TaxTMI 
TaxTMI 
2013 (7) TMI 1163
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....a sum of Rs. 3 lacs which he would repay in about 7 to 8 months. The appellant claimed to have advanced a sum of Rs. 2,40,000/- against which the respondent issued 10 cheques dated 31/03/2006 to 30/09/2006 for amounts ranging from Rs. 20,000/- to Rs. 35,000/-. The first cheque for Rs. 20,000/- dated 31/03/2006 was realised. The second cheque was dishonoured on the ground that the funds were insufficient. In respect of this second cheque dated 30/04/2006, the appellant issued a notice and upon failure of the respondent to pay the amount demanded, filed a criminal case bearing No. 478/2006, which was pending when the complaint dated 18/12/2006 was filed in respect of dishonour of the remaining cheques. The appellant presented the remaining cheques on the dates they were due and since those cheques were dishonoured, the appellant issued notice to the respondent calling upon the respondent to pay the amounts under those cheques. Since the respondent did not pay the amount of Rs. 2 lacs demanded within 15 days of the receipt of notice, the appellant filed the complaint before the learned Magistrate at Mapusa. After examining the complainant, the learned Magistrate directed issuance of p....
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....pp) 1142) as also judgment of this Court in Vinay Parulekar v. Pramod Meshram, reported at 2008 (1) Mh LJ (Cri) 517 : (2008 (3) AIR Bom R 721). 4. I have heard the learned counsel for the appellant and the learned Counsel for the respondent and with the help of both, I have gone through the entire evidence on record. The learned Counsel for the respondent first submitted that it would not be open to this Court to set aside an acquittal unless the judgment of the acquittal was shown to be perverse or based on untenable evidence. He submitted that if the view taken by the learned Additional Sessions Judge was probable this Court may not interfere with such a finding. There can be no doubt about this proposition of law. It would therefore be necessary to find out whether the learned Judge was justified in setting aside conviction recorded by the learned Magistrate. 5 . The learned counsel for the appellant submitted that the learned Additional Sessions Judge was not justified in coming to the conclusion that the appellant could not at all have advanced a sum of Rs. 2,40,000/- to the respondent or that the defence of the respondent was probalised. He submitted that if the respond....
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....ondent was not in need of money it is not clear as to why he came up with the case of sale of his premises to DW 2/Lawrence Fernandes. Secondly, though the respondent claimed to have received consideration towards the premises from DW 2/Lawrence Fernandes, the evidence of Lawrence Fernandes in the present case as also in the earlier case No. 478/06 which have been duly considered by the learned Magistrate show that the story sought to be made out by the respondent is without any foundation. According to the respondent, the respondent had sold the premises to Lawrence Fernandes on 11/08/2005 and had placed Lawrence Fernandes in possession on the same day. But, in his examination-in-chief itself, the respondent stated that possession of second shop was also given but the agreement was made later. He then stated "we" started business in the said shop in October 2005. The learned counsel for the respondent stated that "we" should be read as "he" referring to Lawrence Fernandes. The agreements which were produced were of 11/08/2005 and 17/02/2006. There are two telephone bills of 7/01/2006 and 7/12/2005, which show that the telephone stood in the name of Lawrence Fernandes. It was also ....
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.... all in possession of any part of the premises would be farfetched. 9. Further, as rightly submitted by the learned counsel for the appellant this aspect is relevant only for testing the reliability of the statement made by the appellant that he met the respondent on 31/03/2006 in the premises in question. Even if the respondent may have sold the premises to Lawrence Fernandes or have handed over possession to Lawrence Fernandes or even if it is accepted that Lawrence Fernandes had started some business of the consumer goods in the premises, that will not prevent the appellant and the respondent to meet in the said shop. Where the parties met may not be determinative of the question whether the appellant had advanced a sum of Rs. 2,40,000/- to the respondent as claimed by the appellant. Therefore, on facts, there was no reason to give any extra weightage to the claim of the respondent based on his story about sale of premises to Lawrence Fernandes, particularly, when Lawrence Fernandes had no compunction in contradicting himself with reference to his deposition in earlier case. 10. The learned Additional Sessions Judge had observed that since the respondent had received about....
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....terial to outweigh the presumption that the amount represented in the cheque was for legally enforceable debt or liability. 13. These conclusions are fortified by the fact that the accused had in fact allowed a cheque of Rs. 20,000/- to be honoured and was ready to pay a further sum of Rs. 20,000/- when another case of dishonour of cheque issued in the same series was before the same Magistrate. Had the complainant been a bully and had snatched the cheques from the accused and had the accused been really scared and, therefore, not made a complaint to the police, he would at least not have offered to pay Rs. 20,000/-, when a case was already filed against him and when he was before the Court. Therefore, the learned Additional Sessions Judge should have noted these aspects and held as a matter of fact that the story of complainant having made an advance of Rs. 2,40,000/- had not been rebutted. 14. The learned Additional Sessions Judge next held that the complainant did not produce his books of accounts to show that he had sum of Rs. 2,40,000/- with him which he could have advanced, since the complainant had not filed any income tax returns. The learned Judge then referred to pr....
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....cused requested him for a hand loan of Rs. 45,000/- in order to meet construction expenses and the complainant paid Rs. 45,000/- by way of cash. The accused assured to repay the amount but failed to do so and then issued cheque for Rs. 45,000/- which was dishonoured. The accused took defence that he had lost a signed blank cheque. The Court considered the presumption under Sections 118 and 139 of the Negotiable Instruments Act and also the judgment of the two Judges Bench in Krishna Janardhan Bhat (supra). After considering several judgments the Supreme Court observed in para 26 as under: 14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to rai....
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....to be held rendered on the facts of that case, not laying down any law. Therefore, judgments which follow Krishna Janardhan Bhat (supra) can be safely ignored. 18. There is another aspect of the matter. The learned counsel for the respondent pointed out that in Krishna Janardhan Bhat (supra) attention of the Supreme Court was possibly not drawn to the actual wording of Section 269SS of the Income-tax Act. He submitted that Section 269SS of the Income-tax Act, in fact, does not cast any burden upon a person making advance in cash to record it in his returns and does not prevent any such cash advance from being made. It may be useful to quote provisions of Section 269SS and 271D of the Income-tax Act as under: Section 269SS: No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,-- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earl....
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....ch he has made. 19. The learned Counsel for the respondent submitted that the view taken in Krishna Janardhan Bhat (AIR 2008 SC 1325) (supra) has been consistently followed by this Court. He also relied on judgment of this Court in Sayeeda Iqbal Vakil v. Javed Abdul Latif Shaikh & Anr., reported at 2008 (2) Bom CR (Cri) 258 : (2008 (6) ABR (NOC) 1000) and Patricio D'Souza v. Oscar D'Souza & Anr., reported at 2009 (1) Bom CR (Cri) 710 : (2009 (6) ABR (DOC) 101) which in turn relied on observations in Vasudev Ramchand Ahuja v. Vilas Shripati Kamble, reported at 2006 (2) Bom CR (Cri) 1 : (2006 (6) ABR (NOC) 1114) to the following effect: The observation seen by the trial Court that amount allegedly paid by complainant during period has not been reflected in Income Tax returns as well as in books of account. Reasons recorded by the Court below on appreciation of evidence on record, impugned judgment cannot be said to be unreasonable and perverse. This and some other circumstances led the Court to refuse leave to file appeal against acquittal. 20. In Peter Mascarenhas v. Monsabre Ashley Oswald Dias, reported at 2010 (2) Bom CR (Cri) 38 : (2010 (4) AIR Bom R 461....
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....reement for interest on the amount given...... (Emphasis added) The complaint was filed in the year 2005. The evidence of the applicant was recorded on 28th February, 2006. The applicant admitted that the amount allegedly paid by him to the 1st respondent by way of loan was a cash amount kept at his residence and at that time it was an unaccounted amount. He categorically admitted that till date (i.e. till 28th February, 2006) he has not disclosed the amount to the Income Tax. According to the case of the complainant, he had advanced loan on 14th September, 2004 which was repayable within 90 days. Thus, on 14th September, 2004 the amount allegedly paid by him to the 1st respondent was stated to be an unaccounted amount which was kept at the residence of the applicant. Moreover, till February, 2006, when the evidence was recorded, the said amount was not disclosed in the Income Tax Returns of the applicant. Thus it continued to be an unaccounted amount. 7. It is true that merely because amount advanced is not shown in Income Tax Return, in every case, one cannot jump to the conclusion that the presumption under section 139 of the said Act stands rebutted. There ....
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....s under: 4. It is now common knowledge that the Negotiable Instruments Act, 1881, was amended with a view to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers, as the evil practice of issuing cheques in settlement of liabilities without there being adequate amount in the accounts had become rampant and the amendment was carried out with a view to curb the same effectively by enacting a stringent law while at the same time taking care to safeguard the interest of honest drawers. If that be the object of the amendments, the provisions of the Act are required to be interpreted in the light of the said objects intended to be achieved. The Court further observed in respect of requirement to show advances in the income tax returns as under: ......The learned J.M.F.C. has also held against the complainant the fact that the complainant had not shown the amount advanced by him in his income tax returns. ....
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....ecovery of an unaccounted amount. A cheque issued in discharge of alleged liability of repaying "unaccounted" cash amount cannot be said to be a cheque issued in discharge of a legally enforceable debt or liability within the meaning of explanation of section 138 of the said Act. Such an effort to misuse the provision of section 138 of the said Act has to be discouraged. (Emphasis supplied). The underlined observations do not disclose as to where can one find a prohibition on recovering amounts not disclosed in income tax returns. With utmost humility, I have to state that I have not come across any provision of Income-tax Act, which makes an amount not shown in the income-tax returns unrecoverable. The entire scheme of the Income-tax Act is for ensuring that all amounts are accounted for. If some amounts are not accounted for, the person would be visited with the penalty or at times even prosecution under the Income-tax Act, but it does not mean that the borrower can refuse to pay the amount which he has borrowed simply, because there is some infraction of the provisions of the Income-tax Act. Infraction of provisions of Income-tax Act would be a matter between the revenue a....
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....ender evidence or bear burden of proof of the same magnitude as the prosecution. The learned counsel for the respondent relied on judgment of Supreme Court in M.S. Narayana Menon alias Mani v. State of Kerala & Anr., reported at 2006 (6) SCC 39 : (AIR 2006 SC 3366), which deals with how presumptions under the Evidence Act as also under the Negotiable Instruments Act could be rebutted and the Court observed on the consideration of facts in that case, that the standard of proof is preponderance of probabilities and inference of preponderance of probabilities can be drawn, not only from the materials on record, but also by reference to the circumstances upon which the accused relies. The Court also observed that the accused need not disprove the existence of consideration by way of direct evidence and that the onus on an accused is not as heavy as that of the prosecution and that it is comparable with that on a defendant in civil proceedings. There can be no dispute about this proposition. In fact, similar are the observations of three Judges bench of Supreme Court in Rangappa (AIR 2010 SC 1898) (supra) where the Court held as under: 27. Section 139 of the Act is an example o....
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....r judgments which discuss as to when a judgment of acquittal could be set aside. They are: (1) Bhajan Singh alias Harbhajan Singh & Ors. v. State of Haryana (2011) 7 SCC 421 : (AIR 2011 SC 2552), (2) State of Maharashtra v. Haribhau Krishnaji Deshmukh & Ors. 2003 All MR (Cri) 1441 : (2003 Cri LJ 3639), (3) Fahim Khan v. State of Bihar Now Jharkhand (2011) 13 SCC 142 : (2011 AIR SCW 2747), (4) Babu v. State of Kerala (2010) 9 SCC 189 : (AIR 2011 SC (Cri) 809). I have carefully gone through the judgments. In the case at hand, the conclusions drawn by the learned Additional Sessions Judge were thoroughly unwarranted and based on an untenable appreciation of the evidence. As already observed, the learned Additional Sessions Judge had principally relied on provisions of Section 269SS and 271D of the Income-tax Act, which have absolutely no bearing and therefore the judgment is unsustainable. 30. Before I conclude, with all humility at my command, it has to be noted that even after noticing the object of enacting Section 138 of Negotiable Instruments Act, namely to enhance the acceptability of cheques, Courts have been accepting virtually any arg....