of the law". 86. An offence, as we ordinarily understand it, consists of a "how-when - where - who - why' framework. There are several stages as for instance, the intention, the planning, the preparation and the execution of the offence. Such an offence may be proved either by direct ocular evidence or by circumstantial evidence, where every link is in place, leading to the proof of guilt of the accused. This is not an offence like that. Many statutory offences do not fall within these parameters. Violations of the provisions of law either by doing what is forbidden or by not doing what is mandated, is the offence and the statute may also insist upon the mens rea element or it may not. When the element of mens rea is part of the statutory offence, then what follows is that the particular act of omission or commission should be done with the intention, with "knowledge", "deliberately", 'without reasonable cause" or as in the case of the impugned provision, "....
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.... is required to prove it. The Indian Evidence Act and the law laid down by Indian Courts as well as the Courts elsewhere with regard to proof of facts specially within the knowledge of the accused provides that the burden must necessarily be cast on that person. At the same time, it was, of course, vehemently contended on behalf of the petitioners that in the present case, the presumption amounts to proof of guilt and it was submitted, and with much force, that the impugned provision is a legislative presumption of guilt. I am afraid not. The law does not presume and the law has not presumed that the assessee is guilty. The law has only asked the Court to presume that nothing prevented the assessee from filing his return in accordance with law and in response to the notices and therefore, the failure is wilful. If there were such compelling circumstances, it is always open to the assessee to prove them in accordance with law. That does not seem to be and cannot be a difficult thing to do. In fact, obviously, the Parliament found that it was well nigh impossible for the prosecution to prove the absence of compelling circumstances which preve....
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.... offence, the culpable mental state on the part of the accused is required, the Court shall presume the existence of such mental state. The words used are "in any prosecution for any offence". There is no ambiguity or doubt in these words. When that is so, it is not for us to limit the sweep of these words. The Object of the Amendment Act is quite clear. Even otherwise, when the Section itself is clear, we do not need to look elsewhere. 91. It was also contended that there could be flagrant misuse and abuse of the law. The possibility of flagrant abuse or misuse of law has never been a ground for holding a provision ultra vires. We cannot presume that the authorities will administer the law "with an evil eye and an unequal hand". This has been so held in several cases where the constitutionality of a legal provision was attacked. The observations of the Supreme Court in Krishna Lal's [1995] Supp 2 SCC 187, case where the Kerala Abkari Act was challenged, are squarely applicable to the present case. Merely because the Act requires the assessee to prove that there were circumstances which prevented the assessee from filin....
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....ibility of such discriminatory treatment of persons falling within the same group or category, however, cannot necessarily invalidate this piece of legislation. It is to be presumed unless the contrary were shown that the administration of a particular law would be done not with an evil eye and unequal hand. The Supreme Court rejected thus the attack on the impugned provisions as being discriminatory and violative of the Constitution. 94. So, we see that the Supreme Court has upheld such provisions, as for instance in Krishna Lal's case [1995] Supp 2 SCC 187, and in A. Thangal Kunju Musaliar's case [1956] 29 ITR 349 (SC) stating that in the background of the ground realities, it is open to the legislature to make stringent and harsh provisions to plug loopholes, which in the case on hand, was not possible if the usual procedure under the Tax Law was applied. 95. Are the words "beyond reasonable doubt" not definite and therefore impossible for the assessee to know what exactly the words define? This question deserves to be answers in the negative outright. There is no ambiguity with regard to what the assessee has to prove - the assessee has to prove th....
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.... in favour of its constitutionality, yet it is also a relevant factor in its favour, since this Section and similar other sections in the Customs Act, Foreign Exchange Regulation Act as also other such legislations have been in force all these years and there appears to have been no serious complaint of mindless and indiscriminate prosecution. 99. The decisions we have looked into show the following : A statute must work and every statute must be so interpreted as to make it work. The requirement of proof of lack of guilty knowledge would not violate the Fundamental Rights or the International Covenants. In the background of factual realities, it is open to the legislature to make such provisions as are necessary to plug the loopholes in order to prevent violations, if the earlier procedure was not effective. Presumptions are really regulations of the burden of proof and not presumptions of guilt. If there are certain facts, if when established would justify excuse what is prima facie an offence, then the onus of proving those facts obviously rests on the party accused. Reasonableness can be tested against the opportunity given to the defendant to rebut the pre....