TaxTMI 
TaxTMI 
2006 (10) TMI 147
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....uty Exemption Entitlement Certificate (for short, "the Scheme"). Upon scrutiny of the application, a recommendation, however, was made to allow the said company to import cotton fabrics of 44 inch width. As the item was not figuring in the standard input and output norms book, the file was placed before respondent No. 1, Smt. Sashi Balasubramanian, by Sri V. Rajpriyan, respondent No. 2 herein, for placing before the Zonal Advance Licensing Committee for recommendations as regards quantity and description of the goods to be allowed for import. Approval for advance licence was granted by Smt. Sashi Balasubramanian. On allegations in regard to the grant of the said licence, a first information report was lodged on March 2, 1995, for commission of offences under sections 120B, 420 and 471 of the Indian Penal Code, section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1988, and section 136 of the Customs Act, 1962. The company and its directors, however, in the meanwhile filed an application in terms of the Scheme. Declarations were filed on December 31, 1998. The charge-sheet in the criminal case was filed on April 12, 1999. Originally, there were seven....
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....when charges had been framed under section 120B of the Indian Penal Code. (iv) As the charges formed part of the same transaction, either all the persons involved therein may be proceeded against or none at all. (v) Section 95(iii) of the Act, as the High Court has rightly opined, must be held to be inapplicable in the facts and circumstances of the case. (vi) In any event, even if the allegations made against the respondents are taken to be correct and accepted in their entirety, the same do not constitute any offence as alleged or at all. An additional submission was made by Mr. T. Raja that his client having worked under the orders of Smt. Sashi Balasubramanian, cannot be said to have committed any offence at all. Parliament enacted the Finance (No. 2) Act, 1998. It came into force with effect from 1-4-1998. Chapter IV of the said Act provides for the Kar Vivad Samadhan Scheme, 1998. It came into force with effect from the 1st day of September, 1998. Declarant has been defined in section 87(a) to mean a person making a declaration under section 88. "Disputed tax" has been defined in section 87(f) to mean the total tax determined and payable, in respect of an as....
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.... the amount of duties (including drawback of duty, credit of duty or any amount representing duty) or cesses due or payable on the date of making a declaration under section 88." A declaration is required to be filed in the form prescribed therefor. The time and manner of payment of tax arrears are provided for in section 90. Section 91 provides for immunity from prosecution and imposition of penalty in certain cases. Section 95 provides for exceptions as regards the applicability of the Scheme, clause (iii) whereof, which is relevant for our purpose, reads as under: "95. The provisions of this Scheme shall not apply-... (iii) to any person in respect of whom prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code (45 of 1860), the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the Terrorists and Disruptive Activities (Prevention) Act, 1987 (28 of 1987), the Prevention of Corruption Act, 1988 (49 of 1988), or for the purpose of enforcement of any civil liability has been instituted on or before the filing of the declaration or such person has been convicted ....
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....tain the particulars of tax arrears and the sum payable after such determination towards full and final settlement of tax arrears. The immunity under the Scheme is not an absolute one. The designated authority may impose certain conditions while making an inquiry contained in section 90. The immunity granted is subject to the conditions provided in section 90. The immunity is in relation to institution of any proceeding for prosecution for any offence. Such offence may be either under the direct tax enactment or indirect tax enactment. Immunity is also granted from imposition of penalty under such enactments. However, immunity also extends to matters covered under the declaration under section 88. Section 95 provides for an exception to the Scheme. Once the provisions of section 95 are attracted, the Scheme shall not apply. A determination might have been made although the Scheme was not applied, but the same may not per se confer a right of obtaining any immunity in terms of section 91 of the Act. Clause (iii) of section 95 while laying down the exceptions, enumerates offences under Chapter IX or Chapter XVII of the IPC and certain other statutes. It also makes an exception,....
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....f the matter, an immunity is granted only in respect of offences purported to have been committed under direct tax enactments or indirect tax enactments, but by no stretch of imagination, would the same be granted in respect of offences under the Prevention of Corruption Act. A person may commit several offences under different Acts; immunity granted in relation to one Act would not mean that immunity granted would automatically extend to others. By way of example, we may notice that a person may be prosecuted for commission of an offence in relation to property under the Indian Penal Code as also under another Act, say for example, the Prevention of Corruption Act. Whereas charges under the Prevention of Corruption Act may fail, no sanction having been accorded therefor, the charges under the Penal Code would not. The High Court has not held that the offences alleged against the respondents are so inextricably connected that they cannot be separated so much so that in the event it be held that private parties cannot be proceeded with at all, the case against public servants, would invariably fail. We, thus, as at present advised, do not intend to delve deep info the said questi....
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.... or where it has been referred to police or other authorities for enquiry; even then a prosecution may not be held to have been initiated at that stage. What transpires from the said decision is that whereas before cognizance is taken, application of mind on the part of the court is imperative, taking action of some other kind would not mean that cognizance has been taken. In some cases, even after lodging of the F.I.R, a preliminary enquiry which may not be an investigation into the crime, may be initiated. Strong reliance has also been placed on Basir-ul-Huq v. State of West Bengal [1953] SCR 836; AIR 1953 SC 293. The question which arose for consideration therein was whether having regard to the nature of the offence allegedly committed by the accused named therein, it was capable to be split up. In the aforementioned context, it was held that if the offences are inseparable or incapable of being split up, the court will have no other option but to pass a judgment of acquittal, stating: "14, Though, in our judgment, section 195 does not bar the trial of an accused person for a distinct offence disclosed by the same facts and which is not included within the ambit of tha....
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....rit of the Scheme promulgated under the Finance (No. 2) Act of 1998. If a person against whom criminal proceedings were pending, relating to offence under Chapter IX or XVII IPC or who stood convicted under any of the provisions of those chapters, he would not have been eligible to seek benefit under the Scheme and after accepting that position and the due settlement, there was no occasion to initiate and continue the criminal proceedings, which could bring about the conviction of the same persons, in case prosecution ended successfully in favour of the State and against the appellants. If such a condition is provided that on a particular date a criminal proceeding should not be pending against a person nor should he have been convicted of an offence, as a condition precedent for a settlement, and on that basis a settlement is brought about, it does not mean that later on, one could turn around and get the declarant convicted for a criminal offence too, after settlement of the liability. More so, when in view of section 90 sub-section (4) of the Scheme the declarant is obliged to withdraw an appeal or proceedings regarding tax liability pending before the High Court or the Supreme ....
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....o consider whether the allegations in the complaint prima facie make out an offence or not. It is not necessary to scrutinise the allegations for the purpose of deciding whether such allegations are likely to be upheld in the trial. Any action by way of quashing the complaint is an action to be taken at the threshold before evidences are led in support of the complaint. For quashing the complaint by way of action at the threshold, it is, therefore, necessary to consider whether on the face of the allegations, a criminal offence is constituted or not." Reliance has also been placed on K.C. Builders v. Assistant Commissioner of Income-tax [2004] 2 SCC 731; [2004] 265 ITR 562 (SC). The question which arose for consideration therein was as to whether mens rea is an essential ingredient for imposition of penalty under section 271(1)(c) of the Income-tax Act. In that case, finding of concealment and subsequent levy of penalties had been struck down by the Tribunal. The assessment year was directed to be corrected in terms of section 154 of the Act. It was in that fact situation, this court opined that if the Tribunal has set aside the order of imposing a penalty for concealment, there....
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....r bonds shall be ignored altogether and shall not be relied upon as evidence showing possession of undisclosed money. This provision relegates the Revenue to the position as if special bearer bonds had not been purchased at all. If without taking into account the fact of subscription to or acquisition of special bearer bonds and totally ignoring it as if it were nonexistent, any inquiry or investigation into concealed income could be carried out and such income detected and unearthed, it would be open to the Revenue to do so and it would be no answer for the assessee to say that this money has been invested by him in special bearer bonds and it is therefore exempt from tax or that he is on that account not liable to prosecution and penalty for concealment of such income. This is the main difference between the impugned Act and the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1965. Under the latter Act, where gold is acquired by a person out of his undisclosed income, which is the same thing as black money, and such gold is tendered by him as subscription for the National Defence Gold Bonds, 1980, the income invested in such gold is exempted from tax, but where specia....