Judgment Case ID: 2402

Judgment:
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 A.S. 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 5(1)(d) read with section 5(2). 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. P.C.	 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. G.C. 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 I.P.C. The appellant raised before the Special Judge an objection to the effect that the terms of section 420 I.P.C. 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 I.P.C. 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 [.P.C. 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 I.P.C. is correct.