THE PR. COMMISSIONER OF INCOME TAX CIT (A) vs. M/S. LAKSHMINARAYANA MINING COMPANY

In order to avoid confusion, the parties herein addressed according to their stand and ranking as referred in the trial Court.

The summary of the case of the complainant in the trial Court reads as under: “The accused borrowed a sum of Rs.7,00,000/- during the last week of July 2012 for her urgent family needs, legal necessities and for agricultural operation and for repayment of the same had issued cheque for Rs.7,00,000/- on 05/09/2012 bearing No.167223 drawn on Indian Overseas Bank. Kunigal Branch in favour of the complainant. On presentation, the said cheque came to be returned with an endorsement “Funds insufficient”. Thereafter, the complainant got issued legal notice on 03.10.2012 to the accused, demanding for repayment of cheque amount of Rs. 7,00,000/-. The notice sent by RPAD was served to the accused. Inspite of receipt of legal notice, she neither complied the notice nor replied to the same and thus accused committed an offence punishable u/s. 138 of NI Act and punish the accused in accordance with law and to award suitable compensation, in the interest of justice and equity”.

The learned Trial Judge was accommodated with the oral and documentary evidence as under:- List of witnesses examined for the complainant: PW-1 : Arun Kumar

On conclusion of the trial, the complaint came to be allowed, the accused was found guilty for an offence punishable under Section 138 of NI Act and was sentenced to pay fine of Rs.7,20,000/-, failing which, the accused shall under go simple imprisonment for a period of one year and out of the said amount Rs.7,20,000/-, Rs.20,000/- was ordered to be paid by way of compensation to the complainant.

The appeal preferred by the accused against the Judgment of conviction and order of sentence came to

Learned counsel for the accused/revision petitioner submits that the accused did not issue any cheque in favour of the complainant during 2002. However, with reference to chit transactions cheque was issued to the father-in-law of the complainant by way of security and the same is misused by the complainant to make wrongful gain. The complainant is not at all having capacity to accumulate the amount of Rs.7,00,000/- and the case is filed in this connection in order to harass the accused. Learned counsel further submits that the notice sent by the accused marked as Ex.P4 is defective as the time mentioned for repayment therein it is stated as “within forth night”. The learned counsel further submitted that spelling is not mentioned for the term “forth night” as to whether notice has been issued forthwith or forth night. It was further submitted that the appellate judge has discussed in the judgment at paragraph 19, wherein it is

It was further submitted that the learned appellate judge has found that the grounds regarding financial capacity were not taken.

However, on reading it shows that the accused has no financial capacity. The relevant portion has been reproduced as hereunder: “19. The Shastry Autombiles is a partnership firm consisting of five partners at Ex.P8 and as per Ex.P9 the Sapthagiri Enterrises is consisting of complainant himself and one Vasala. The gross income of the Shastry Automobiles as per Ex.P16 is Rs.1,25,480/- and gross income of Sapthagiri enterprises is Rs.94,550/- for the year 2013-14. So it clearly shows that whether the complainant is having financial capacity to pay sum of Rs. seven lakhs. Because there are no other IT returns produced by complainant. Unfortunately appellant has not taken any defence or grounds in this regard.”

In case of Negotiable Instrument, merely allegation by one and denial by other would result in onus on the person to establish. But when it is a specific or separate plea or defense by the denying party and when he pleads the special defense, onus is on the denying party to discharge the burden on special plea. Because in this case, it is the case of the accused that the cheque was given to the father-in-law of the complainant during the year 2012 as a security. In this connection, it is necessary on the part of the accused to say what was the amount which he owed to father-in-law of the complainant in the form of monetary obligation or in any form and as a security for payment of what amount the cheque was issued. This is not explained. Thus, the said defense appears as a defense without there being corroborating or substantiating evidence. In the overall facts and circumstances, there are no separate evidence by the accused towards his stand and in the light of facts and circumstances of the case.

However, the accused has stated in the chief- examination that the liability or the debt was Rs.78,000/- to the father-in-law of the complainant. The learned trial judge and the appellate judge have found liability of the accused to pay the amount of Rs.7,00,000/-, the said cheque is addressed to B.V.ArunKumar and the amount of Rs.7,00,000/- mentioned in the words, digits and the date is not mentioned. The counsel submits that date is not mentioned in the cheque. On observation, the date of the cheque is clearly mentioned as 05/09/2012. It is submitted by the learned counsel that the year is mentioned as ‘12’ after three digits i.e., 200. Thus, it becomes 2012. The digits 200 are printed and it should have been mentioned as one digit because after 200 it cannot be rectified into 2012 without overwriting. Thus, it appears that accused in the habit of glittering trouble man and making mistakes.

Further contention of the counsel is that, in the legal notice, no date is mentioned regarding the date of