Case: K.T.M.S. Mohammed &amp; Another Vs. Union of India

the three. On the other hand, the offence said to have been committed by the third appellant is specifically attributed only to him. So the question is whether any conspiracy could be inferred under these circumstances. In our opinion, on the facts of the case, no such inference could by drawn for the simple reason that the appellants 1 and 2 were interrogated by the Enforcement Authorities on 19.10.66 and they sent their letter of retraction through their advocate on the very next day i.e. on 20.10.66 and that the ITO, Karakudi has recorded the retraction statement of the first appellant even on 16.11.66. It was only thereafter the third appellant sent his letter to the Enforcement Authorities claiming the controversial amount on 22.12.66. The charges levelled against appellants 1 and 2 are only on the basis of their retractions made through their lawyer on 20.10.66 and by their subsequent statements. In the letter dated 20.10.66, the appellants 1 and 2 have not stated that the amount belonged to the third appellant. Similarly, it is not the case of the prosecution that the first appellant by his statement dated 16.11.66 explained the amount as belonging to the third appellant. Nor is it the case of the prosecution that the second appellant came forward by his statement recorded in the year 1974 which is the basis for prosecuting him for perjury stating that the amount belonged to the third appellant. Therefore, no agreement to commit the offence punishable under Sections 193 IPC or 277 I.T. Act can be said to have been hatched among all the three appellants. further, it is neither the case of the complainant nor could it be said that the appellants 1 and 2 knew that the third appellant intentionally fabricated false evidence or wilfully made a false return before the ITO. Merely because the third appellant happens to be related to the first appellant and claimed that amount as owner thereof, no irresistible inference can be safely drawn that there was a conspiracy among all the three appellants and the accused Nos. 4 and 5. Moreover, the evidence, direct or circumstantial is very much lacking to bring all the three and the other two accused under the charge of conspiracy. hence the third appellant cannot be put on a joint trial along with appellants 1 and 2 and others under the charge of conspiracy. Therefore, the conviction of the third appellant under the conspiracy charge has to fail.54. It is pertinent to note, in this connection, that the trial court in paragraphs 87 and 88 of its judgments, after finding appellant No. 3 guilty of the conspiracy charge along with appellants 1 and 2, A 4 (since dead) and A 5 punishable under Sections 120-B read with 193 IPC and 120-B read with 277 I.T. Act has acquitted the fifth accused (Bhaskar alias Kannan) of all the charges in paragraph 89 of its judgment. This contradictory finding of the trial court has not been noted either by the appellate court or by the High Court. 55. The next question that arises for consideration is whether the third appellant can be convicted for the offence under Sections 193 IPC and 277 of the I.T. Act (simplicitor). The third appellant has not voluntarily submitted any return before the ITO but only on receipt of a notice from the ITO. No doubt, this will not absolve the criminal liability of the third appellant if the ingredients to constitute the offences under these two sections are established and the trial of the case is not vitiated by any illegality. 56. Section 277 of the I.T. Act in general seeks to the penalise one who makes a false statement in order to avoid his tax liability. In the present case, the Revenue has not come forward that the money represents the income of the third appellant liable to be taxed but on the other hand it is the case of the ITO that it is not the third appellants money at all. Moreover, a cursory reading of the penal clause proposes to impose punishment depending upon the quantum of tax sought to be evaded. Here no question of evading he tax will arise. Even assuming, that the third appellant has made himself liable to be punished under Sections 193 and 277 (simplicitor) of the I.T. Act, inasmuch as he has been put in a joint trial with the appellants 1 and 2 for the conspiracy of the said offences without any specific allegation or acceptable evidence to connect the third appellant with the activities of the appellants 1 and 2, there is a clear misjoinder of charges which includes misjoinder of parties also. In the facts and circumstances of the case on hand, the misjoinder of charges cannot be said to be a mere irregularity. In our considered opinion by the joint trial with misjoinder of charges, as pointed out by Mr. ATM Sampath, a failure of justice has in fact been occasioned since all the Courts below have clubbed all the allegations levelled against all the three appellants and two other accused (A 4 and A 5) together and considered the same as if all the offences were committed in the course of the same transaction pursuant to a conspiracy which is neither supported by the allegations in the complaint nor by any evidence as required under the law. Hence, the conviction under Sections 193 IPC and 277 of I.T. Act (simplicitor) also have to be set aside.57. The High Court, without adverting to the above important intricated questions of law involved in this case and examining them in the proper perspective has disposed of the revisions in a summary manner and hence the impugned orders warrant an interference. Since we are inclined to allow all these appeals mainly on the various questions of law which we have discussed in the preceding part of this judgment, we feel it unnecessary to deal with the other questions raised in the appeal.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]40. Hence for all the reasons stated supra, we hold that the convictions recorded by the Courts below under Sections 120-B read with 193IPC and 193 (simplicitor) as against the appellants 1 and 2 cannot be sustained. It is very surprising and shocking to note that the complainant has stepped into the shoe of the Enforcement Directorate, and appears to have assumed the authority under the FERA and levelled a charge stating that the appellants 1 and 2 by sending the letter of retraction on 20.10.66 denying their earlier statements dated 19.10.66 have made themselves liable to be convicted under Section 193 IPC (vide paragraph 25 (i) of the complaint).41. Still more shocking, the Trial Court has not only convicted the appellants 1 and 2 for sending the letter of retraction dated 20.10.66 but also found the third appellant and accused Nos. 4 and 5 as having been parties to a conspiracy for causing a letter dated 20.10.66 to be sent the Enforcement Directorate.In the present case, on two occasions, the Tribunal has held that the amount of Rs. 6 lakhs was not owned by the first appellant. In Exh. D 4, the Tribunal has further held the Section 69 (a) dealing with the unexplained money etc. has no application to the facts of the case. Taking this finding of the Tribunal into constitution, we are constrained to hold that the appellants cannot be held to be liable for punishment under Section 120-B read with 277 and 277 (simplicitor) of the I.T. Act as the very basis of the prosecution is completely nullified by the order of the Tribunal which fact can be given due regard in deciding the question of the criminal liability of the appellants 1 and 2.51. Now coming to the case of the third appellant, it is his specific case throughout that the entire amount of Rs. 4,28,712 belonged to him. It appears from paragraphs 70 and 71 of the judgment of the trial court that the third appellant filed a suit on O.S. No. 62/71 on the original side of the High Court of Madras against the Enforcement Directorate claiming the said amount but that suit was dismissed. Exh. P 87 is the certified copy of the judgment. While it was so, PW 2 who was then the Income-tax Officer, City Circle, Madras during 1967-68 issued a letter dated 2.2.67 enclosing a notice under Sections 139 (2) of the I.T. Act and also another notice under Section 177 and 175 of the Act-both relating to the assessment years 1967-68-which notices are marked as Exhs. P 14 and P 15. He was further directed to file his return of income within a week of the receipt of Exh. P 15. The third appellants plea for extension of time was rejected. The third appellant, thereafter, filed his statement in verification accompanied by a signed statement claiming exemption of the sum of Rs. 4,28,713 as non-taxable on the ground that the said amount represented the sale proceeds of his mothers jewels etc.A careful perusal of the complaint leaves an impression that it has been ill-drafted and that necessary ingredients to make out a case for conspiracy are not brought out in the complaint. It is true that in case of conspiracy, an agreement between the conspirators need not be directly proved but it can also be inferred form the established facts in the case. As pointed out by this Court in Bhagwan Swaruop and ors v. State of Maharashtra, AIR 1965 SC 682 : 1964(2) SCR 378 that the offence of conspiracy can be established either by direct evidence or by circumstantial evidence and this section will come to play only when the Court is satisfied that there is reasonable ground to believe that two or more persons have conspired to commit an offence or an actionable wrong, that is to say, there should be prima facie evidence that a person was a party to the conspiracy. The charges levelled in the complaint in paragraphs 25 (i) (ii) and (iii) read that the first and the second appellants by sending the letter through their lawyer on 20.10.66 committed an offence under Section 193 IPC and that they, thereafter, individually committed an offence under Section 193 IPC by retracting their earlier statements given before the Enforcement Authorities. Under Paragraph 25 (iv), (vi) and (vii) of the complaint, the third appellant is stated to have caused false entries to exist in the account books of M/s precious Stone Trading Company and then wilfully made a false statement in verification before the Income-tax Authority accompanied by a false statement. Nowhere, it is stated that the individual acts of appellants 1 and 2 and that of the third appellant were due to any conspiracy among all the three. On the other hand, the offence said to have been committed by the third appellant is specifically attributed only to him. So the question is whether any conspiracy could be inferred under these circumstances. In our opinion, on the facts of the case, no such inference could by drawn for the simple reason that the appellants 1 and 2 were interrogated by the Enforcement Authorities on 19.10.66 and they sent their letter of retraction through their advocate on the very next day i.e. on 20.10.66 and that the ITO, Karakudi has recorded the retraction statement of the first appellant even on 16.11.66. It was only thereafter the third appellant sent his letter to the Enforcement Authorities claiming the controversial amount on 22.12.66. The charges levelled against appellants 1 and 2 are only on the basis of their retractions made through their lawyer on 20.10.66 and by their subsequent statements. In the letter dated 20.10.66, the appellants 1 and 2 have not stated that the amount belonged to the third appellant. Similarly, it is not the case of the prosecution that the first appellant by his statement dated 16.11.66 explained the amount as belonging to the third appellant. Nor is it the case of the prosecution that the second appellant came forward by his statement recorded in the year 1974 which is the basis for prosecuting him for perjury stating that the amount belonged to the third appellant. Therefore, no agreement to commit the offence punishable under Sections 193 IPC or 277 I.T. Act can be said to have been hatched among all the three appellants. further, it is neither the case of the complainant nor could it be said that the appellants 1 and 2 knew that the third appellant intentionally fabricated false evidence or wilfully made a false return before the ITO. Merely because the third appellant happens to be related to the first appellant and claimed that amount as owner thereof, no irresistible inference can be safely drawn that there was a conspiracy among all the three appellants and the accused Nos. 4 and 5. Moreover, the evidence, direct or circumstantial is very much lacking to bring all the three and the other two accused under the charge of conspiracy. hence the third appellant cannot be put on a joint trial along with appellants 1 and 2 and others under the charge of conspiracy. Therefore, the conviction of the third appellant under the conspiracy charge has to fail.54. It is pertinent to note, in this connection, that the trial court in paragraphs 87 and 88 of its judgments, after finding appellant No. 3 guilty of the conspiracy charge along with appellants 1 and 2, A 4 (since dead) and A 5 punishable under Sections 120-B read with 193 IPC and 120-B read with 277 I.T. Act has acquitted the fifth accused (Bhaskar alias Kannan) of all the charges in paragraph 89 of its judgment. This contradictory finding of the trial court has not been noted either by the appellate court or by the High Court.Section 277 of the I.T. Act in general seeks to the penalise one who makes a false statement in order to avoid his tax liability. In the present case, the Revenue has not come forward that the money represents the income of the third appellant liable to be taxed but on the other hand it is the case of the ITO that it is not the third appellants money at all. Moreover, a cursory reading of the penal clause proposes to impose punishment depending upon the quantum of tax sought to be evaded. Here no question of evading he tax will arise. Even assuming, that the third appellant has made himself liable to be punished under Sections 193 and 277 (simplicitor) of the I.T. Act, inasmuch as he has been put in a joint trial with the appellants 1 and 2 for the conspiracy of the said offences without any specific allegation or acceptable evidence to connect the third appellant with the activities of the appellants 1 and 2, there is a clear misjoinder of charges which includes misjoinder of parties also. In the facts and circumstances of the case on hand, the misjoinder of charges cannot be said to be a mere irregularity. In our considered opinion by the joint trial with misjoinder of charges, as pointed out by Mr. ATM Sampath, a failure of justice has in fact been occasioned since all the Courts below have clubbed all the allegations levelled against all the three appellants and two other accused (A 4 and A 5) together and considered the same as if all the offences were committed in the course of the same transaction pursuant to a conspiracy which is neither supported by the allegations in the complaint nor by any evidence as required under the law. Hence, the conviction under Sections 193 IPC and 277 of I.T. Act (simplicitor) also have to be set aside.57. The High Court, without adverting to the above important intricated questions of law involved in this case and examining them in the proper perspective has disposed of the revisions in a summary manner and hence the impugned orders warrant an interference. Since we are inclined to allow all these appeals mainly on the various questions of law which we have discussed in the preceding part of this judgment, we feel it unnecessary to deal with the other questions raised in the appeal.