TaxTMI 
TaxTMI 
2020 (2) TMI 804
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.... always been excellent, outstanding and she never faced any departmental or disciplinary enquiry in her entire career of more than two and half decades. The 2nd petitioner is the husband of the 1st petitioner. He was also a Civil Servant in Indian Railways Accounts Service. He held high positions as Deputy Financial Advisor and Chief Accounts Officer in the Indian Railways. He took voluntary retirement in the year 2009. At present he is a sitting Member of Legislative Assembly of Andhra Pradesh having been elected from Santhanutalapadu Constituency and representing the political party, YSRCP. He was a Member of Committee of Assurances, Member of Committee on Scheduled Caste and Scheduled Tribe Welfare and is also a member of Committee on Public Accounts. It is further submitted that the petitioners reside in their house at Plot No. 126, Road No. 11, Jubilee Hills, Hyderabad and that both of them are Income Tax Assesses and the PAN number of the 1st petitioner is ABAPT0991J and the PAN number of the 2nd petitioner is ACLPA5607N and they have filed their Income Tax Returns regularly for all these two and half decades. Both the petitioners have disclosed their income and assets part....
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....ously, as the 2nd petitioner belongs to a rival political party to the ruling party, the impugned F.I.R. was registered mechanically without there being any prima facie case. It is further submitted that Annexure-1 to 6 filed herein along with this Writ Petition are the Income Tax Returns of the 1st petitioner for the financial years 2010-11 to 2015-16 and she had disclosed all the particulars of taxable income regularly. Annexure-7 to 14 are the immovable property declarations for the period 2010 to 2017 made by the 1st petitioner as a Government servant, as required under C.C.A. Conduct Rules and in the said I.P.Rs, she had declared all the assets held by her, whether acquired or inherited along with their values thereof. It is also submitted that Annexure-15 is a copy of the Affidavit filed by the 2nd petitioner herein as required under the Representation of Peoples Act, 1951 and the Rules made there under while contesting to the State Legislative Assembly in the year 2014. In this also, as required under the Rules and as per the Proforma indicated therein, he had declared the properties held by him, in his name or in the name of the 1st petitioner along with "Current Market Val....
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.... in Plot No. 126. These items were purchased even as per the Statement-A in the F.I.R. in 1995-96 by the father of the 1st petitioner, late Sri T. Santhosham. In the said Statement-A, these two items value was shown as Rs. 9,50,000/- and Rs. 6 lakhs respectively. In Statement-B, these two items were valued at Rs. 2,59,50,000/- and Rs. 2,56,00,000/- respectively. These two portions, put together, was valued at Rs. 5,15,50,000/-. These values were mentioned at the end of Sl. No. 7 of the Statement-B and that they are as per the valuation report, dated 11th March, 2016 which is filed herewith as Annexure-22. This Annexure-22 is the same valuation report which was filed by the 1st petitioner and which was accepted by the Department. As per this valuation report, the entire construction on both Eastern and Western side - i.e., Sl. Nos. 6 and 7 was valued at Rs. 4,14,21,800/- but without any basis, without referring to and without relaying upon the said Valuation Report, the items at Sl. Nos. 6 and 7 have been arbitrarily valued at Rs. 5,15,50,000/- instead of Rs. 4,14,21,800/-. These two items are included in the Statement-B in the F.I.R. Thus, an amount of Rs. 85,78,200/- was shown in....
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....wn sources of income. In this regard, properties in Sl.Nos.23, 24, 25 and 30 of the Statement-B, the approximate current market values were taken, though the assets were inherited by the 2nd petitioner long back. It is further submitted that substantially all the items mentioned as assets are either acquired long back by the petitioners or by their family members or were inherited by them decades ago. Those cannot be the basis for the impugned F.I.R. Even prima facie to conclude that the petitioners are guilty of offence under Section 13 (1) (e) of Prevention of Corruption Act, 1988 is ex-facie illegal. The declarations made by the petitioners about their values are as per the relevant Rules and Regulations mentioned by them either in the Income Tax Returns or in the I.P.Rs. or in the affidavits before the concerned authorities. As per the relevant provisions, Rules and Regulations, the petitioners are obliged to mention the Current Market Values to the assets. This cannot be the basis for the F.I.R. under the Prevention of Corruption Act, 1988 as if it is the value of the asset as indicated in the F.I.R. during the check period. This is a glaring illegality and irregularity which ....
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....rns are available and which have been filed. There is no reference to the income of the 1st petitioner as declared by her in her Income Tax Returns. If these are taken into consideration, there will not be any asset disproportionate to their known source of income. It is a glaring irregularity and ex-facie illegal and arbitrary exercise of powers by the respondents to conclude without any basis that the petitioners are in possession of assets disproportionate to their known source of income. It is also submitted that as required under C.C.A. Conduct Rules, the 1st petitioner had also declared all transactions in financial instruments viz., fixed deposits, mutual funds, PPF, LIC, etc., from time to time. The same has been taken on record by the Department of the 1st petitioner and the said particulars are filed as Annexure-27. As these particulars were furnished as per C.C.A. Rules, the same should also be taken into account while examining their known sources of income. The impugned F.I.R. was registered stating that on oral information, the petitioners have been guilty of possessing assets and pecuniary resources disproportionate to known sources of income and abatement of assets.....
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....l manner as there was prima facie evidence to conduct detailed investigation. During the course of investigation, the respondents would verify the actual assets, income and expenditure on the immovable properties vis-à-vis immovable property returns, income tax returns and the explanation of the petitioners, for assessing its truthfulness. The disproportionate assets as alleged in the F.I.R. are sufficient enough to register F.I.R. against the petitioners to set law into motion and to conduct detailed investigation and there is no illegality in registration of the case. It is also stated that the respondents are not conducting roving enquiry against the petitioners and the investigation is limited to the assets, income and expenditure pertaining to the petitioners and their family members which includes all their financial transactions. It is further stated that the investigation is in advance stage and is being conducted in fair and transparent manner and the petitioners would be given opportunity to explain their positions based on the outcome of the investigation. Heard Sri S.S.Prasad, learned Senior Counsel, for Ms.C.Sindhukumari, learned Counsel appearing for the petit....
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.... valued at Rs. 2,59,50,000/- and Rs. 2,56,00,000/- respectively. Without any basis and without relying upon the valuation report which was filed as Annexure-22, the respondents arbitrarily valued at Rs. 5,15,50,000/- instead of Rs. 4,14,21,800/-, thus an amount of Rs. 85,78,200/- was shown in excess as value for the items at Sl.Nos.6 and 7. He further submits that the asset mentioned in Sl.No.26 is Ac.2.00 of land, which was sold at Rs. 1.00 Crore, as is evident from Statement-C at Sl.No.9, but the respondents arbitrarily shown the income earned as Rs. 72,50,000/-. He further submits that it is apparent on the face of record that the assets have been arbitrarily valued ignoring the Valuation Report, I.T. Returns and I.P.R. Returns filed by the petitioners. He also submits that the impugned F.I.R. seems to have been registered with an oblique motive and with mala fide intention and out of political considerations, as the 2nd petitioner belongs to an opposition party to the Ruling party in the State. It is apparent that there are serious errors in the F.I.R. as pointed out in the affidavit filed in support of the writ petition and the same are sufficient to conclude beyond reasonable....
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....same cannot be adjudicated in this writ petition. He further submits that the Income Tax Returns cannot be made basis to set aside the F.I.R., whether the source of income is lawful or not is a matter of investigation, evidence and trial to be adduced by both the parties. He further submits that even before collection of material, the petitioners have exclusive knowledge, which needs thorough investigation and at this preliminary stage, drawing a logical conclusion would not be fair and that the petitioners ought to have cooperated for the investigation in a fair and transparent manner. He has also argued that the law is very clear that power of quashing the F.I.R. in economic offences should be used by the Courts very sparingly. Learned Special Public Prosecutor in support of his contentions relied upon the judgments of the Supreme Court in State of Madhya Pradesh v. Awadh Kishore Gupta and others (2004) 1 SCC 691 and State of Orissa and another v. Saroj Kumar Sahoo (2005) 13 SCC 540. Power of High Court to quash the F.I.R.: As a prologue to answering of the points above, this Court thinks it expedient to consider whether a F.I.R. can be quashed by exercising power either under ....
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....of Cr.P.C. gave the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of the Court or otherwise to secure the ends of justice. The Supreme Court in Bhajan Lal case ((1992) Supp. (1) SCC 335 supra) made it clear that it may not be possible to lay down any precise, formulae and to give an exhaustive list to myriad kinds of cases wherein such power should be exercised. According to this judgment, the High Court would be justified in exercising its power in cases of following categories: (1) Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused; (2) Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code; (3) Where the uncontroverted allegations made in the FIR or 'compla....
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....he proceedings are to be quashed. The Court said that it was erroneous to assess the material before it and conclude that the complaint cannot be proceeded with, because the material annexed to the Petition under Section 482 of the Code cannot be termed as "evidence" without being tested and proved. (Vide para 13 of the report). In the latter case, the Supreme Court expressed the view that in a petition under Section 482 of the Code, and where the investigation is not completed, the Court shall not look into the materials, the acceptability of which is essentially a matter of trial. The learned Special Public Prosecutor exerted thrust upon the fact that the petitioners herein are producing certain documents to substantiate their plea that the F.I.R. referred assets, income etc., but they cannot be relied upon at the present stage as their truth has to be tested only during investigation. A reading of those two judgments show that the documents relied upon by the petitioners/accused therein are intending to destroy the allegations propounded in the F.I.R. by the Police and evidently those were the cases where only upon proof of those documents referred facts, the F.I.R. was sought....
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....ation other than legal remuneration as a motive or reward such as is mentioned in section 7; or (b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a consideration which he knows to be inadequate from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned; or (c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do; or (d) if he,- (i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (iii) while holding office ....
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....ives statements A to D, and lastly summed up that- "Thus Smt. T.H.Vijaya Lakshmi (A-1) and her husband Shri A.Suresh (A-2), have acquired assets/pecuniary advantage to the tune of Rs. 5,95,58,322/- (Assets Rs. 5,55,25,000/- and expenditure Rs. 40,33,322/-_ against an income of Rs. 4,84,76,630/- earned during the check period. Thereby Smt. T.H.Vijaya Lakshmi and her husband Shri A.Suresh have amassed disproportionate asset to the tune of Rs. 1,10,81,692/- which is 22.86% of the income earned by them, which they cannot satisfactorily account for". (Emphasised by me) Thus, except the statements, there is no other material to support the above conclusion of the respondents, as per the F.I.R. Further it is also significant to note that a remark is made in the above emphasised portion that the petitioners cannot satisfactorily account for. It is pertinent to recall the language in Section 13 (1) (e) which mandates that "the public servant cannot satisfactory account for". It means, as rightly argued by learned Senior Counsel that an opportunity shall be given to the public servant to explain satisfactorily and to account for the assets. The interesting question is at what stage such ....
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....ed in utter violation by the respondents and that will vitiate the entire process of registration of the F.I.R. To be more specific, the contention of the petitioners is that preliminary enquiry postulated by Chapter 9 of the Manual is not conducted by the respondents before registration of F.I.R. Chapter 8 of the Manual deals with the complaint and source information. Every complaint from any source shall be entered in a register and that shall be treated as confidential at all stages (8.1) Verification of complaints is required in cases falling within Clause 8.6. They are (i) complaints pertaining to the subject matters which fall within the purview of C.B.I. either received from official channels or from well established and recognized public organisations or from individuals who are known and who can be traced and examined; and (ii) complaints containing specific and definite allegations involving corruption or serious misconduct against public servants etc., falling within the ambit of C.B.I. which can be verified. Clause 8.8 provides for process of verification. According to clause 8.9 secret verification shall be completed within 3 months of the receipt of complaint or four....
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....ry provisions of the Cr. P.C. provides essential guidelines for the CBI's functioning. It is imperative that the CBI adheres scrupulously to the provisions in the Manual in relation to its investigative functions, like raids, seizure and arrests. Any deviation from the established procedure should be viewed seriously and severe disciplinary action taken against the officials concerned. In Shashikant v. Central Bureau of Investigation and another (2007) Crl.L.J. 995, the Court observed as under: - "CBI Manual provides for a preliminary inquiry. By reason thereof a distinction has been made between a preliminary inquiry and a regular case. A preliminary inquiry in terms of Para 9.1 of the CBI Manual may be converted into a regular case as soon as sufficient material becomes available to show that prima facie there has been commission of a cognizable offence." Para 9.7 of the C.B.I. Manual reads: "As soon as it is decided to register a PE, the SP will take action to get the PE Registration Report prepared, which will invariably be vetted by him and in case of important enquiries even drafted by him. Registration Report of PE should be written in the PE Registration Report Fo....
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....nts are made: "11. ..There is no requirement of law to afford opportunity to the accused to explain before registration of the case. There is also no command of law to conduct preliminary enquiry (PE) before the registration of F.I.R. in all cases." "18. It is further submitted that before completion of investigation, the petitioners would be given ample opportunity to explain each and every item/property with regard to assets, income and expenditure of the petitioners and their family members, as per law. It is further submitted that opportunities are not required to be given to the person for registering any F.I.R. against any person for the offence committed by him/her. The same is the position of law in respect of offences under Section 13 (2) read with 13 (1) (e) of the Prevention of Corruption Act, 1988 as well." Thereby, the respondents are admitting that before registration of F.I.R. and after the receipt of Source Information, no preliminary enquiry within two months was done. This is a deviation from the procedure. To strengthen this view of this Court, the counter affidavit further reads" "29. The averments made in para No.21 are wrong and hence, denied. It is sub....
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....ve Assembly, he has sworn affidavit and submitted the same to the Election Authority under the Representation of Peoples Act. It is argued that the values given in those documents shall be accepted for determining 'known sources of income' but the respondents have arbitrarily valued the assets, either purchase value or sale value and thereby a glaring illegality is committed in the registration of F.I.R. to bring the petitioners within the mischief of Section 13 of the Act. The counter argument of the respondents is that the IT Returns and the Statements of disclosures filed with the Department are not final and the truth of those particulars has to be verified and confirmed during course of investigation. In the light of these contentions, the question that fall for consideration is whether the IT Returns or declarations to the department are entitled to be relied upon? In M.Krishna Reddy v. State, Deputy Superintendent of Police ( supra) the Apex Court remarked that under Section 5(1)(3) of the P.C.Act, 1947 which corresponds to Section 13(1)(e) of the present Act of 1988 discloses that it is not the mere acquisition of property that constitutes an offence under the provisions ....
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....the petitioners have filed their I.R.T.s and statements of disclosure to the Department as per C.C.A. Rules and the 2nd petitioner filed affidavit with the Election Authority, as required under the Representation of Peoples Act, 1951 and the Rules made thereunder. Annexures-P3 to P6 are the Income Tax Returns of the 1st petitioner for the financial years 2011- 2012 (Assessment year 2012-13) to 2015-2016 (Assessment year 2016-17) and Annexure- P7 is the Acknowledgment along with computation of income issued by the I.T.Department for the financial year 2010-2011 (Assessment year 2011-2012). Annexure-P15 is a letter by the 1st petitioner addressed to the Principal Chief Commissioner of Income Tax (CCA), Chennai on 14.03.2016 giving information about completion of construction of house property along with proforma under Rule 18 (2) as prescribed in CCS (Conduct) Rules, 1964. This letter has 5 annexures relating to details of total cost of construction, sources of funds, valuation report by registered valuer, bank statement relating to the funds, and building plan and contract agreement. This letter contains the office receipt stamp of the department on 15.03.2016. This information has....
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....r the purpose of Section 13 (1) (e) of the Prevention of Corruption Act. It is apposite to mention in this perspective that the respondents in their counter have specifically admitted that the statements A to D in the F.I.R. are prepared totally basing on the Source Information and without verifying the Income Tax Returns and other documents only, because, no preliminary enquiry was conducted. For ready reference, that part of the counter affidavit filed by the respondents is extracted hereunder: "11. The averments made in para No.3 are not correct and hence denied. It is submitted that based on the source information, the said F.I.R. was registered against the petitioners for possession of pecuniary resources as mentioned in the F.I.R. which is disproportionate to their known sources of income.... 18. It is submitted that the F.I.R. was registered based on the source information on the allegation of possession of disproportionate assets to the tune of Rs. 1,10,81,692...." The source information itself states that the petitioners are in possession of disproportionate assets worth Rs. 1,10,81,692/-. This Court is unable to comprehend how the source information would exactly re....
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.... during the check period, the following is shown as total of the income declared in the I.T. Returns for the Financial years 2010-2011 to 2015-2016. The petitioners have filed the I.T. Returns with the relevant annexures which were already referred above and to facilitate easy understanding, they have filed a statement as Annexure-P18 of the Petition in a tabular form which is as follows :- FY Gross salary as per Form- 16 Rental receipts Interest receipts Agricultural Income Total 2010-11 10,33,474 1,80,000 15,484 1,00,000 13,28,958 2011-12 11,25,531 1,30,500 20,996 1,00,000 13,77,027 2012-13 11,81,472 27,000 36,637 2,00,000 14,45,109 2013-14 13,87,838 0 83,628 2,50,000 17,21,466 2014-15 15,55,154 0 21,822 50,000 16,26,976 2015-16 19,73,017 8,57,765 47,938 1,50,000 30,28,720 Total 82,56,486 11,95,265 2,26,505 8,50,000 1,05,28,256 So far as the 2nd petitioner's income is concerned, the Annexure-P17 shows the following computations. Details of errots in the FIR Amount shown in the FIR As per returns/ declaration Difference amount Evidence Income for 1.4.10 to 31.03.2012 (12 lakhs pa approx.) 12 lakhs, Income of Dr. Suresh....
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.... to the respondents, as given in the F.I.R., the value of consideration received by the 2nd petitioners by sale of immovable property is Rs. 1,00,00,000/-. In the petitioner's affidavit at Para No.19 a specific question is raised about the justification of the respondents in deducting a sum of Rs. 27,50,000/- from the consideration actually received. In the Counter affidavit, answering the said averment of the petition, the respondents state in Para No.18 that 'the averments in para 10 of the petition are wrong and hence denied' and further stated that 'as per the Source Information only the disproportionate assets was assessed in the F.I.R.'. In Para No.24 of the Counter affidavit, it is further stated as under : '24. ....With regard to purchase and sale of Property at Survey No.61, Nallapanahalli Village, Chinnarayapatna Hobli, Devanahalli Taluk, Bangalore Rural District, it is submitted that the actual purchase and sale details are required to be collected from the concerned officials and the purchasers/sellers to arrive at the actual cost of purchase and sale of the land. ' When the F.I.R. itself shown in Statement-C that the sale consideration received by the 2nd petitioner....
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....lot No.126, Shaikpet Village, which is purchased by Sri T.Santhosham, father of the 1st petitioner from Smt. Y.Rishikanya vide document No.4330/1995 (Vide Sl.No.4 shown in Annexure-P1 (page-23) of the Writ Petition. This is referred as item Nos.6 and 7 in Statement-B (Assets at the end of the check period 29.02.2016). The value of the asset is shown as Rs. 2,59,50,000/- (western portion) and Rs. 2,56,00,000/- (eastern portion) (Total Rs. 5,15,50,000/-) in the said statement, which is part of the impugned F.I.R. Against these items, the contention of the petitioners is that the approved valuer has valued the cost of the building (both portions) as Rs. 4,14,21,800/- only which is relied upon by the respondents in the F.I.R. but gave an excess value of Rs. 85,78,200/- and this is uncalled for and without justification. It is argued for the petitioners and also shown in the Annexure-P16 of the petition, that the valuation report, dated 11.03.2016 which is referred by the respondents is only Rs. 4,14,21,800/- for both the portions and this excess value is not explained anywhere by the respondents and to that extent, it should be held that the F.I.R. is lacking prima facie material to s....
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....g prima facie material to substantiate the grounds to bring the penal provision of the Act to the fore. As an afterthought, the respondents are propounding a ground that they have got the valuation done by the CPWD Engineers during investigation, forgetting the fact, they cannot commence investigation before registration of the F.I.R. This Court, from the above circumstance has reason to believe that registration of the F.I.R. is done in a very informal but callous manner, which is uncalled for. One more item relating to this topic is value of Elevator installed at the building constructed at Plot No.126, which is the building shown in items 6 and 7 of Statement-B. This Elevator is shown as Sl.No.31 in Statement-B at a value of Rs. 10.00 lakhs. It is the contention of the petitioners that where the building in items 6 and 7 is valued, that valuation is inclusive of fixtures and apparatus including the Elevator. While giving the value of the entire building, showing the value of Elevator again is nothing but arbitrary and erratic and thereby the respondents have increased the value of assets at the end of the check period by Rs. 10.00 lakhs. Except saying that the CPWD Engineers va....
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.... which is included in the value of the construction of building by the 1st petitioner 10,00,000 Total amount of deduction to be made to Statement-B 1,03,78,200 a) Total Income as modified (Statement-C) 6,20,29,158 b) Total value of assets possessed at the end of check period as modified (Statement-B 5,86,72,866 Adopting the modified figures, revised working is as hereunder : Sl. No. Particulars of Assets Amount A Assets at the beginning of the check period 1,35,26,066 B Assets at the end of the check period 5,86,72,866 C Assets during the check period (B-A) 4,51,46,800 D Income during the check period 6,20,29,158 E Expenditure during the check period 40,33,322 F Assets + Expenditure - Income (DA) -1,28,49,036 The above figures demonstrate that there is no disproportionate asset at all. On the contrary there is an excess of income of Rs. 1,28,49,036/- over and above the assets. The claim of the respondents that the petitioners are possessing disproportionate assets at a value of Rs. 1,10,81,692/- that translates to 22.86% in excess of the known sources of income is therefore unsustainable. This Court, therefore, concludes that the ....