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December 24, 2022

A circular prohibiting prosecution after the age of 70 does not allow an escape path for the unlawfully dead

A circular prohibiting prosecution after the age of 70 does not allow an escape path for the unlawfully dead

Facts and issue of the case

Income Tax Office has filed a complaint case under the provisions of section 276C (1)/ 276D and 277 of the Income Tax Act against the petitioner alleging opening of an undisclosed account in HSBC Bank, London on 20.08.19 by the petitioner and having the maximum credit balance USD 575,010, equivalent to Rs.2,53,00,440/- at the exchange rate of Rs.44 per USD for the Year 2006-07. Thereafter, a search and seizure was carried out at petitioners residence and business premises under Section 132 of the Act on 23.08.2011 and notice under Section 153-A of the Income Tax Act, 1961 dated 26.04.2012 was issued to him for filing his Income Tax Return. In the income tax return income of Rs.6,47,19,401/- was shown, whereas according to respondents the peak balance in the HSBC account was offered in the return of assessment year 2007-08 by the petitioner. It is further alleged that the petitioner filed a revised income tax statement on 16.05.2015 for the assessment year declaring balance in HSBC bank, London of USD 575,010 equivalent to INR 2,53,00,44/- as his income. Petitioner was served with Notice under Section 274d of the Income Tax Act and also a penalty of Rs.10,000/- under Section 271(1) (b) of the Act was levied upon him

On 27.02.2015, Assessment Order under Section 153A of the Income Tax Act, 1961 was framed and vide order dated 30.04.2015 penalty of Rs.90,45,966 under Section 271(1) (c) of the Income Tax Act, 1961 was levied upon the petitioner for not disclosing his true income. The learned trial court vide order dated 18.01.2016 took cognizance of the offence alleged. Pursuant to receipt of summons, petitioner appeared before the learned trial court and was admitted to bail on furnishing of surety. The petitioner, on the ground of his old age being 80 years and medical conditions, sought exemption from personal appearance, which was granted to him. Petitioner also made an application under Section 245(2) Cr.P.C. before the learned trial court for dropping of the proceedings on the ground of his age and on the basis of Circular/Instruction No. 5051 dated 07.02.1991, however, the same was dismissed.

Aggrived by the decision the petitioner filed appeal to High Court

Observation of court

The grounds urged by the petitioner, who claims to an Architect by profession and 80 years of age, are that detailed response to the Show Cause Notices issued by the department were sent and the beneficial circulars were also brought to their knowledge, in particular Instruction No. 5051 dated 07.02.1991. However, the Commissioner of Income Tax did not consider the replies filed by the petitioner and initiated proceedings under Section 276-C (l)/276-D and 277 of the Income-tax Act, 1961 for Assessment Year 2006-07; in the year 14.01.2016 for allegedly evading tax for the assessment year 2006-07.

 During the course of hearing, learned Senior Counsel appearing on behalf of petitioner urged that as on 31.03.2006, petitioner was already 70 years of age and in terms of Instruction No. 5051 dated 07.02.1991; prosecution cannot be initiated against a person who has attained the age of 70 years at the time of commission of the offence. Reliance was placed upon decision in Arun Kumar Bhatia & Anr. Vs. Vijay Kumar & Ors. 2011 X AD (Delhi) 347 wherein on a complaint under Section 276 CC of the Income Tax Act, 1961, this Court while relying upon Circular dated 07/02/1991 issued by Central Board of Direct Taxes and also the fact that petitioner therein was above 70 years of age, were discharged from all charges. However, the learned trial court while ignoring the aforesaid position of law, rejected petitioner‟s application for discharge on 24.11.2016. Reliance was also placed upon decision in Union of India and Others Vs. Arviva Industries India Limited And Others (2014) 3 SCC 159 wherein the Hon‟ble Supreme Court has held that the Circulars issued by the department are binding on them and stand contrary thereto cannot be taken.

Learned Senior Counsel for petitioner submitted that in order to buy peace in his old age, petitioner had already paid all the taxes and interest on the assessment year 2006-07 on the basis of documents provided to him during search and proceedings on 16.05.2012, but the respondents have taken a stand that despite payments of taxes, petitioner will not be absolved of the offences committed by him. It was submitted by petitioner‟s counsel that there was no provision for the assessee to disclose foreign account till the year 2013 and still petitioner has paid the taxes which substantiates that the default on petitioner‟s part was not intentional and deliberate in attempt to evade the tax. Lastly, learned counsel for petitioner submitted that the impugned complaint deserves to be quashed and this petition deserves to be allowed.

learned Senior Standing Counsel appearing on behalf of respondents submitted that on information received from Government of France in the year 2011 under Double Tax Avoidance Convention with India, it came to notice that petitioner had opened an account in HSBC, London on 20.08.1991. Accordingly a search and seizure action under Section 132 of the Act was carried on 23.08.2011. Petitioner‟s statement under Section 132(4) of the assessee was recorded on 23/24.08.2011, wherein though petitioner at the first instance to the question No. 13 denied having any foreign account but thereafter, conceded in question No.45 that he had an account in UK. It was submitted that despite issuance of Notice dated 26.04.2012 under Section 153A of the Act, petitioner in his income tax return disclosed his income as Rs.6,47,19,409/-, as was declared in his original income tax return on 31.10.2006. Thereafter, show cause notices were issued to the petitioner. Subsequently, petitioner filed a revised income tax return on 16.02.2015 and declared his additional income as Rs.2,53,00440/- under the head „income from other sources‟ i.e. the maximum credit balance in the undisclosed bank account maintained in HSBC account. Correspondingly, the income disclosed in return of assessment year 2007-08 was reduced. It was submitted that the petitioner, therefore, tried to evade tax on account of undisclosed foreign account. Learned Senior Standing Counsel for respondent further submitted that the petitioner/assessee had succeeded in evading tax on deposit and transaction in the said undisclosed foreign account and various notices under Section 274 r/w 271 of the Act were issued against him and on 26.09.2013 also a penalty under Section 271 (1) (b) of the Act for noncompliance of notice under Section 142(1) was levied. The appeal filed by the petitioner against the order dated 26.09.2013 was dismissed vide order dated 23.01.2015.


The Court held that petitioner cannot be permitted to take benefit of Circular/ Instruction No. 5051 dated 07.02.1991 to find an escape route for the wrong committed by him. Accordingly, the present petition is dismissed. Pending application is disposed of as infructuous.

Full case law PDF given below

Rajinder Kumar Vs State (Delhi High Court)

CRL.M.C. 462/2017 & CRL.M.A. 2055/2017


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