Trial Court to do enquiry u/s 202 CrPC for non jurisdictional assessee in IT Proceedings

Trial Court to carry out an enquiry u/s 202 CrPC before issuing summons to non jurisdictional assessee in Income Tax Proceedings.

ABCAUS Case Law Citation
ABCAUS 3648 (2023) (01) AC

Important Case Laws relied upon:
Vijay Dhanuka and Ors vs Najima Mamtaj and Ors,
Confident Projects (India) Pvt. Ltd and Ors vs The Income Tax Department
National Bank of Oman vs Barakara Abdul Aziz and Anr, (2013) 2SCC 488
Cheminova India Limited and Anr vs State of Punjab and Anr, (2020) 3RCR (Cri) 477
Udai Shankar Awasthi vs State of UP and Anr, (2013)2 SCC 435
Union of India vs Ashok Kumar Sharma and Anr.
Serdia Pharmaceuticals (India) Private   Limited   vs   UOI,
K.T. Joseph vs State of Kerala and Anr, (2009) 15 SCC 199

In the instant case, the assessee had challenged the order passed by the Additional Chief Metropolitan Magistrate (ACMM) in criminal complaint summoning him to face trial.

A criminal complaint for offences u/s 276-C (2) r/w Sec. 278-B/278-E of the Income Tax Act, 1961 (the Act) was filed against a limited company and the revisionist by Income Tax officer.

It was the case of the revisionist that he was a permanent resident of other State whereas the complaint was filed in other State. Hence, the revisionist was residing outside the territorial jurisdiction of Trial court which had summoned him.

It was further contended that as per amended Section 202 CrPC, it was incumbent on the Trial Court to carry out an enquiry or to order investigation u/s 202CrPC before issuing process to a person who was residing beyond its jurisdiction.

It was contended that the Trial Court had neither enquired himself or through police about sufficient grounds for proceeding in the matter against the revisionist, who was

It was also contended that the offence alleged u/s 276-C(2) of the Act was for non-payment of tax on the due date, i.e. the date when the revisionist was not the Director or  incharge of the affairs of the concerned company. The revisionist had resigned from Board of Directors when he found that company was not complying with many of the statutory compliances.

It was contended that as per Section 278-B of Income Tax Act, only a person Incharge and responsible for the affairs of the company, will be responsible for the alleged offence.

The Department contended that since company of which the petitioner/revisionist was Director, had filed its return in Delhi, so the accused had himself submitted to Delhi jurisdiction. It was further argued that the applicant being an organ of the State, the provisions of Sec. 202 CrPC would not be strictly applicable and cannot be construed as such.

In support of its contention, the Department placed reliance upon judgments of Hon’ble High Court and Hon’ble Supreme Court.

The Sessions Court opined that in complaint cases filed by a public servant, he can be exempted from getting himself examined u/s 200 Cr.P.C. but it does not mean that in such type of criminal cases filed by public servant/organ of State, there is exemption from following the procedure as laid down u/s202 Cr.P.C., qua accused not residing within the territorial jurisdiction of the trial court.

However, at the same time, no specific mode or manner for conducting such enquiry has been laid down by Hon’ble Supreme Court or under the Statute and this position has been re-asserted by Hon’ble Supreme Court by holding that since the Magistrate had examined the complainant on solemn affirmation and two witnesses on his behalf, the same was sufficient compliance of Sec.202 CrPC as the examination of complainant and its witnesses was tantamount to an enquiry u/s 202 CrPC.

The Sessions Court observed that unlike the case relied upon by the Revenue, in the present matter, the complainant ITO being a public servant has also not got himself examined or any other witness in support of complaint. So, the present case cannot be equated with the case relied upon.

The Hon’ble Sessions Court observed that the revisionist had relied upon the judgment of Hon’ble High Court on the same subject.  The said judgment was passed against the Income Tax Department itself, like the respondent herein. Even, in this case, one of the Directors of the accused company was residing beyond the territorial jurisdiction of the concerned court. The question was, whether the trial court was required to comply with the provisions of Sec. 202 CrPC qua the director residing beyond the territorial jurisdiction of the trial court or not?  The answer was replied in affirmative by Hon’ble High Court.

The Sessions Court further noted that the aforesaid judgment of Hon’ble High Court was challenged by Income Tax Department before Hon’ble Supreme Court did not grant any relief to the Department and declined to interfere with the order of Hon’ble High Court. Though while disposing off the SLP, it was also observed that the dismissal of SLP would not be construed as approval of the observations made in the said judgment.

The Sessions Court opined that the said judgment of High Court has not been set aside, therefore, the facts of the present case being similar and the said judgment being passed against the same department/respondent, shall apply to the present respondent as well.

Accordingly, The Petition was allowed. The impugned order passed by the ACMM was set aside qua the revisionist. The Trial Court was directed to conduct an enquiry as envisaged u/s 202 Cr.P.C., and thereafter pass a fresh order on the point of summoning of revisionist.

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