Click the Play button to listen to article

The Supreme Court has observed that Income Tax circulars and press releases permitting possession of gold to a certain extent cannot account for the possession of the said assets for accounting purposes.

In other words, a public servant accused in a disproportionate assets case cannot rely on departmental press releases and circulars to outright deny liability for possessing gold by arguing that the possession is within the permissible limit prescribed by such press releases. The Court held that since possessing gold and accounting for it are distinct concepts, the accounting for gold cannot be determined through press releases or circulars.

A bench of Justice KV Viswanathan and Justice Arun Palli set aside the Patna High Court's decision to quash the proceedings against the Respondent, ex-Child Development Project Officer under the Prevention of Corruption Act, 1988 (“Act”), for having for owning assets disproportionate to known sources of income.

The High Court had quashed the proceedings, taking into account Instruction No. 1916 dated May 11, 1994, and a Press Release issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes dated December 1, 2016, which entitles a married woman to possess 500 grams of gold, an unmarried lady to possess 250 grams of gold, and a male to possess 100 grams of gold.

Noting that the total weight of gold jewellery possessed by the Respondent and her unmarried daughter was 646.400 grams, which was within the permissible limit of the circulars and press release, the High Court said that the respondent was entitled to possess gold; hence, there could be no prosecution under the Act.

Challenging the High Court's decision quashing the proceedings, the State moved the Supreme Court, contending that those circulars have no application for determining assets disproportionate to known sources of income and for carrying on prosecution under the Act.

Finding force in the State's submission, the Supreme Court found the High Court's interference in the proceedings against the Respondent to be untenable.

“…we find that the reasoning of the High Court is totally untenable. In a prosecution under Section 13(1)(e) read with Section 13(2) of the Act, the accused is called upon to explain allegations with regard to owning assets disproportionate to known sources of income. Merely showing certain press release and circulars permitting the holding of gold to a certain extent will not amount to accounting for the possession of the said assets.”, the Court said.

As a result, the appeal was allowed, thereby restoring the prosecution against the Respondent in a disproportionate asset case.

For Petitioner(s) : Mr. Akshay Amritanshu- 3121, AOR Mr. Sarthak Srivastava, Adv. Mr. Akshat Aggrawal, Adv. Mr. Utkarsh Rai, Adv. Ms. Jyotsna Shandilya, Adv. Mr. Atharve Tiwari, Adv.

For Respondent(s) : Dr. Ranjit Kumar, Adv. Mr. Karan Verma- 4227, AOR Mr. Shobhit Ahuja, Adv.

Tags: