BABITA LILA & ORS.-THE APPELLANTS, WHO WERE HUSBAND and wife, are residents of both Bhopal and Aurangabad. The search operation was conducted by the authorities under the Income Tax Act, 1961 (for short, hereinafter referred to as “the Act”) on 28.10.2010 at both the residences of the appellants, in course whereof their statements were recorded on oath under Section 131 of the Act. On a query made by the authorities, it is alleged that they made false statements denying of having any locker either in individual names or jointly in any bank. It later transpired that they did have a safe deposit locker with the Axis Bank (formerly known as UTI Bank) at Aurangabad which they had also operated on 30.10.2010. The search at Aurangabad was conducted by the Income Tax Officer, Nashik and Income Tax Officer, Dhule and the statements of the appellants were also recorded at Aurangabad.
Based on the revelation that the appellants, on the date of the search, did have one locker as aforementioned and that their statements to the contrary were false and misleading, a complaint was filed as afore-stated under the above-mentioned sections of the Indian Penal Code by the Deputy Director of Income Tax (Investigation)-I, Bhopal (M.P.) on 30.5.2011 in the court of the Chief Judicial Magistrate, Bhopal, (M.P.) and the same was registered as R.T. No. 5171 of 2011.
The Trial Court on 9.6.2011, took note of the offences imputed and issued process against the appellants. In doing so, the Trial Court, amongst others, noted that the search proceedings undertaken by the authorities under Section 132 of the Act were deemed to be judicial proceedings in terms of Section 136 and in course whereof, as alleged, the appellants had made false statements with regard to their locker and that on the basis of the documents and evidence produced on behalf of the complainant, sufficient grounds had been made out against them to proceed under Sections 191,193, 200 IPC.
The appellants impugned this order of the Trial Court before the High Court under Section 482 Cr.P.C. (for short hereinafter to be referred to as “the Code”) and sought annulment thereof primarily on the ground that the search operations having been undertaken by the I.T.Os. of Nashik and Dhule, the complaint could not have been lodged by the Deputy Director of Income Tax (Investigation)-I, Bhopal (M.P.) who was not the appellate authority in terms of Section 195(4) of the Code and further no part of the alleged offence having been committed within the territorial limits of the Court of the Chief Judicial Magistrate, Bhopal, it had no jurisdiction to either entertain the complaint or take cognizance of the accusations. By the order impeached herein, the High Court has declined to interfere on either of these contentions.
Against the judgement of the High Court special leave petition was filed by the appellants. The Supreme Court accepted the appeal, quashed the impugned proceedings and the orders. The respondents were however given liberty to take appropriate steps in the matter as available in law, if so advice.
The operative part of the judgment reads as under:-
As enumerated under Section 116 of Chapter XIII of the Act, Deputy Director of Income tax/Deputy Commissioner of Income Tax/Deputy Commissioner of Income Tax (Appeals) amongst others are the designated income tax authorities. Section 1 18 authorises the Central Boar d of Dir ect Taxes constituted under the Central Board of Revenue Act, 1963 (hereinafter referred to as “the Board”) to direct by notification in the official gazette that any income tax authority or authorities specified therein would be subordinate to such other income tax authority or authorities as may be specified in such notification. In course of the arguments, such a notification as contemplated has been laid before this Court and attention has been drawn to clause (e) thereof.
As would be evident from the above extract, it deals exclusively with the inter se subordination of the authorities mentioned therein so much so that Income Tax Officers have been made subordinate to Assistant Directors or Assistant Commissioners within whose jurisdiction they perform their functions or other income tax authorities under whom they are appointed to work and to any other income tax authority to whom the Assistant Director or the Assistant Commissioner as the case may be or other income tax authority is subordinate. Noticeably this clause does not spell out any territorial barriers but logically warrant some order/notification to activate the functional mechanism in order to address the institutional exigencies.
The notification issued under Section 118 of the Act cannot be conceded an overriding effect over the scheme of the statute designating the appellate forums more particularly in absence of any order, circular, notification of any authority thereunder to that effect. The Deputy Director of Income Tax for that matter, as the framework of the Act would reveal, has not been acknowledged to be the appellate forum from any order or the decision of the assessing officer/ I.T.O., notwithstanding several other provisions with regard to conferment of various powers and assignments of duties on the said office. In the teeth of such mindful and unequivocal module of the Act, recognition of the Deputy Director of Income Tax to be a forum to whom an appeal would ordinarily lie from any decision or action of the assessing officer/ income tax officer would not only be inferential but would also amount to unwarranted judicial legislation by extrinsic additions and doing violence to the language of the law framed. On the contrary, acceptance of the Deputy Commissioner (Appeals) as the forum to which an appeal would ordinarily lie from an order/decision of the assessing officer/ I.T.O., would neither be inconsistent with nor repugnant to any other provision of the Act and certainly not incompatible with the legislative scheme thereof.
Neither the hierarchy of the income tax authorities as listed in Section 116 of the Act nor in the notification issued under Section 118 thereof, nor their duties, functions, jurisdictions as prescribed by the cognate provisions alluded heretobefore, permit a deduction that in the scheme of the legislation, the Deputy Director of Income Tax has been conceived also to be an appellate forum to which appeals from the orders/ decisions of the I.T.Os./assessing officers would ordinarily lie within the meaning of Section 195(4) of the Code. The Deputy Director of Income Tax (Investigation)-I Bhopal, (M.P.), in our unhesitant opinion, therefore cannot be construed to be an authority to whom appeal would ordinarily lie from the decisions/orders of the I.T.Os. involved in the search proceedings in the case in hand so as to empower him to lodge the complaint in view of the restrictive preconditions imposed by Section 195 of the Code. The complaint filed by the Deputy Director of Income Tax, (Investigation)-I, Bhopal (M.P.), thus on an overall analysis of the facts of the case and the law involved has to be held as incompetent.
Acceptance of the Deputy Commissioner (Appeals) as the forum to which an appeal would ordinarily lie from an order/decision of the assessing officer/ I.T.O., would neither be inconsistent with nor repugnant to any other provision of the Act and certainly not incompatible with the legislative scheme thereof. Mere silence in Section 246 of the Act about any decision or order other than those enumerated in sub-section (1) thereof as appealable/ decision to the Deputy Commissioner (Appeals), does not ipso fact spell legislative prohibition in that regard and in our comprehension instead signifies an affirmative dispensation.
The Parliament has unmistakably designated the Deputy Commissioner (Appeals) to be the appellate forum from the orders as enumerated under Section 246(1) of the Act. This however, in our view, as observed hereinabove does not detract from the recognition of this authority to be the appellate forum before whom appeals from the decisions of an assessing officer or of an officer of the same rank thereto would generally and ordinarily lie even in the contingencies not referred to in particular in sub section 1 of Section 246.
The judicial formulations on the theme is so consistent and absolute in terms that no further dilation is essential. The scheme of the Act and the legislative design being unreservedly patent in the instant case, that it is plainly impermissible to acknowledge the Deputy Director of Income Tax to be the forum to which an appeal would ordinarily lie from an order/decision of an assessing officer/ I.T.O. The present is thus not a case where this Court can premise that the statute suffers from casus omissus so as to recognise the Deputy Director of Income Tax as such an appellate forum.
In this persuasive backdrop, the conferment of appellate jurisdiction on the Deputy Commissioner of Appeals from the orders/decisions of the assessing officers as is apparent from Section 246 of the Act, has to be construed as a conscious statutory mandate. This is more so as noticed hereinabove, the Deputy Director of Income Tax, Deputy Commissioner of Income Tax and the Deputy Commissioner of Income Tax (Appeals) have been otherwise placed at par in the list of income tax authorities provided by Section 116 of the Act. The omission to either vest the Deputy Director of Income Tax with the appellate powers or to contemplate the said post to be an appellate forum from the orders/decisions of the assessing officers cannot thus be accidental or unintended. The relevant provisions of the Act pertaining to the powers, duties and jurisdiction of the various income tax authorities do not leave any room for doubt, in our estimate, to conclude otherwise. True it is, that the Deputy Commissioner of Appeals has been construed in terms of Section 246 of the Act to be an appellate forum from the orders as enumerated in sub-section (1) thereof, but in absence of any provision in the statute nominating the Deputy Director of Income Tax to be an appellate forum for any order/decision of the assessing officer/ I.T.O., the inevitable conclusion is that the said authority i.e. Deputy Director of Income Tax cannot be construed to be one before whom an appeal from any order/decision of any income tax authority, lower in rank would ordinarily lie.
Both these decisions on territorial jurisdiction, to start with having regard to the facts involved herein are distinguishable and are of no avail to the appellants. As hereinbefore stated, the appellants as assesses, had residences both at Bhopal and Aurangabad and had been submitting their income tax returns at Bhopal. The search operations were conducted simultaneously both at Bhopal and Aurangabad in course whereof allegedly the appellants, in spite of queries made, did not disclose that they in fact did hold a locker located at Aurangabad. They in fact denied to hold any locker, either individually or jointly. The locker, eventually located, though at Aurangabad, has a perceptible co-relation or nexus with the subject matter of assessment and thus the returns filed by the appellants at Bhopal which in turn were within the purview of the search operations. The search conducted simultaneously at Bhopal and Aurangabad has to be construed as a single composite expedition with a common mission. Having regard to the overall facts and the accusation of false statement made about the existence of the locker in such a joint drill, it cannot be deduced that in the singular facts and circumstances, no part of the offence alleged had been committed within the jurisdictional limits of the Chief Judicial Magistrate, Bhopal.
Be that as it may, on a cumulative reading of Sections 177, 178 and 179 of the Code in particular and the inbuilt flexibility discernible in the latter two provisions, we are of the comprehension that in the attendant facts and circumstances of the case where to repeat, a single and combine search operation had been undertaken simultaneously both at Bhopal and Aurangabad for the same purpose, the alleged offence can be tried by courts otherwise competent at both the aforementioned places. To confine the jurisdiction within the territorial limits to the court at Aurangabad would amount, in our view , to impermissible and illogical truncation of the ambit of Sections 178 and 179 of the Code. The objection with regard to the competence of the Court of the Chief Judicial Magistrate, Bhopal is hereby rejected.
Authorities relied upon : 2015 (9) SCC 209, 1964 (6) SCR 700, 1956 SCR 125, 1978 (1)All ER 948 (HL).
Reference : Supreme Court. Babita Lila & Another v. Union of India, Criminal Appeal No.824 of 2016 [Arising out of SLP (CRL) No. 1474 of 2012]