Iqbal Hasan Mahmood Tuku
Md. Ruhul Amin CJ
Mohammad Fazlul Karim J
MM Ruhul Amin J
Md. Tafazzul Islam J
Md. Joynul Abedin J
Md. Hassan Ameen J
Md. Abdul Matin J
Government of the People’s Republic of Bangladesh and others………………Appellants
Iqbal Hasan Mahmood alias Iqbal Hasan Mahmood Tuku…………Respondent
May 20, 2008.
Income Tax Ordinance 1984, ss. 93 and 128, 165 and 166
Failure to initiate proceeding for assessment or the pendency of assessment proceeding cannot operate as a bar to the institution of any criminal prosecution for offences punishable under Chapter XXI of the Income Tax Ordinance. Hence the prosecution of criminal cases for offences under sections 165 and 166 is not dependent on the proceedings under section 93 or 128 of the Ordinance …………(13)
Sanction under section 170 of the Ordinance
The question of validity of the sanction or any defects in it can only be determined by the trial Court……….(14)
Cases Referred to-
MA Hai vs. TCB 40 DLR (AD) 206; Nesar Ahmed vs. Bangladesh, 49 DLR (AD) 111; Commissioner of Income Tax vs. Bhupen Champak Lai Dalai (2001) 248 ITR (SC) 830; P Jayappan vs. Sk Perumal: (1994) 149 ITR S96(SC); Tiptop Plastic Industries P Ltd vs 1TQ; (1995) 2H ITR 778 (Madras); Gopal vs. Assistant CIT; (1994) 207 ITR 971 (Madras); MK Gopalan vs. State of Madhya Pradesh, AIR 1954 SC 362 AIR 1948 PC 82 and Md. Iqbal Ahmed vs. Andhra Pradesh, AIR 1979 SC 677.
Fida M Kamal, Attorney-General, (Zahirul Islam Mukul, Deputy Attorney-General with him) instructed by Md Zahirul Islam, Advocate-on-Record—For the Appellants
Ajmalul Hossain, QC, Senior Advocate, instructed by Mvi Md. Wahidullah, Advocate-oh-Record-For the Respondent
Civil Appeal No. 88 of 2008.
(From the judgment and order dated 5-12-2007 passed by the High Court Division in Writ Petition No. 7451 of 2007).
Md. Joynul Abedin J.- This appeal by leave by the respondent arises out of the judgment and order dated 5-12-2007 passed by a Division Bench of the High Court Division in Writ Petition No, 7451 of 2007 making the Rule absolute and thereby declaring the entire proceedings in Special Case No. 6 of 2007 arising out of Complaint Case No, 33 of 2007 started against the respondent under sections 165 and 166 of the Income Tax Ordinance, 1984 without lawful authority and of no legal effect and also quashing the same for the ends of justice,
2. The respondent filed the aforesaid writ petition stating that he was a regular Tax payer since 1980-81. The National Board of Revenue (NBR) by its order dated 29-9-2003 included the respondent as Tax payer under Large Tax Payers Unit (LTU), Dhaka by virtue of his being a Director of Apex Weaving and Finishing Mills Ltd and since then he has been paying his tax under LTU. As a regular tax-payer the respondent had paid a total amount of Taka 46,74,99/- as income tax since tax year 1980-81 to 2006-2007, After the emergency was proclaimed in the country the respondent was arrested on 4-2-2007 by the law enforcing agency and subsequently detained in the Chittagong Central Jail by an order of detention dated 5-2-2007.
3. While he was in jail custody pursuant to the aforesaid order of detention, the Secretary of the Anti-Corruption Commission issued a notice under section 26 of the Anti-Corruption Commission Act, 2004 directing him to submit his and his family’s wealth statements within 72 hours. Being constrained and finding no other alternative the respondent instructed his only son Mr. Abed Hasan Mahmood through jail authority to submit his wealth statements as well as wealth statements for his family to the Anti-Corruption Commission. Thereafter, the respondent No. 6, Deputy Commissioner of Taxes, by letter dated 27-6-2007 requested the respondent No. 5 to approve the enclosed draft complaint and also to obtain necessary sanction from the National Board of Revenue (NBR) for filing a criminal case against the respondent under sections 165 and 166 of the Income Tax Ordinance, 1984 for making false statement in his income tax returns and other documents furnished in connection thereto and also for concealing incomes. The respondent No. 5, Commissioner of Taxes, by a letter dated 28-6-2007 requested for necessary sanction by the NBR. The NBR thereupon on the same date by a Memo dated 28-6-2007 informed the respondent No, 5 of the necessary sanction accorded by it calling upon him to arrange for filing the petition of complaint against the respondent. The respondent No. 6, thereafter, filed the petition of complaint on 4-7-2007 against the respondent in the Court of the Senior Special Judge, Dhaka under sections 165 and 166 of the Income Tax Ordinance, 1984 read with Rule 15 of the Emergency Power Rules, 2007 alleging that the respondent had committed offence under sections 165 and 166 by making false statements and concealing various incomes with a view to evading tax in his tax returns for the tax years 2000-2001 to 2006-2007. Consequently, the Senior Special Judge, Dhaka on the same date took cognisance upon the complaint filed under sections 165 and 166 of the Income Tax Ordinance read with rule 15 of the Emergency Power Rules and thereupon Metropolitan Special Case No, 33 of 2007 was registered (arising out of Complaint Petition No. 33 of 2007) and thereafter, on 10-7-2007 transferred the said case to the Special Court No. 5, Sher-e-Bangla Nagar Parliament Building, Dhaka for trial and there the case was renumbered and registered as Special Case Nov6 of 2007, It is also stated that the aforesaid special case was not competent in the absence of any prior notice under section 93(3) of the Income Tax Ordinance issued on the respondent.
4. The appellants being the writ respondents opposed the Rule by filing affidavit-in-opposition and a supplementary affidavit-in-opposition denying the material statements in the writ petition asserting that for filing of the complaint petition leading to the aforesaid special case there was no necessity of issuing any prior notice under section 93(3) of the Income Tax Ordinance.
5. A Division Bench of the High Court Division after an elaborate and contested hearing made the Rule absolute by the judgment and order dated 5-12-2007.
6. The appellants thereupon being dissatisfied with the impugned judgment and order dated 5-12-2007 filed Civil Petition for Leave to Appeal No. 363 of 2008 whereupon this Division granted leave to consider the following: (1) whether the criminal proceeding in the aforesaid special case was validly taken against the respondent under sections 165 and 166 of the Income Tax Ordinance for making false statements and also for concealing particulars with a view to evading income tax independently of any proceeding for assessment under sections 83 and 93 of the Income Tax Ordinance, (2) Whether the sanction by the NBR for filing the said criminal case was valid without issuing any prior notice on the respondent and whether the sanction accorded by NBR in its meeting preside by its chairman who was not a member was hit by the principle of coram-non-judice, (3) Whether the writ petition filed by the respondent was maintainable for failing to exhaust the alternative remedy by filing a petition for quashing the proceeding of the criminal case under section 561A of the Code of Criminal Procedure.
7. We have heard Mr. Fida M Kamal, the learned Attorney-General for the appellants and Mr. Ajmalul Hossain, QC for the respondent.
8. Income tax, charged, levied, paid and collected in accordance with the provisions of the Income Tax Ordinance 1984 in respect of the total income of the income year or income years of a person. However, such person shall file or cause to be filed a return of his income or the income of any other person with the Deputy Commissioner of Taxes in respect of which he is assessable to tax under the Income Tax Ordinance if his total income during the income year exceeded maximum amount which is not chargeable to tax. The Deputy Commissioner of Taxes thereupon assesses the total income of the assessee and determines the sum payable by him as income tax on the basis of such assessment and communicates the order to the assessee within 30 days. Where a return is filed and the Deputy Commissioner of Taxes is not satisfied without requiring the presence of the person who filed the return or the production of the evidence that the return is correct and complete, he serves on such person a notice requiring him to appear before him on specified date or to produce or cause to be produced before him any evidence in support of the return. Thereafter, the Deputy Commissioner of Taxes assesses the total income of the assessee and determines the sum payable by him on the basis of such assessment and communicates the order of assessment to the assessee within next 30 days. If for any reason any chargeable income for any assessment or has escaped assessment or has been under assessed or has been assessed at too low a rate or has been the subject of excessive relief or refund under the Ordinance, the Deputy Commissioner of Taxes may proceed to assess to determine the total income of the assessee or the tax payable by him by issuing a notice on the assessee where he has reason to believe that the assessee or any other person on his behalf has not filed a return under section 75 or 77 or in a case where he has reason to believe that the assessee has for any assessment year concealed the particulars of his income or furnished inaccurate particulars thereof or omitted or failed to disclose all material facts necessary for the assessment for such year.
9. Assessment in case of income escaping assessment is required to be made within 5 years from the end of the assessment year for which the assessment is to be made. Where, in the course of any proceeding under this Ordinance, the Deputy Commissioner of Taxes, the Appellate Joint Commissioner, the Commissioner (Appeals) or the Appellate Tribunal is satisfied that any person has, either in the said proceeding or in any earlier proceeding relating to an assessment in respect of the same income year, concealed particulars of his income or furnished inaccurate particulars of such income or understated the value of any immovable property in connection with its sale or transfer with a view to evading tax, he or it may impose upon such person a penalty of a sum not exceeding two and a half times the amount of tax which would have been avoided had the income or the value of the immoveable property as shown in the return was accepted as correct.
10. It is, therefore, clear that the tax collecting authorities under the Income Tax Ordinance are authorised to initiate proceeding for levy, charge and realisation of income tax including the penalty where income escaped assessment for making false statements in the income tax return or for concealing particulars of his income vide sections 83, 93 and 128 of the Income Tax Ordinance as per Chapters IX and XV of the Income Tax Ordinance. The imposition and realisation of penalty by the Deputy Commissioner of Taxes under Chapter XV of the Ordinance is the highest civil liability created for a delinquent assessee or a person who commits or omits to do certain acts towards payment of income tax. Imposition and realisation of penalty is the highest civil liability dealt with and determined by the income tax authorities under the Ordinance and the proceeding in this regard is initiated by the Deputy Commissioner of Taxes. The process of determination to pay tax and imposition of penalty become final after revision and appeal to the higher income tax authorities and reference to the High Court Division.
11. The Income Tax Ordinance also provides for prosecution of certain offence or offences for making false statements or for concealment of income under sections 165 and 166 of Chapter XXI of the Ordinance. Section 171 of the Income Tax Ordinance under Chapter XXI provides for trial of some offences by Special Judge and the Special Judge is required to take cognisance of such offence only upon a complaint in writing made by the Deputy Commissioner of Taxes after a prior sanction obtained by him (Deputy Commissioner of Taxes) from the NBR.
12. Launching of criminal cases against any person under sections 165 and 166 of the Income Tax Ordinance is a separate and independent proceedings of the ones provided for assessment and realisation of penalty as outlined above. The Deputy Commissioner of Taxes may initiate criminal proceeding under sections 165 and 166 of the Ordinance even without reopening any closed assessment of any assessment year in an appropriate case. Further, there is no impediment in law for the criminal proceedings to proceed even during the pendency of any proceeding under the Ordinance mentioned hereinbefore. The criminal Court is however required to give due regard to the result of any proceeding under the Ordinance having a bearing on the question in issue and in an appropriate case it (criminal Court) may even drop the proceedings in the light of an order passed under the Ordinance. It does not however, mean that the result of the proceeding under the Ordinance would be binding on the criminal Court. The criminal Court has to judge the case independently on the evidence placed before it. Otherwise, there is a danger of a contention being advanced that whenever an assessee or any other person liable under the Ordinance has failed to convince authorities in the proceedings under the Ordinance that he has not deliberately made any false statement or fabricated any material evidence, the conviction of such person should invariably follow in the criminal Court, It is needless to emphasise that mens rea is a sine qua non to the successful prosecution of a criminal proceeding under Chapter XXI of the Ordinance.
13. In an appropriate case the wholesome rule is that a criminal Court may adjourn or postpone the hearing of a criminal case, if the disposal of any proceeding under the Ordinance, which has relevance and a bearing on the proceedings before it, is imminent so that it may take also into consideration the order to be passed therein. This should however be done in such a way as not to frustrate the object of the criminal proceedings. We are of the view that failure to initiate proceeding for assessment or the pendency of the assessment proceeding cannot operate as a bar to the institution of any criminal prosecution for offences punishable under Chapter XXI of the Ordinance. This position finds support from some cases of Indian Jurisdiction, such as Commissioner of Income Tax vs. Bhupen Champak Lal Dalal (2001) 248 ITR (SC) 830, P Jayappan vs. Sk Perumal (1994) 149 ITR 696 (SC); Tip-top Plastic Industries P Ltd vs. ITO (1995) 214 ITR 778 (Madras). Hence the contention of Mr. Ajmalul Hossain that prosecution of criminal cases for offences under sections 165 and 166 is dependent on the proceedings under sections 93 or 128 in Chapter IX of the Ordinance is not sustainable in law.
14. The next contention of Mr. Ajmalul Hossain is that the sanction in the instant case is coram-non-judice as it was accorded by the NBR in its meeting presided over by its Chairman who was not a member of the Board and further, that the sanction is also bad in law as it was given without giving prior notice to the respondent has also no substance. The process of sanction is an administrative act and is not subject to any judicial scrutiny. Further, since the Chairman of the NBR is an inseparable and essential constituent part for the Board to function, the sanction given by it cannot be taken to be in any way tainted for his presence on the Board. Hence the principle of coram-non-judice has no application in the present case. The case of Md. lqbal Ahmed vs. Andhra Pradesh, AIR 1979 SC 677 may be referred to on the point. Further, whether the sanction was proper or valid or it suffers from any defect that could only be determined at the trial on the evidence that could be adduced to satisfy the trial Court that all material facts were before the sanctioning authority when sanction was accorded. The case of Gopal vs. Assistant CIT (1994) 207 ITR 971 (Madras) and the case of MK Gopalan vs. State of Madhya Pradesh, AIR 1954 SC 362 and AIR 1948 PC 82 may be cited as authority on the point. Sanction is intended to check and eliminate frivolous and vexations prosecution. If the letter for sanction or consent for prosecution contains the full facts constituting the offence it should be taken to be a valid sanction.
15. Mr. Hossain, lastly contends that our nation is now going through a period of crisis and in this situation the highest Court of the country is not expected to do anything out of the ordinary at this time. Because to do so would set a bad example and precedent. In elaboration of his point it is submitted that historically it is now learnt from the facts stated by NBR before the High Court Division as recorded in the impugned judgment that no prosecution under Chapter XXI was ever brought without first reopening the previously closed assessment. Hence this Court is expected and required not to depart from the practice. Mr. Hossain seeks to bolstar this point with reference to Discourses of Niccolo Machiavelli on the First Ten (Books) of TITUS Livius and vehemently argues that upholding the Rule of Law is of paramount importance which requires the highest Court to hold that the prosecution of the offence under Chapter XXI is permissible only after the proceedings under sections 83, 93 and 128 of the Income Tax Ordinance were exhausted. This contention of Mr. Hossain, as understood, merely reiterates his earlier contention in this case that the Income Tax Ordinance being a civil legislation and solely designed to fix civil liability to pay income tax, the prosecution of criminal offences under Chapter XXI, particularly under sections 165 and 166 of the Ordinance, should be allowed only after first reopening the previously closed assessment of the respondent. This Court however, appreciates the anxiety expressed by Mr. Ajmalul Hossain and reiterates that in view of the scheme of the Ordinance, as understood and interpretated, the criminal prosecution for offences under the Ordinance has not been subjected to the initiation of the proceedings under sections 83, 93 and 128 of the Ordinance after reopening the closed assessment.
16. On the other hand, the contention raised by the learned Attorney-General that the writ petition filed by the respondent challenging the proceeding in the aforesaid special case now pending against him before the Special Judge is not maintainable for not having exhausted the otherwise efficacious alternative remedy by way of a petition under section 561A of the Code of Criminal Procedure is also not acceptable, inasmuch as the instant writ petition has raised question of law and interpretation of statute. Further, the respondent had no other efficacious alternative remedy under the Income Tax Ordinance to challenge the criminal case now pending against him. It is pertinent to point out that a Division Bench of the High Court Division has already held in the case of Jahangir Hossain Howlader 58 DLR 106 that filing of an application under section 561A of the Code of Criminal Procedure is not an adequate alternative remedy as contemplated under Article 102(2) of the Constitution. Further, in the case of MA Hai vs. TCB, 40 DLR (AD) 206 it is held that availability of alternative remedy by way of appeal or revision will not stand on the way when the question of law and interpretation of statute is involved. It is also decided in the case of Nesar Ahmed vs. Government of Bangladesh 49 DLR (AD) 111 that when it becomes impossible to avail of the alternative remedy, relief by way of writ petition under Article 102 of the Constitution is competent. The instant writ petition is therefore maintainable.
In view of the foregoing discussions the appeal is allowed without any order as to costs.
Source: 60 DLR (AD) (2008) 147