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2025 DIGILAW 618 (KER)

Rajan Koyoth Veettil Sidharth v. State Of Kerala,

2025-03-17

V.G.ARUN

body2025
ORDER : (V.G. ARUN, J.) Petitioners are some of the accused in Crime No.RC0342023E0002 registered by the CBI/SCB/ Thiruvananthapuram for offences punishable under Sections 120B read with 420 of IPC and Section 276C of the Income Tax Act. The crime was registered on the basis of a letter received from the Principal Chief Commissioner of Income Tax, Kochi alleging that many salaried assessees in Ward-3 Kannur had received huge refund of income tax, by claiming bogus deductions under Sections 80DDB, 80E, 80EE, 80GG, 80GGC etc. 2. These Crl.M.Cs are filed seeking to get the FIR and further proceedings against the petitioners quashed on various grounds. 3. Heard, Advs.K.P.Santhi and Shabu Sreedharan for the petitioners, Adv.Jose Joseph for the Income Tax Department and Adv.Sreelal N Warrier for the Central Bureau of Investigation. 4. Learned counsel for the petitioners contended that in the communication issued by the Principal Chief Commissioner of Income Tax, which led to registration of the crimes, the allegations were raised against agents who had indulged in malpractices while submitting returns on behalf of the assessees. Assessees like the petitioners are completely dependent on the agents for filing income tax returns. The prosecution does not have a case that the bogus claims were raised at the instance of the petitioners. According to the counsel, the Income Tax Department had treated the claim for refund as a mistake and notices were issued under Sections 148, 154, 155 etc. of the Income Tax Act. On receipt of the notices, mistakes were rectified and the ineligible refund, remitted back. This shows that the petitioners had no intention to cheat. Moreover, the petitioners cannot be prosecuted for the offence under Section 276C of the Income Tax Act without previous administrative approval of the Collegium of two CCIT/DGIT rank officers, as evident from Annexure XIX circular produced in Crl.M.C.No.1003 of 2023. 5. Learned Standing Counsel for the Income Tax Department made the following submissions; From 2014-2015 onwards, many of the assessees in Ward 3, Kannur had raised bogus claims for refund by under- reporting their salary and making ineligible deductions. Filing of return of income is the responsibility of individual tax payers even if it is prepared with the help of an agent. Electronic verification of the return of income has to be done by the tax payer himself, either through Aadhar OTP or net banking. Filing of return of income is the responsibility of individual tax payers even if it is prepared with the help of an agent. Electronic verification of the return of income has to be done by the tax payer himself, either through Aadhar OTP or net banking. The returns are processed by the Central Processing Centre without any manual intervention. Therefore, the escaped assessment was noticed only during subsequent verification. Immediately, notices were sent to the petitioners and other assessees. The reply received from the petitioners being unsatisfactory, penalty was imposed on them. Refund of the excess amount claimed and payment of penalty will not absolve the petitioners from criminal liability, as they had committed cheating by filing false returns with intention to deceive the department. The contention based on Annexure XIX circular cannot also be countenanced, since the Department has not initiated prosecution under Section 276C. Instead, the CBI is conducting investigation based on the information given from the Department. 6. Learned Standing Counsel for the CBI submitted that, crime was registered against 31 persons, including the petitioners, based on a complaint received from the Income Tax Department. During investigation, sufficient incriminating evidence to prove the commission of the offence of cheating was obtained. Hence, charge sheet was filed against the petitioners and others for the offence of cheating under Section 420 of the Indian Penal Code. The intention to commit the offence will continue to exist even if the loss caused to the Government is compensated by repaying the ineligible refund received. Investigation had revealed that some of the accused had claimed exemption towards housing loan interest, whilst others had claimed unmerited deductions under Sections 80DDB, 80E, 80EE, 80GG,80GGC etc. of the Income Tax Act. On receipt of complaint from the Income Tax Department, the documents were verified meticulously and information was gathered from officers at various levels and opportunity was given to the petitioners to prove their innocence. The petitioners were not able to produce any document to substantiate their claim for refund. 7. The contention that false claims were raised by the agents and not the petitioners is liable to be rejected outright as the responsibility of filing proper returns is that of the assessee and not the agent. The petitioners themselves are the beneficiaries of such false claims and the agents are paid only a small percentage of the refunded amount. 7. The contention that false claims were raised by the agents and not the petitioners is liable to be rejected outright as the responsibility of filing proper returns is that of the assessee and not the agent. The petitioners themselves are the beneficiaries of such false claims and the agents are paid only a small percentage of the refunded amount. The argument that prosecution under Section 276C can be initiated only with the permission of the Collegium has no relevance, since the crime against the petitioners was investigated by the CBI. Pertinently, in the charge sheet filed by the CBI, only the offence punishable under Section 420 of IPC read with 120-B IPC, is incorporated. The submission that the Income Tax Department had treated the claim for refund as a mistake and issued notices to the petitioners, and the petitioners repaid the amount with penalty, is of no avail, as submission of false returns and acceptance of ineligible refunds are the crucial factors. Going by the scheme of the Income Tax Act, proceedings for realisation of escaped assessment, imposition of penalty and prosecution for filing false returns are entirely different aspects and realisation of escaped assessment or imposition of penalty will not absolve a person from prosecution. For the reasons aforementioned, the prayer for quashing the proceedings is liable to be rejected. Needless to say, it will still be open for the petitioners to move the trial court for discharge. The Crl.M.Cs are hence dismissed leaving it for the trial court to pass appropriate orders if applications for discharge are filed by the petitioners.