HC dismissed appeal against inadequacy of sentence in income tax prosecution cases

Appeal against inadequacy of sentence passed by special court in income tax prosecution cases dismissed by High Court 

In a recent judgment, Hon’ble Karnataka High Court has dismissed the appeal filed by the Income Tax Department against inadequacy of sentence passed by special court in prosecution cases under Chapter XXII of  Income Tax Act, 1961 (the Act) as the High Court has no jurisdiction when sentence is passed by the Magistrate.

ABCAUS Case Law Citation:
ABCAUS 4152 (2024) (07) HC

In the instant case, the Income Tax Department had challenged the judgment of conviction and order on sentence passed by the Special Court for Economic Offences established under Section 280-A of the Income Tax Act, 1961.

The Department had challenged the sentence on the ground of its inadequacy. The offence for which all the respondents – accused had been convicted were all under Chapter XXII of the Act.

The Hon’ble High Court noted that provisions contained under Sections 280-A to 280-D of the Act were inserted by Finance Act 2012 with effect from 01.07.2012. Prior to the above said amendment and insertion of Section 280A, the notification dated 01.09.1982 was issued for establishing the Special Court of Judicial Magistrate First Class for trial of offences under 12 enactments and subsequently, 2 enactments were added by notification dated 04.02.1985.

The Hon’ble High Court observed that prior to the amendment in Section 377 of Cr.P.C. by Act No. 25/2005 with effect from 23.06.2006, the High Court only had jurisdiction to entertain appeal against the sentence on the ground of its inadequacy. However, subsequent to the amendment, appeal against the sentence on the ground of inadequacy is provided (a) to the Court of Sessions, if the sentence is passed by the Magistrate; and (b) to the High Court, if sentence is passed by any other Court.

The Hon’ble High Court observed that the object of the said amendment is to permit the filing of an appeal in the Court of Sessions instead of the High Court on the ground of inadequacy of sentence passed by a Magistrate.

The contention of the Department was that the order of sentence had been passed by the Special Court for Economic Offences and it has to be considered as the sentence passed by `any other Court’ and appeals against inadequacy of sentence will lie to the High Court under clause (b) of sub-section (1) or clause (b) of sub-section (2) of Section 377 of Cr.P.C.

It was contended that the Special Court for Economic Offences is not a Court of Magistrate and therefore, the appeal will not lie to the Court of Sessions under clause (a) of sub-section (1) or clause (a) of sub-section (2) of Section 377 of Cr.P.C.

The Hon’ble High Court observed that the Co-ordinate Bench had considered a similar point and had concluded that the words appearing in clause (b) – `any other court’ brings within its sweep `Special Courts’ even though they may be presided over by the officers of the rank of a Magistrate. However, the Hon’ble High Court disagreed with the Co-ordinate Bench and opined that if the Special Courts are presided over by Sessions Judge, then the said Special Courts might be said to come under clause (b) – `any other Court’. As the Special Courts are presided over by the officer of the rank of a Magistrate, the Special Courts cannot come under clause (b) – `any other Court’.

Further, the Hon’ble High Court observed that the offences and prosecutions under Chapter XXII of the Act, are non-cognizable offences in view of Section 279-A of the Act. As per the first schedule of Cr.P.C. classification of offence against other laws if offence is punishable for imprisonment for less than 3 years or with fine only, it is classified as non-cognizable, bailable and triable by any Magistrate. As the offences stated in Section 279-A of the Act are non-cognizable within the meaning of Cr.P.C., they are triable by a Magistrate.

Further, the Hon’ble High Court observed that the appeal against convictions for offence under Chapter XXII of the Act lie to the Sessions Judge under Section 374 of Cr.P.C. The Department had challenged the judgment of conviction passed by the Special Court and the said criminal appeal was pending before the Sessions Court.

In view of the above, the Hon’ble High Court opined that if the appeal had been tried against the judgment of conviction by the Sessions Court and if the appeal is dealt by the High Court against inadequacy of sentence it may lead to passing of conflicting judgments. In case in an appeal against conviction if the Sessions Court reverses the judgment of conviction and acquits the accused and the High Court allows the appeal filed against inadequacy of sentence then the said judgments are conflicting judgments against the same judgment of conviction passed by the Special Court. In order to avoid such conflicting judgments the appeal against conviction and appeal against inadequacy of the sentence are to be dealt with by the same Court.

Referring to the provisions of Bharatiya Nagarik Suraksha Sanhita, 2023 (the BNSS) with regard to appeals against the sentence on the ground of its inadequacy, the Hon’ble High Court observed that under Section 418 of BNSS it is in pari materia with Section 377 of Cr.P.C. Even under the BNSS no provision has been introduced for filing appeal before the High Court if the sentence is passed by the Magistrate. Sub- Section (3) of Section 415 of BNSS provides for filing appeal to the Court of Sessions against judgment of conviction on a trial held by the Magistrate. The reasons noted supra will also apply to the appeals filed or to be filed under Section 418 of BNSS.

Accordingly, the Hon’ble High Court dismissed all the appeals preferred by the Income Tax Department under Section 377 of Cr.P.C. as not maintainable. 

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