Preliminary enquiry cannot be considered as a report filed under Section 173 of the Criminal Procedure Code

Section 156 of Cr.P.C – The order made under Section 156(3) of the Criminal Procedure is in the nature of a peremptory reminder or intimation to the Police to exercise their plenary powers of investigation under Section 156(1) of the Criminal Procedure Code. Such an investigation embraces the entire continuous process which begins with the collection of evidence under Section 156 and ends with a report or charge-sheet under Section 173 of the Criminal Procedure Code

Section 173 of Cr.P.C The report submitted after conducting a preliminary enquiry - cannot be considered as a report filed under Section 173 of the Criminal Procedure Code. Therefore the entire action taken by the respondent is contrary to the provisions contained in Sections 156 and 157 of the Criminal Procedure Code.

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 06.12.2007

CORAM

THE HONOURABLE MR. JUSTICE K.MOHAN RAM

Criminal Original Petition No.34202 of 2007

V.S.Veerasamy ... Petitioner

-Vs-

State by Inspector of Police

B-7 Ramanathapuram Police Station

Coimbatore City, Coimbatore - 45 ... Respondent

Prayer:- Criminal Original Petition filed under Section 482 of the Criminal Procedure Code to direct the respondent herein to register the case as per the orders of the learned Judicial Magistrate No.VI, Coimbatore, by its order dated 26.06.2007 in D.No.1042 of 2007 and investigate the matter and file final report within the time stipulated by this Court.

For Petitioner : Mr. V.Balu

For Respondent : Mr. A.Saravanan,

Government Advocate (Crl. Side)

- - -

O R D E R

The brief facts that are necessary for the disposal of the above criminal original petition are as follows:-

The petitioner herein filed a private complaint before the learned Judicial Magistrate No.VI, Coimbatore, against one Lakshmi and nine others alleging the fabrication of false records etc., which according to the petitioner amounted to offence under Sections 120(b), 465, 468, 471, 511, 423, 424, 441 and 447 of the Indian Penal Code. The learned Magistrate by his proceedings in D.No.1042 of 2007 dated 26.06.2007 forwarded the said private complaint under Section 156(3) of the Criminal Procedure Code to the respondent herein for registering a case and investigating and for filing a report within a period of one month. On receipt of the said proceedings the respondent herein instead of registering a case and taking up investigation had conducted a preliminary enquiry and has sent a report concluding that the complaint discloses only a civil dispute and further action can be taken only after the disposal of the civil suits pending between the parties. Being aggrieved by that the petitioner has filed the above criminal original petition seeking a direction to the respondent to register the case as per the orders of the learned Magistrate.

2. Heard Mr. V.Balu learned counsel for the petitioner and Mr.A.Saravanan learned Government Advocate (Crl. Side) for the respondent.

3. Learned counsel for the petitioner submitted that when the learned Magistrate by his proceedings has directed the respondent to register the case and investigate, it is the mandatory duty on the part of the respondent to first register the case and then investigate the same and thereafter file a final report either way. But instead of registering a case the respondent had conducted only a preliminary enquiry and has sent the report, which according to the learned counsel, is against the provisions contained in Sections 156(3) and 157 of the Criminal Procedure Code.

4. Countering the said submissions the learned Government Advocate (Crl. Side) for the respondent fairly submitted that the respondent, on the directions issued by the learned Magistrate under Section 156(3) of the Criminal Procedure Code, ought to have registered the case first and investigate the same and the procedure followed by the Sub Inspector of Police in this case is not in accordance with the provisions of the Criminal Procedure Code.

5. I have carefully considered the submissions made by the learned counsel on either side. It is seen that on the private complaint filed by the petitioner herein the learned Magistrate, as aforesaid, had forwarded the complaint to the respondent herein with the direction to register a case and investigate the same and file a final report within one month, but admittedly the respondent had not registered the case. Sections 156 (1) and 156 (3) of the Criminal Procedure Code read as follows:-

"156. Police Officer's power to investigate cognizable case. (1) Any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a Court having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of Chapter XIII.

(2) ....

(3) Any Magistrate empowered under Section 190 may order such an investigation as above-mentioned."

6. A reading of the above said provisions makes it abundantly clear that the learned Magistrate is empowered to order investigation on a private complaint filed before him. The Magistrate can under Section 190 of the Criminal Procedure Code before taking cognizance seek for investigation by the Police under Section 156(3) of the Criminal Procedure Code. The order made under Section 156(3) of the Criminal Procedure is in the nature of a peremptory reminder or intimation to the Police to exercise their plenary powers of investigation under Section 156(1) of the Criminal Procedure Code. Such an investigation embraces the entire continuous process which begins with the collection of evidence under Section 156 and ends with a report or charge-sheet under Section 173 of the Criminal Procedure Code. When the learned Magistrate has applied his mind and ordered registration of a case and investigation thereon with a further direction to file final report within one month, it is mandatory on the part of the respondent to have first register a case. Admittedly, in this case, the respondent has not complied with the directions of the learned Magistrate and registered the case. Investigation in a criminal case commences only after registration of a first information report, instead of registering the case the respondent has conducted a preliminary enquiry which is not in consonance with the order passed by the learned Magistrate. The report submitted by the respondent after conducting a preliminary enquiry is also cannot be considered as a report filed under Section 173 of the Criminal Procedure Code. Therefore the entire action taken by the respondent is contrary to the provisions contained in Sections 156 and 157 of the Criminal Procedure Code. Therefore, the report submitted by the respondent herein should be considered to be non-est in law.

7. For the above said reasons the criminal original petition is disposed with the following directions:-

The respondent shall first register the case and then commence investigation, examine the witnesses and thereafter, whether a case is made out or not, a final report has to be filed accordingly within a period of one (1) month from the date of receipt of a copy of this order.

To

1. The Inspector of Police, B-7 Ramanathapuram Police Station

Coimbatore City, Coimbatore - 45

2. The Judicial Magistrate No.IV, Coimbatore

3. The Public Prosecutor, High Court

Madras.

Read More

11:42 PM | 0 comments

Public works department authorised to issue NOC for Ground water commercial use

The  Madras High court has issued directions based on government  G.O.Ms.No.52, Public Works (R2) Department, dated 02.03.2012 directing the general public approach the authorities of the Public Works Department for necessary approval  for commercial usage of ground water based on the category to which they fall.

The power of Revenue Department has been taken away and they no longer can take cognizance of illegal ground water trade.  Even after this judgement may revenue authorities with out any legal mandate have taken action with the help of police.

<<click to download full judgement>>

<< click to download  G.O.Ms.No.52, Public Works (R2) Department, dated 02.03.2012 >>

 

Judgement :

In the High Court of Judicature at Madras

Dated: 18.09.2013

Coram

The Honourable Mrs.JUSTICE CHITRA VENKATARAMAN

and

The Honourable Mr.JUSTICE T.S.SIVAGNANAM

Writ Appeal Nos.923 to 926 of 2009, W.P.Nos.23116 of 2006, 23896 to 23900 of 2006, 4711 of 2004 and 12375 of 2008 & Connected Miscellaneous Petitions

Writ Appeal Nos.923 to 926 of 2009:

New Tirupur Area Development Corporation Ltd.,

represented by its Authorised Signatory

having its office at 'Anurag',

No.15, Murray's Gate Road,

Alwarpet, Chennai 600 018. .... Appellant in the above W.A.s

Vs.

1. Tmt. K.Poomani .... Respondent in W.A.Nos.923 & 924/2009

1. Sri.K.Paramasivam .... Respondent in W.A.Nos.925 & 926/2009

2. The Revenue Divisional Officer,

Tiruppur, Coimbatore District.

3. The Inspector of Police,

Tiruppur Rural Police Station,

Coimbatore District.

4. The Secretary,

Government of Tamil Nadu,

Public Works Department (Groundwater),

Fort St. George, Chennai 600 009.

.... Respondents in W.A.Nos.923 to 926 of 2009

5. KRNR Aqua Industries,

rep. by its Proprietor,

Opp. Jaya Theatre,

Mallaooppampatti Village,

Ayyamperumampatti Post,

Salem 636 005.

(R4 impleaded vide order dated 28.7.2009,

R5 impleaded vide order dated 1.7.2013 &

R6 impleaded vide order dated 18.9.2013)

.... Respondents in W.A.No.923 of 2009

6. M/s.Kamala Corporation,

rep. by its Proprietor,

S.Pazhamalai, No.353, Main Road,

Pennadam 606 105

Cuddalore District.

(R4 impleaded vide order dated 28.7.2009,

R5 impleaded vide order dated 1.7.2013 &

R6 impleaded vide order dated 18.9.2013)

.... Respondents in W.A.Nos.923 & 926 of 2009

APPEALs under Clause XV of the Letters Patent against the order dated 12.1.2009 made in W.P.M.P.No.2 of 2008 in W.P.No.25352 of 2008; W.P.No.25352 of 2008; W.P.M.P.No.2 of 2008 in W.P.No.25353 of 2008; W.P.No.25353 of 2008 on the file of this Court.

Writ Petition Nos.23116, 23896 to 23900 of 2006:

Tmt.Rukmani .... Petitioner in W.P.No.23116 of 2006

N.Eswaramoorthy .... Petitioner in W.P.No.23896 of 2006

N.Manonmani .... Petitioner in W.P.No.23897 of 2006

K.Narayanasamy .... Petitioner in W.P.No.23898 of 2006

O.Subramanian .... Petitioner in W.P.No.23899 of 2006

Tiruppur Water Lorry Owner Association,

Regd. No.3/2006,

73/3, Thanner Pandal Colony,

Avinashi Road, Tiruppur 641 652

rep. by its Chairman

R.M.Vadivel

.... Petitioner in W.P.No.23900 of 2006

Vs.

1. The Commissioner,

Tiruppur Municipality,

Tiruppur.

2. The Collector,

Coimbatore District,

Coimbatore.

.... Respondents in the above W.Ps

PETITIONs under Article 226 of The Constitution of India praying for the issuance of Writ of Mandamus forbearing the respondents from obstructing the supply of water taking from the borewell of the petitioners situated in S.No.96/2B2, Ganapathypalayam Village, Palladam Taluk; S.No.518 in 19A Rakkiapalayam Village, Majara Vijayapuram, Tiruppur Taluk; S.No.75/2 in Naranapuram Village Palladam Taluk; S.No.455/3D in 19A, Rakkiapalayam, Nallur Village, Tiruppur Taluk; S.No.369/1B, Ganapathypalayam Village, Palladam Taluk, through tanker lorries for domestic and industrial purposes in and around Tiruppur and Palladam by the petitioners.

Writ Petition No.4711 of 2004:

N.Ramamurthy

.... Petitioner

Vs.

1. The District Collector,

Coimbatore District,

Coimbatore.

2. The Tahsildar,

Palladam Taluk, Palladam,

Coimbatore District.

3. The Asst. Engineer,

Tamil Nadu Electricity Board,

Kulathupalayam, Palladam Taluk,

Coimbatore District.

.... Respondents

PETITION under Article 226 of The Constitution of India praying for the issuance of Writ of Mandamus forbearing the respondents from preventing the petitioner from taking water from his borewell situated in S.F.no.54/3 of Karaipudur Village, Palladam Taluk, Coimbatore District and transporting the water through the lorry to his Banian factory viz., 'Saranya Colours' near the Tiruppur situated in Kunnagalapalaym, Chinnakarai, Arulpalayam Post, Palladam Taluk, Coimbatore District.

Writ Petition No.12375 of 2008:

Appusamy Gounder .... Petitioner

Vs.

1. The Revenue Divisional Officer,

Tiruppur, Coimbatore District,

2. The Inspector of Police,

Palladam Police Station,

Palladam Taluk,

Coimbatore District.

3. New Tirupur Area Development Corporation Ltd.,

represented by its Authorised Signatory

having its office at 'Anurag',

No.15, Murray's Gate Road,

Alwarpet, Chennai 600 018. .... Respondents

PETITION under Article 226 of The Constitution of India praying for the issuance of Writ of Mandamus forbearing the respondents from obstructing the supply of water taking from the open well of the petitioner situated in S.No.386 in 30, Karaipudur Village, Palladam Taluk, Coimbatore District for domestic and industrial purposes in and around Tiruppur and Palladam by the petitioner.

For Appellant in W.A.Nos.923 to 926 of 2009: Mr.S.Raghunathan

For R1 in W.A.Nos.923 to 926 of 2009 and for Petitioner in W.P.Nos.23116 of 2006, 23896 to 23900 of 2006, 4711 of 2004 and 12375 of 2008 : Mr.S.Doraisamy

For R2 to R4 in W.A.Nos.923 to 926 of 2009 & For Respondents in W.P.Nos.23116 of 2006 23896 to 23900 of 2006, 4711 of 2004 and 12375 of 2008 :Mr.A.L.Somayaji, Advocate General Assisted by Mr.R.Ravichandran, AGP Mr.P.Karthikeyan, G.A.

For R5 in W.A.No.923 of 2009: Mr.A.S.Rajkumar

For R6 in W.A.Nos.923 & 926 of 2009: Mrs.Hema Sampath, S.C. For M/s.K.V.Muthuvisakan

-----------------

C O M M O N J U D G M E N T

(Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.)

The present Writ Appeals are filed by New Tirupur Area Development Corporation Limited, who sought to implead itself in Writ Petitions filed by one Poomani in W.P.No.23532 of 2008 and one Paramasivam in W.P.No.25353 of 2008. The said Writ Petitions were filed before this Court for issuance of writ of mandamus forbearing the respondents therein from obstructing the supply of water taking from the open well of the petitioners through tanker lorries for domestic and drinking purposes in and around Tiruppur and Palladam by the petitioners.

2. Learned single Judge rejected the impleading petitions filed by the Writ Appellant taking the view that for deciding the issue, the presence of the impleading party was not at all necessary. Thus, the petitions to implead the Writ Appellant were dismissed. Aggrieved by this, Writ Appeal Nos.925 and 926 of 2009 are filed before this Court. Apart from this, the Writ Appellant also filed Writ Appeals as against the main order passed in W.P.Nos.25352 and 25353 of 2008, wherein learned single Judge, by order dated 12.01.2009 held that in the absence of any order issued by the Government under Section 9 of the Tamil Nadu Groundwater (Development and Management) Act 2003, neither the Revenue Authorities nor the Police Authorities got any power to obstruct the petitioner from drawing ground water from open wells and bore wells and transporting the same. Learned single Judge also pointed out that the order would not stand in the way of the Government issuing appropriate order under Section 9 of the said Act.

3. It is seen from the averment made in the affidavit filed by Paramasivam - Writ Petitioner in W.P.No.25353 of 2005 that on account of the development of knit wear industries resulting in serious set back in the agricultural activity in and around Tiruppur and leading to the shortage of manpower, the petitioner and other similarly placed persons had started selling water to the dyeing factories. However, with the formation of New Tiruppur Area Development Corporation Limited, wherein a Scheme was introduced for drawing water from Bhavani river to Tiruppur for the industrial purpose only, the petitioner felt that his business got offended. Apart from that, the introduction of the Tamil Nadu Groundwater (Development and Management) Act, 2003 to regulate the development and management of groundwater, which was yet to be notified, was further seen as an obstruction to the business. He contended that for sinking a well or bore well, no permission was necessary from the authorities. However, on instruction from the Revenue Divisional Officer, the Inspector of Police started obstructing the lorries taking water from the well and supplying the same to the dyeing factories. Hence, the petitioner approached this Court for a writ of mandamus to forbear the respondents from obstructing the supply of water taken from the open well of the petitioner.

4. In the background of the said contention and with the New Tiruppur Area Development Corporation Limited not being a main party in the Writ Petition, the present appellant filed a petition in M.P.No.2 of 2008 contending that the impleading party was created as a special purpose vehicle under the support of Government of Tamil Nadu to implement the project on drawing water from Bhavani River to Tiruppur, which would not only be beneficial for the public at large and to the industries located in and around Tiruppur but also for the supply of drinking water to the Tiruppur township as well as to the villages in and around Tiruppur. Since the project was implemented at enormous cost, the petitioner thought it fit to move the Court for impleading itself in the Writ Petitions. The appellant contended that on account of the use of groundwater for industrial purpose, the purpose for which the impleading party was constituted would be totally defeated; hence, the appellant had to be impleaded as party and heard in the Writ Petition.

5. As already pointed out, learned single Judge rejected the impleading petitions. The appellant filed Writ Appeals against this order and as well as against the order in the Writ Petitions stating that the Authorities had no jurisdiction to obstruct anybody from drawing water. It is seen further that this Court passed an interim order on 31.01.2011 in the Writ Appeals, wherein the Division Bench of this Court directed the State Government not to allow any person to draw and sell the groundwater until the Tamil Nadu Groundwater (Development and Management) Act, 2013 was notified. This led to the impleading of the sixth respondent M/s.Kamala Corporation in the Writ Appeals. Since one of the contentions raised by the Writ Petitioner and other impleading party related to the non-notification of the Tamil Nadu Groundwater (Development and Management) Act, 2003 and hence on the jurisdiction of the Authorities to obstruct anyone from drawing water from the wells to trade therein, we requested the learned Advocate General to appear in this matter to get proper instructions. Accordingly, learned Advocate General has placed before this Court the copy of the Tamil Nadu Ordinance No.4 of 2013 dated 14th September, 2013, where under, the Tamil Nadu Groundwater (Development and Management) Act, 2003 is now sought to be repealed. The ordinance is called as the Tamil Nadu Groundwater (Development and Management) Repeal Ordinance, 2013. The Explanatory statement reads as under:

"The Tamil Nadu Groundwater (Development and Management) Act, 2003 was enacted taking into consideration the circumstances prevailed in the year 2003. However, in the past 10 years, the following factors have drastically changed the scenario:-

(i) Certain definitions like marginal and small farmers, etc., have not been clearly defined to carry out the purport of the Act preventing groundwater drawal for Agricultural purposes and thereby causing hardship to farmers.

(ii) The people at large are to be ensured minimum potable water from groundwater sources when other sources are not sufficient especially in a drought affected year.

(iii) The provisions in the Act require that all individuals should be registered with the Groundwater Authority and licence should be obtained by all persons having over 1 Horse Power motor. If the Act in the present form was implemented and groundwater was not allowed to be tapped, it would have led to a public outcry.

(iv) Since 2003, the Municipal Corporations like Chennai, Coimbatore, Madurai, etc., have expanded, Piped water supply is not adequately available in the extended portions. Therefore, for supply to households by the Corporations and Private lorries, tapping of groundwater is being resorted to. As per the Act, a permit has to be obtained for transport of groundwater by means of lorry, trailer etc., from the notified areas for any purpose. This would result in unnecessary difficulties to the general public as each and every lorry or trailer in the State has to obtain a permit from the State Groundwater Authority even for supply of drinking water causing difficulties to the general public.

(v) The manner in which the drawal of groundwater has to be regulated for construction of multistoried buildings and for commercial exploitation of water, where water is used as raw material has not been addressed in the Act."

6. Paragraph No.2 of the Explanatory Statement further states that the Tamil Nadu Groundwater (Development and Management) Act, 2003 has to be comprehensively changed taking into account the present demand, need and supply. Consequently, while repealing the Tamil Nadu Groundwater (Development and Management) Act, 2003, the note further expressed its decision to regulate the drawing of water on commercial basis.

7. Learned senior counsel appearing for the impleading party viz., M/s.Kamala Corporation in Writ Appeal Nos.923 and 926 of 2009 placed before us G.O.(Ms) No.52, Public Works (R2) Department dated 02.03.2012. The letter written by the Chief Engineer, State Ground and Surface Water Resources Data Centre, Tharamani to the Secretary to Government dated 02.07.2013 points out that it is an executive order passed in the interests of the State, for equitable availability of groundwater to every one and all the water connecting Departments were consulted on this subject.

8. On a reading of G.O.Ms.No.52, Public Works (R2) Department, dated 02.03.2012, we find that the Chief Engineer, State Ground and Surface Water Resources Data Centre, Tharamani had submitted certain proposals to the Government for notifying blocks based on the categorization made as on March, 2009 for all the Districts in Tamil Nadu on the exploitation of groundwater. Based on the recommendation, the Government issued G.O.Ms.No.52, Public Works (R2) Department dated 02.03.2012 approving the categorization of over exploited blocks; critical blocks; semi critical blocks; safe blocks and saline/poor quality blocks. Thus, all the over exploited blocks and critical blocks are notified as 'A' category stage of groundwater extraction is 90% and above and all the semi critical and safe blocks are notified as 'B' category stage of groundwater extraction is below 89%. The Government further notified in paragraph Nos.9 to 12 as follows:

"9. The Government further direct that no schemes should be formulated in over exploited and critical blocks Notified as A category blocks. In Semi Critical and Safe blocks Notified as B category blocks, all the schemes should be formulated through State Ground and Surface Water Resources Data Centre of Water Resources Department and the Chief Engineer / State Ground and Surface Water Resources Data Centre will issue No Objection Certificate for Ground Water Clearance.

10. The Government further direct to exclude the Ground Water drawal for domestic purpose by individual household; domestic infrastructure project (Housing); Governments Drinking Water Supply Schemes and; non water based industries, (i.e. the industries which do not require and use water, either as raw material or for other processing). The Chief Engineer, State Ground and Surface Water Resources Data Centre will permit for domestic use of water by this non water based industries by issuing No Objection Certificate based on the hydro geological conditions. The list of non water based industries will be issued by the Industries Department of Government of Tamil Nadu separately.

11. The Government further direct that appropriate rain water harvesting and Artificial Recharge Schemes shall be carried out in the catefories viz. Over exploited, Critical, Semi Critical and Safe blocks of Tamil Nadu. While carrying out the above schemes, priority shall be given to marginal quality and bad quality areas so as to avoid further deterioration.

12. The Government further direct that all the schemes and proposals based on Ground Water will have to be adhered the Government orders and conditions as detailed in the Annexure II of this order."

9. Thus, in the background of the Government Order, in exercise of executive power and which has nothing to do with the passing of the repealing of the Act, we feel, the proper course herein would be to set aside the order of the learned single Judge in the Writ Petitions as well as the order rejecting the impleading petitions and direct the parties to approach the authorities of the Public Works Department for necessary approval based on the category to which they fall. Accordingly, the order dated 12.01.2009 made in W.P.Nos.25352 and 25353 of 2008 and M.P.Nos.2 and 2 of 2008 stands set aside. We make it clear that even with the repealing of the Act, G.O.Ms.No.52 Public Works (R2) Department dated 02.03.2012 will govern the interests of the parties and the State in the matter of regulating the business of the Writ Appellant herein.

10. In view of the order passed setting aside the orders of the learned single Judge passed in the Miscellaneous Petitions as well as in the Writ Petitions, all the Writ Appeals and the Writ Petitions are disposed of in terms of what we have stated in the preceding paragraphs. No costs. Consequently, connected Miscellaneous Petitions are closed.

Index :Yes (C.V.,J) (T.S.S.,J)

NOSJSS law journal. An open source judgement search system

Read More

8:21 AM | 1 comments

Supreme court Directions in NI Act / Cheque bounce case

Metropolitan Magistrate/Judicial Magistrate  (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of summons.

(2) MM/JM should adopt a pragmatic and realistic approach while issuing summons. Summons must be properly addressed and sent by post as well as by e-mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date be fixed. If the summons is received back un-served, immediate follow up action be taken.

(3) Court may indicate in the summon that if the accused makes an application for compounding of offences at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the earliest.

(4) Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial and ask him to take notice under Section 251Cr.P.C. to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re-calling a witness for cross-examination.

(5) The Court concerned must ensure that examination-in-chief, cross-examination and re- examination of the complainant must be conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for cross-examination as and when there is direction to this effect by the Court.

Case details : WRIT PETITION (CIVIL) NO.18 OF 2013 Indian Bank Association and others ... Versus Union of India and others

Read More

7:13 AM | 0 comments

Vodafone judgement

The recent supreme court judgement in Vodafone  case has laid down some important guidelines to decide tax evasion and colourable device adopted in tax evasion. The judgement has been praised and applauded by many imminent lawyers  <<<read more on analysis of  judgement>>>

Read More

10:41 PM | 0 comments

Purchase of peace cannot escape the penalty under section 217(1)(c) of the Income Tax

Senthamarai Constructions v CIT

High Court of Madras

ITA No. 178 to 180 of 2005 and TCMP Nos. 138 to 140 of 2005

Decided on: 20 June 2011

Judgment

Chitra Venkataraman, J

1. These three Tax Case Appeals are filed by the assessee as against the order of the Tribunal relating to the assessment years 1990-91, 1991-92 and 1992-93 raising the following questions of law:

“1. Whether in the facts and circumstances of the case the Tribunal was right in holding that the revised return filed by the asessee to purchase peace and avoid litigation would amount to concealment in the instant case attracting penalty under section 217(1)(c) of the Income Tax?

2.(a) Whether on the facts and in the circumstances of the case the Tribunal is right in law in holding that the revised return filed by the assessee would constitute a valid, legal and proper basis for levy of penalty under section 271(1)(c) of the Act, particularly since the assessment was based only on the said return and not on any evidence or material on record, justifying the assessment of the income, in respect of which the penalty was levied.

(b) Whether on the facts and in the circumstances of the case the Tribunal was right in its view that a mere admission by the assessee establishes concealment, Authority regarding the discharge of the burden of proof in respect of the Explanation to section 271 or any specific finding in this regard in the order of penalty?

(c) Whether on the facts and in the circumstances of the case, the Tribunal is right in confirming the levy of penalty under section 271(1)(c) of the Act?”

2. It is seen from the facts projected herein that the assessee is a registered firm consisting of three partners. In respect of the assessment year 1990-91, the assessee filed its return originally admitting a total income of Rs.1,45,830/-; for the assessment year 1991-92 Rs.1,56,189/- and for the assessment year 1992-93, the assessee did not file any return. There was a search in the premises of one R.Sonai, who happens to be the Managing Partner of the assessee company, on 27.3.1992. The search resulted in the seizure of bank deposits and jewellery. The Managing Partner R.Sonai admitted that the unexplained investments were out of the undisclosed income of the firm. Following this, a revised return was filed in respect of the first two assessment years and for the third year, the firm filed a return admitting the total income. The assessee offered the income, which was stated to be undisclosed income of the firm to be distributed among the above said three assessment years. After completing the assessment, proceedings were initiated to levy penalty under section 271(1)(c) of the Income Tax Act. The assessee stated that it offered to agree the  income only to purchase peace from the Department. As such, there was no wilful concealment at all warranting levy of penalty under section 271(1)(c) of the Income Tax Act. Taking the view that the assessee had admitted the income as undisclosed and it was made use to make undisclosed investments by the Managing Partner, the Assessing Authority levied minimum penalty of Rs.60,000/- for the assessment year 1990-91 as against the maximum penalty leviable at Rs.1,52,500/-; Rs.1,00,000/- for the assessment year 1991-92 as against the maximum penalty of Rs.2,70,000/- and for the last assessment year 1992-93 Rs.1,75,000/- as against the maximum penalty of Rs.4,74,708/-.

3. The assessee preferred appeals before the Commissioner of Income Tax (Appeals), who agreed with the view of the assessee and by following the decision of the Supreme Court in the case of Sir Sadilal Sugar and General Mills Ltd. and another v CIT reported in 168 ITR 705 (SC), held that when the assessee had offered the income voluntarily, penalty could not be levied on the assessee. Thus, in respect of all the three assessment years, the Commissioner of Income Tax (Appeals) cancelled the levy of penalty. As against this order, the Revenue went on appeal before the Income Tax Appellate Tribunal.

4. It is seen from the order of the Tribunal that by a common order, it considered the claim of the assessee that there was no wilfulness as regards the offering of an additional income at the hands of the assessee; that the same was offered only to purchase peace and hence, in the circumstances, the assessee contended that the question of levy of penalty did not arise. The Tribunal, however, rejected the claim of the assessee by following the decision of this Court reported in (2000) 244 ITR 510 (P.Govindaswamy v CIT), where under similar circumstances following the decision of the Supreme Court in the case of K.P.Madhusudhanan v CIT reported in (2001) 251 ITR 99, this Court confirmed the levy of penalty. The Tribunal held that in view of the introduction of Explanation to section 271(1)(c) of the Income Tax Act, the reliance placed by the assessee as regards the decision reported in (2001) 251 ITR 9 (CIT V. Suresh Chandra Mittal) is no longer sustainable in law.

5. The Tribunal pointed out that after the decision of the Supreme Court in the case of K.P.Madhusudhanan v CIT reported in (2001) 251 ITR 99 and with the introduction of Explanation to section 271(1)(c) of the Income Tax Act, the decision reported in 168 ITR 705 (SC) (Sir Sadilal Sugar and General Mills Ltd. and another v CIT), has no relevance to the case on hand. Thus the Tribunal allowed the appeals filed by the Revenue, thereby restored the order of penalty made by the Assessing Officer. Aggrieved by the same, the present appeals have been filed by the assessee.

6. Learned counsel appearing for the assessee pointed out that when the assessee had voluntarily offered the income of the firm, in the absence of any wilfulness in not disclosing the same, the question of levy of penalty did not arise. She pointed out that there was no concealment as such as had been viewed by the assessing authority and as confirmed by the Tribunal.

7. Per contra, learned standing counsel appearing for the Revenue brought to our attention the decisions of this Court reported in 283 ITR 254 (M.S.Mohammed Marzook (Late) and another v Income Tax Officer); 292 ITR 585 (M.Shahul Hameed Batcha v Income Tax Officer) and 283 ITR 230 (M.Sajjanraj Nahar v Commissioner of Income Tax), to which one of us was a party, wherein this Court had elaborately considered the case law on the subject and pointed out to the decision in the case of K.P.Madhusudhanan v CIT reported in (2001) 251 ITR 99, rendered after the introduction of Explanation to Section 271(1)(c) of the Income Tax Act and this Court held that when the concealment of the income was with reference to the original return and there was no explanation at all as regards the non-disclosure, the mere claim that the income was offered in the revised return, as a matter of purchasing peace, by itself, would not exonerate the assessee from the culpability. Having regard to the fact that the assessee had not disclosed any reason for the omission in the original return and that the revised return was filed only after the search, this Court held that penalty was leviable.

8. The facts herein are no different from the above said decision. As seen from the narration in the order of the Tribunal as well as that of the other authorities, the assessee filed the revised return in respect of the first two assessment years and filed the return for the first time for the last of the assessment year only after search in the Managing Partner’s residence, wherein undisclosed cash and investments were found. The conduct of the assessee, hence, assumes significance in coming forward to disclose the income of the firm, which are relatable to the investments made by the Managing Partner.

9. As rightly pointed out by the learned standing counsel appearing for the Revenue that when there is no satisfactory explanation as regards its non-disclosure of the income in the original return and that the undisclosed income came to be shown only in the revised return, rightly the Tribunal applied the law as declared by the Apex Court and by this Court.

10. In the circumstances, we do not find any justification to cancel the penalty levied by the Assessing Officer, which is admittedly a minimum penalty. Accordingly, all the appeals fail and the same are dismissed. No costs. Consequently, T.C.M.P.Nos.138 to 140 of 2005 are also dismissed.

Read More

11:00 PM | 0 comments

Embossing unique vehicle registration numbers on already manufactured number plates amounts to manufacture

ORDER NO.  AAR(CX) R01-03/2004 dated 23-02-2004

APPLICATION No. AAR/44/101/2003

Name and address of the applicant 
M/s. Shonkh Technologies International Ltd.,
NIRMAL, 6 Floor,
Nariman Point,
Mumbai-400 021

Present for the Applicant 
Mr. V. Sridharan,
Advocate

Present for the Department
Mr. Sanjeev Sachdeva,
Addl. Director General,
Directorate General of Central
Excise Intelligence, New Delhi .
Mr. S.K.Sawhney,
Addl. Director,
Directorate Genera! of Central  Excise Intelligence,
New Delhi .

ORDER
(By Mr. Justice Syed Shah Mohammed Quadri )

1 . 
This is an application under section 23C of the Central Excise Act, 1944 (for short ‘the Act’) seeking an advance ruling on the question, “whether the process of embossing unique vehicle registration numbers on already manufactured number plates amounts to manufacture.”

2.
The applicant is a resident company registered under the Companies Act, 1956 and proposes to set up a joint venture in India in collaboration with a non-resident, viz. M/s. H.R. International, an independent company registered in Belgium. The applicant would be purchasing high security vehicle registration number plates from manufacturers. It would then manufacture aluminium sheets in coil form which would be flattened and laminated with retro reflective sheets.Thereafter chrome hologram shall be stamped with the hologram hot stamping machine. Thus, various sizes of licence plates would be manufactured; each plate will be having a unique serial number braided on each plate with a laser braiding machine which is a security feature. The embossed plates will then be hot stamped with a foil pre-printed with the word “IND” and laminated plate would be fitted to the vehicles. The plates will be stamped “IND” to comply with the mandatory requirement of the Government directive.  The special feature of these plates is that once such a plate is fitted to a car, it cannot be removed. The applicant submits that the plates would be classifiable under Chapter heading 83.10 of the Central Excise Tariff.

3.
A preliminary objection has been raised by the Commissioner as to the maintainability  of the application on the ground that the question on  which the advance ruling is sought, does not fall under section 23C of the Central Excise Act, 1944. The germane point which arises for consideration is whether the afore-mentioned process would amount to manufacture and the goods thus manufactured fall under Chapter 83.10 of the Central Excise Tariff.      Having perused the application, the material on record and having considered the provisions of sub-section (2) of Section 23C of the Act, we are, prima facie, of the view that the application is liable to be rejected on the ground that the question on which the advance ruling is sought, does not fall under sub-section (2) of Section 23C of the Act. A notice to that effect shall be issued to the applicant under sub-section (2) of Section 23D of the Act.

4.
Mr.V. Sridharan, Advocate, appearing for the applicant, takes notice on the said question as to why the application should not be rejected and submits that he waives issuance of a written notice and would argue the point regarding the maintainability of the application. Heard also the learned Departmental Representative.

5.
It would be useful to read Section 23C of the Act here.

Section 23C. Application for advance ruling —

(1)
An applicant desirous of obtaining an advance ruling under this Chapter may make an application    in such form and in such manner as may be prescribed, stating the   question on which the advance ruling is sought.

(2)
The question on which the advance ruling is sought shall be in respect of, -

(a)
classification of any goods under the Central Excise Tariff  Act, 1985 (5 of 1986);

(b)
applicability of notification issued under sub-  section (1) of  section 5A  having a bearing on the  rate of duty;

(c)
the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act;

(d)
notification issued, in respect of duties of excise   under this Act, the  Central Excise Tariff Act, 1985 (5 of 1986) and any duty chargeable   under any  other law for the time being in force in the same manner as   duty of excise leviable under this Act;

(e)
admissibility of credit of excise duty paid or deemed to have been paid on the goods used in or in   relation to the manufacture of the excisable goods.

Sub-section (2) quoted above, enumerates 5 heads which may form subject matter of a question to seek an advance ruling by the Authority.

6.
The learned counsel, however, submits that the definition of the   advance   ruling read along with clause (a) of Section 23 C (2) would show that the application cannot be rejected on the ground that manufacture is not one of the heads in respect of which advance ruling could be sought. The learned Departmental Representative submits that an advance ruling can be sought only in regard to the liability to pay duty in relation to an activity proposed to be undertaken by the applicant

7.
Clause (b) of Section 23A defines “advance rulings” thus:

“(b) “
advance ruling” means the determination, by the authority of a  question of law or fact specified in the application regarding the liability to   pay duty in relation to an activity proposed to be undertaken, by the applicant;”

The expression “advance ruling” means the determination of a question of law or fact regarding the liability to pay duty in relation to an activity proposed to be undertaken by the applicant. The term ‘activity’ is defined in clause (a) of section 23A to mean production or manufacture of goods. The expression does not postulate determination of a question as to whether the process leading to production of excisable goods amounts to activity or manufacture within the meaning of the Act. In our considered view, the definition of the said expression which, cannot be read in isolation, has to be harmoniously interpreted with the provisions of sub- section (2) of section 23C which specifically enumerates the heads on which the advance ruling can be sought. The determination of the proposed question should therefore be relatable to one of the enumerated heads. Undisputedly, clause (a) of section 23C is regarding “classification of any goods under the Central Excise Tariff Act, 1985.” The stage of  classification arises only after the process of manufacture of goods is over. The classification in clause (a) can by no stretch of imagination take in its fold the process of manufacture as such. If that be so, as the advance ruling is sought on the question as to whether process amounts to manufacture, the question does not fall within any of the heads under sub section (2) of section 23C. The objection has to be sustained. The  petition is accordingly rejected.

Sd/
(Dr. K.N. CHATURVEDI)
MEMBER
Sd/ 
(SOMNATH PAL)
MEMBER
Sd/
(JUSTICE S.S.M.QUADRI)
CHAIRMAN

NEW DELHI
DATED: 23.2.2004

F.No.AAR/44/1 01/2003                                                                     

Read More

10:17 PM | 0 comments