Income Tax prosecution proceedings to be clubbed for different complaints on same material, evidence

Prosecution proceedings under Income Tax to be clubbed for different complaint cases on same material, evidence, documents and allegations

ABCAUS Case Law Citation
ABCAUS 3425 (2020) (11) HC

Important case law relied upon by the parties:
Chandni Srivastava vs. CBI & Ors
Mohan Baitha vs. State of Bihar AIR 2001 SC 1490

In the instant case, the Petitioner has filed a Writ Petition before the Hon’ble High Court against the order of the magistrate rejecting to club three criminal complaints against the petitioner for having undisclosed foreign bank account.

In the instant case, the Petitioner was director/CEO of a company. The Income Tax Department information was received information from Foreign Government that petitioner was having bank account in Switzerland with the mala fide intention to evade tax. Accordingly, a search was conducted on the premises of the petitioner.

Subsequently, the department preferred a criminal complaint under Section 276 D of the Income Tax Act. 1961 (the Act) against the petitioner. The department also preferred two separate criminal complaints u/s 276 C (1) and Section 277 of the Act.

Thus, the petitioner was facing three separate trials in all the three complaints before the same Magistrate for allegedly not declaring the fact of having a foreign bank account to the Income Tax authorities, though the material and evidence relied upon by the department was similar in all the three complaints.

The Petitioner stated that he had filed an application before the learned Magistrate for clubbing of the three complaints and joint trial, which was rejected by the Magistrate holding that not declaring foreign bank account in the Income Tax file for each specific year under prosecution is a distinct offence. Each instance of filing of income tax return without disclosing foreign funds is a separate and different act and same cannot held in part of same transaction.

Income Tax prosecution proceedings to be clubbed if on same material, evidence

The Hon’ble High Court observed that whether the petitioner was holding a foreign account or not was a matter of trial in the first complaint and the assumption that he held an undisclosed foreign account, which forms basis of other two complaints, was also subject matter of the trial.

The Hon’ble High Court further observed that it was held that Section 220 of the Cr.P.C. permits of one trial even if many offences are committed, if such offences form  part of the same transaction, the rationale for such an exception being that in such circumstances, separate trials  may lead to conflicting judgments.

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The Hon’ble High Court further noted that as held by the Hon’ble Supreme Court, the broad test for ascertaining whether offences charged form part of the same transaction is whether the other set of offences, even though distinct and separate, have been committed for facilitating the commission of the main offence. If the offences alleged involve similar persons and there is a hint of continuity of action, it is then part of the same transaction. Thus, if the substratum of the series of acts is common, then those acts do constitute same transaction.

The Hon’ble High Court observed that has preferred the three complaints on the very same material, evidence and documents and allegations in all the three complaints were to a large extent quite the same.

It was noted that the three complaints in fact were a part of the same transaction. The first complaint had been filed on the assumption that petitioner was holding an undisclosed foreign account and two subsequent complaints are nothing but to arrive at a figure to meet the ingredients of the first offence.

Thus. The Hon’ble High Court opined that it will be in the interest of justice to have a common trial for all the three complaints.

Accordingly, the appeal was allowed and the impugned order passed by the Trial Court was quashed.

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