iminal Appeal No 09 of 1966
Appeal by special leave from the judgment and order dated November 24 1965 of the Bombay High Court in Criminal Revi ion Application No 232 of 1965
194 AS R Chari N C Maniar P C Bhartari and J B Dada
chanji for the appellant
G L Sanghi and section P Nayyar for respondent No 1
N C Maniar K L Hathi and Atiqur Rehman for respondent No 2
The Judgment of the Court was delivered by Vaidialingam J
In this appeal by special leave on behalf of the appellant the fifth accused in Special Case No 9 of 1963
in the Court of the Special Judge for Greater Bombay Mr  A section R Chari learned counsel challenges the order dated November 24 1965 passed by the High Court of Bombay in Criminal Revision Application No 232 of 1965
There are five accused in Special Case No 9 of 1963
The appellant and accused No 4 are partners of an industrial concern known as Premier Industries 
Accused No 1 is an Income tax Consultant and accused Nos 2 and 3 are clerks
in the Income tax Department
The substance of the prosecution case
against these five accused is that they formed a conspiracy to cheat the income tax authorities in respect of the income tax assessments of the Premier Industries for the assessment year 1960 61 and in pursuance of the said conspiracy committed offences under section 420 IPC and section 51d read with section 52
of the Prevention of Corruption Act 1947 Act 11 of 1947
hereinafter called the Act
They have also been charged with an offence under section 468 IPC alleged to have been committed by them in furtherance of the said conspiracy
The allegations relating to the commission of the offence
under section 420 IPC is comprised in charge No 2
That charge ends up by saying that by the various acts mentioned therein
the appellant along with accused No 1 who is the Income tax Practitioner and accused No 4 dishonestly or fraudulently induced the income tax authorities and obtained assessment order for less income tax than due by accused Nos 4 and 5 and that
all the three of them have committed an offence under section 420
It is not necessary to refer to the other charges
The appellant raised an objection to the framing of a charge
under section 420 IPC
According to him the charge should really have been framed under section 417 on the ground that the assessment order in this case is not property 
He also raised an objection that the assessment order is not valuable security 
The Special Judge by his order dated February 3 1965 re jected the preliminary objections raised by the appellant
He held that the assessment order was property  and that it was also valuable security 
Therefore he held that the charge framed 195 under section 420 IPC was correct
There were certain other objections raised by the appellant viz that sanction had not been obtained under section 196A Cr
PC that where the offence itself was alleged to have been committed in pursuance of the conspiracy and was the subject matter of charge no charge of conspiracy could still be maintained and that the period of conspiracy had been artificially fixed in the charge
These objections have also been overruled by the Special Judge
The appellant carried the matter in revision before the High Court of Bombay
The learned Judge by his order dated November 24 1965 which is under attack has confirmed the order of the Special Judge
Here again the High Court has taken the view that the assessment order is property  and it is also valuable security  under section 30 IPC
The High Court is further of the view that the allegations contained in the material charge do prima facie disclose an offence under section 420 IPC
Certain other objections raised before the High Court were also negatived
Mr A section R Chari learned counsel for the appellant has again reiterated the same objections
Except for the question relating to the charge framed under section 420 IPC we make it clear that we are not expressing any opinion regarding the other points raised by Mr Chari
If any other objections are available to the appellant or any other accused he or they will be perfectly entitled to raise the same during the course of the trial
The argument regarding the invalidity of the charge framed under section 420 runs as follows
The essential ingredient of an offence under section 420 IPC is that the person cheating must thereby dishonestly induce the person deceived to deliver any property or to make the whole or any part of a valuable security
We are not referring to the other matters contained in section 420 IPC
The issue or delivery of an order of assessment by an Income tax Officer is not in consequence of the cheating committed by a party though it may be that the computation of income as found in the assessment order may be the result of cheating practised by the accused
Therefore the accused cannot be considered to have by creating dishonestly induced the Income tax Officer to deliver the assessment order because that is issued to a party as a matter of routine
The assessment order cannot also be considered to be property  within the meaning of section 420 IPC
It cannot also be stated that the accused by cheating have dishonestly induced the Income tax Officer to make a valuable security because an assessment order can in no sense be considered to be a valuable security
No legal right is created by an assessment order
The liability to payment of income tax is created by the charging section section 3 of the Indian 196 Income tax Act 1922 and the demand for payment of tax is made on the basis of a notice of demand issued by the Income tax Officer concerned
At the most the accused will be guilty of  cheating  as defined under section 415 IPC inasmuch as they may have intentionally induced the Income tax Officer who is deceived to do or omit to do anything which he would not do or omit
if he were not so deceived and they will be liable for punishment under section 417 IPC
Mr G L Sanghi learned counsel for the State has supported the views expressed by the High Court
We are not inclined to accept the contentions of Mr Chari that there is any error or illegality in framing a charge under section 420 IPC
As to whether the prosecution is able to make out its case or not is a different point
We are only concerned at this stage to consider as to whether under the circumstances a charge under section 420 could have been framed
It is well known that under the Indian Income tax Act liability to pay income tax arises on the accrual of the income and not from the computation made by the taxing authorities in the course of assessment proceedings and that it arises at a point of time not later than the close of the year of account
It has also been laid down by this Court that assessments particularise the total income of an assessee and the amount of tax payable
But it is not as if that the assessment order is valueless as is sought to be made out
The question that arises for consideration in this case is whether there is any delivery of property  or at any rate whether the Income tax Officer has been induced to make a valuable security  Movable property  is defined in section 22 IPC Document  and valuable security  are defined in sections 29 and 30 IPC respectively
Under the scheme of the Income tax Act it is clear that the assessment order determines the total income of the assessee and the tax payable on the basis of such assessment
The assessment order has to be served on the assessee
The tax is demanded by the issue of a notice under section 29 but the tax demanded is on the basis of the assessment order communicated to an assessee
The communicated order of assessment received by an assessee is in our opinion property  since it is of great importance to an assessee as containing a computation of his total assessable income and as a determination of his tax liability
In our view the word property  occurring in section 420 IPC does not necessarily mean that the thing of which a delivery is dishonestly desired by the person who cheats must have a money value or a market value in the hand of the person cheated
Even if the thing has no money value in the hand of the person cheated but becomes 197 a thing of value in the hand of the person who may get possession of it as a result of the cheating practised by him it would still fall within the connotation of the term property  in section 420 IPC
Once the assessment order is held to be property  the question arises as to whether there is a delivery  of the same to the assessee by the Income tax Officer
It is argued that the order is communicated in the usual course and that irrespective of any cheating  the officer is bound to serve the assessment order
This argument though attractive has no merit
Communication or service of an assessment order is part of the procedure of the assessment itself
But it can be held that if the necessary allega tions are established the accused have dishonestly induced the Income tax Officer to deliver the particular property viz the assessment order as passed by him in and by which a considerably low amount has been determined as the total income of the assessee on the basis of which the amount of tax has been fixed
Nor are we impressed with the contention that the deception if at all is practised not when the assessment order is delivered but at the stage when the computation of the total income is made by the Income tax Officer
The process of cheating  employed by an assessee if successful would have the result of dishonestly inducing the Income tax Officer to make a wrong assessment order and communicate the same to an assessee
An offence under section 420 IPC will also be made out if it is established that the accused have cheated and thereby dishonestly induced the Income tax Officer to make a valuable security 
This takes us to the question  Is the assessment order valuable security   We have already referred to section 30 IPC defining valuable security 
The assessment order is certainly a document  under section 29 IPC
The order of assessment does create a right in the assessee in the sense that he has a right to pay tax only on the total amount assessed therein and his liability to pay tax is also restricted to that extent
Therefore an order of assessment  is a valuable security  under section 420 IPC
Therefore if the cheating employed by the accused resulted in inducing the Income tax Officer to make a wrong assessment order it would amount to inducing the Income tax Officer to make a valuable security 
Considering the question from either point of view as indicated above it follows that the framing of a charge for an offence tinder section 420 IPC is correct
The appeal accordingly fails and is dismissed
GC Appeal dismissed


Summary:
The appellant along with certain others was tried for the offence of entering into a conspiracy to cheat the income tax authorities in respect of the income tax assessment of a firm
The prosecution levelled against him a charge inter alia of the offence under section 420 IPC
The appellant raised before the Special Judge an objection to the effect that the terms of section 420 IPC were not satisfied inasmuch as i an assessment order was not property  ii its communication to him was not delivery  iii an assessment order was also not a valuable security 
The Special Judge and the High Court rejected these contentions
The appellant came to this Court by special leave
HELD  i Even if an assessment order is not property  in the hands of the Income tax Officer it is property  in the hands of the assessee because it contains a computation of his assessable income and a determination of his tax liability
The word property occurring in section 420 IPC does not necessarily mean that the thing of which a delivery is dishonestly desired by the person who cheats must have a money value or a market value in the hands of the person cheated
196 G 197 A ii Communication or service of an assessment order is part of the procedure itself
But if the necessary allegations are established the accused must be held to have dishonestly induced the Income tax Officer to deliver  the particular property viz the assessment order
Nor could the contention be accepted that the deception if at all is practised not when the assessment order is delivered hut at the stage when the computation of the total income is made by Income tax Officer for the process of cheating  employed by an assessee if successful would have the result of dishonestly inducing the Income tax Officer to make a wrong assessment order and communicate the same to an assessee
197 C D iii An order of assessment is a valuable security  under section 420 PC because it creates a right in the assessee in the sense that he has right to pay tax only on the total amount assessed therein and his liability to pay tax is also restricted to that extent
197 F G On the above reasoning framing of a charge for an offence under 420 IPC is correct