Income tax returns not a foolproof defence against a charge of acquisition of assets disproportionate under the PC – SC

October 08, 2021

The first respondent is a Civil Servant of the Indian Revenue Services. She is presently working as Commissioner of Income Tax (Audit) at Hyderabad. The second respondent is the spouse of the first respondent, and was also a Civil servant. They are alleged to have acquired assets/pecuniary advantage to the extent of Rs 5,95,58,322. Disproportionate Assets1 during the check period were computed at Rs 1,10,81,692, which is 22.86 per cent of the total income earned by them. On the basis of the FIR dated 20 September 2017, the CBI ACB Chennai registered a case2 against the respondents for offences punishable under Sections 13(2) read with 13(1)(e) of the PC Act and Section 109 of the IPC.  the respondents filed a writ petition before the Telangana High Court under Article 226 of the Constitution seeking quashing of the FIR. the Telangana High Court allowed the respondents’ writ petition by its impugned judgement dated 11 February 2020 and quashed the FIR, and set aside all proceedings initiated pursuant to it. Appellants moved to Apex Court against this quashing. Two questions has been arose to decide: (i) whether the CBI is mandatorily required to conduct a Preliminary Enquiry before the registration of an FIR in every case involving claims of alleged corruption against public servants;  and (ii) whether the judgment of the High Court to quash the FIR can be sustained in the present case. Both questions has been answered in “NO”. Held that A Preliminary Enquiry is not mandatory when the information received discloses the commission of a cognizable offence. Even when it is conducted, the scope of a Preliminary Enquiry is not to ascertain the veracity of the information, but only whether it reveals the commission. Even as per CBI Manual a Preliminary Enquiry is not mandatory in all cases which involve allegations of corruption. When a prayer for quashing the FIR is made by the alleged accused and the court when it exercises the power under Section 482 Cr.P.C., only has to consider whether the allegations in the FIR disclose commission of a offence or not and a court cannot conduct a mini-trial at the stage of framing of charges and income tax returns and the assessments orders passed thereon, would not constitute a foolproof defence against a charge of acquisition of assets disproportionate to the known lawful sources of income as contemplated under the PC Act. FIR quashing order has been set aside and appeal allowed. 

Central Bureau of Investigation (CB) and Anr.

Versus   

Thommandru Hannah Vijayalakshmi@ T. H. Vijayalakshmi and Anr.  

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