Brief Facts
- That C. Sabharwal, an architect with the New Delhi Municipal Corporation, was charged with possessing assets disproportionate to his known income. His son, Puneet Sabharwal, was accused of abetting him by redeeming Special Bearer Bonds worth `79 lakhs, contributing to the acquisition of properties allegedly held through trusts where Puneet was the sole beneficiary. Charges were framed against the appellant Puneet Sabharwal under Section 109 IPC read with Section 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988 (PCA), the charge against appellant R.C. Sabharwal was under Section 13(1)(e) read with 13(2) of the PCA.
- However, the Income Tax Appellate Tribunal (ITAT) in the meanwhile ruled in favor of the Appellant, holding that the trusts were independent entities and not benami holdings.
- Thereafter in light of the above developments that the Order framing charges by the Special Judge were challenged before the High Court in a writ petition. Relying upon the finding of the ITAT, it was contended that there existed a case of discharge of the appellants. Since the reopening proceedings were based on the search done by CBI, there was no valid ground to proceed with the trial. With regards to appellant Puneet Sabharwal, it was argued since he was a minor for a large portion of the check period and therefore could not be made an accused.
- The Delhi High Court declined to discharge the Appellants, stating the following reasons: (1) Although Puneet Sabharwal was a minor for a significant part of the period under scrutiny, he was legally an adult for seven years during which the alleged offence occurred; (2) the immunity granted under Section 3(2) of the Special Bearer Bonds (Immunities and Exemptions) Act, 1981 does not extend to offences under the Prevention of Corruption Act (PCA); and (3) as held by the Supreme Court in State of Karnataka v. Selvi J. Jayalalitha & Ors. (2017) 6 SCC 263, income tax findings relate only to tax liability and do not necessarily validate the legitimacy of the income’s source.
- Hence, the present Appeal.
Issues
- Whether income tax adjudications exonerating the accused can lead to quashing of criminal proceedings under the Prevention of Corruption Act for disproportionate asset?
- Where there is exoneration in a civil adjudication, whether criminal prosecution on the same set of facts and circumstances cannot be allowed to continue?
Held
- Supreme Court dismissed the appeals and directed that the trial be carried out in expeditious manner. The findings of the Court are as under:
- The probative value of the Orders of the Income Tax Authorities, including the Order of the Income Tax Appellate Tribunal and the subsequent Assessment Orders, are not conclusive proof which can be relied upon for discharge of the accused persons. These orders, their findings, and their probative value, are a matter for a full-fledged trial. In view of the same, the High Court, in the present case, has rightly not discharged the appellants based on the Orders of the Income Tax Authorities.
- Supreme Court distinguished judgments in the case of Radheshyam Kejriwal v. State of West Bengal & Anr., (2011) 3 SCC 581, Ashoo Surendranath Tewari v. CBI & Anr. (2020) 9 SCC 636 and J. Sekar v. Directorate of Enforcement, (2022) 7 SCC 370, which were relied by the Appellant to contest that once there is an exoneration on merits in a civil adjudication a criminal prosecution on the same set of facts and circumstances cannot be allowed to continue.
Relevant Para No.
- 32 and 34