THE PR. COMMISSIONER OF INCOME TAX, CIT(A) vs. M/S DANISH STEEL CLUSTER PVT LTD

The appellant was the complainant and respondent was the accused before the Trial Court. They will be referred as per their respective ranks held before the Trial Court for the sake of convenience.

The complainant filed a private complaint before the learned ACMM contending that the accused has borrowed a sum of Rs.10,00,000/- from the complainant on 20.09.2013 and promised to repay the same within six months. Thereafter,

In order to prove the case of the complainant, she got examined herself as PW.1 and got marked ten documents as Exs.P1 to P10. After recording the statement of accused under Section 313 of Code of Criminal Procedure (for short hereinafter referred to as 'Cr.P.C.'), the accused got examined herself as DW.1 and got marked nine documents as Exs.D1 to D9. After hearing the arguments, learned ACMM, acquitted the accused. Aggrieved by the same, this appeal is filed.

Learned counsel for the appellant argued that the judgment of Trial Court is illegal and contrary to the evidence on record. The Trial Court failed to appreciate the evidence on record in proper perspective. The Trial Court failed to consider the fact that the cheque in question is issued for discharge of the legally recoverable debt. The accused has admitted the issuance of cheque, but she has taken a specific defence that the signature on the cheque is not her signature, therefore, the burden of proving the same shifts on the accused in view of the statutory presumptions available under the provisions of N.I. Act. However, the Trial Court has erroneously put such burden on the complainant which is not tenable. The Trial Court has not properly appreciated the judgment of Apex Court. The Trial Court failed to notice that the complainant has proved the existence of legally recoverable debt. Merely because the accused denied the signature and disputed the financial capacity of the complainant, the Trial Court ought not to have held that the accused has rebutted the presumption. The Trial

Against this, learned counsel for the respondent argued that the accused has given oral and documentary evidence to show that there is a matrimonial dispute between herself and her husband and that matrimonial dispute has now resulted in divorce between them. It is the defence of the accused that her husband has stolen two cheques and has

Perused the records and evidence.

The complainant in her written complaint filed before the Court has not stated as to on what date and when exactly the amount was borrowed or requested. It is simply stated as in the month of September, to meet her financial commitments and she has taken hand loan on 20th September 2013. In the complaint how the amount was given is not stated. It is argued that it is by way of cash. She has further stated that when she demanded to return the amount in the second week of March 2014 then this cheque was issued on 22.03.2014. It appears that for six months she has not taken any documents even though she has stated that she has given Rs.10,00,000/-. Her examination-in-chief is nothing but the reiteration of averments of complaint. What is her relationship

In the cross-examination she had admitted that she is residing in Vijayanagara and she is a housewife. Her husband retired in the year 2005 as Veterinary Inspector. She states that she knew the husband of accused by name Nataraj for last 15 to 20 years. Accused is not known to her. Accused is not a relative to her. Then how she has given this Rs.10,00,000/- as cash and kept quiet for six months is not forthcoming. She cannot remember the date and month when she has given the loan and for the first time she has stated it was given by cash and at that time her husband and daughter were present but none of them were examined. She further states that she had the amount in her house which she has received by selling the site. She has also taken an amount of Rs.3,40,000/- by way of gold loan.

She further admitted that now as there is a difficulty for her to pay the rent she has taken a house on lease

In the Cross-examination it is admitted by her that the property sold by her for Rs.6,00,000/- but she did not know where she has kept or deposited the said amount. It is known to her husband also and when she has withdrawn the amount

On perusing the evidence on record it goes to show that complainant is a housewife. She states that she has given Rs.10,00,000/-. On what basis she has given this amount to the accused? How she knew her? What relationship she had with the accused? Nothing is forthcoming. She kept quiet for six months and she states that accused had given cheques. Further she states that she has taken a bond paper which is not produced. There is no record to show that when the amount was withdrawn by her from any Bank or where such huge amount was with her. She herself is residing in a rented house and has taken a house on lease basis as she was unable to pay rent. Her financial position is not good, hence, under what circumstances she has given this huge amount of Rs.10,00,000/- by way of cash, that too to an unknown

The defence of the accused is that her husband has taken some signed cheques and has misused the same. Of course cheque belongs to the account of the accused. Though signature is disputed, but the defence taken by the accused is that she has filed domestic violence case against her husband. In that case a suggestion that was made to the complainant, she stated that the signed cheques and blank cheques were missing from her residence. It is her husband who took the cheques. Hence, signature of the accused are appearing on the cheque. Therefore, there is an initial presumption in favour of the complainant under Section 139 of the N.I. Act that the cheque was issued for legally enforceable debt or liability.

However, that presumption is rebuttable presumption. The accused can rebut the presumption by two ways. One is by cross-examining the complainant and other is by giving defence evidence. The accused need not to prove his defence beyond all reasonable doubt but he can show by preponderance of probabilities, that the defence set up by him

The cross examination by the accused shows that there is a lack of evidence on the part of complainant regarding financial capacity. Of course, notice is not directly served, however, it is stated that it is not claimed. Therefore, the accused has taken defence during the cross-examination. Apart from cross-examination accused has given her evidence as DW- 1. In her evidence she has stated that there is a matrimonial dispute between herself and her husband. She is working as a Software Engineer. From January 2013 the dispute started between her husband and herself. Now it is stated that they have obtained divorce. Her husband was doing some stock market trading business and he had the account in her name and he was taking the cheques for his business. When she has returned to her house in the month of March 2013, she could not find cheque. Her husband has misused the cheque. In fact she had lodged complaint against her husband for harassment and ill-treatment as per Ex.D.1. and police acknowledgement as per Ex.D.2. She has also lodged a complaint against her

She has further stated that on 20.09.2013 she worked in her office from morning to evening. She has sent a mail and she has produced the document in that regard. She has admitted Ex.P.1 - cheque belongs to her and she states that writings and signature are not her and are denied. She states that her husband and complainant colluding with each other have misused the cheque. In the cross-examination a suggestion was made to her, as her parents are not supporting, it was difficult for her to lead the life and she has borrowed the amount. Such a suggestion is not forthcoming either in the complaint or in the evidence of complainant. It is suggested that her husband and herself have colluded with each and created Ex.D.3. She has denied the suggestion for discharge of the said amount for which the cheque was issued. This is the only suggestion. There is nothing in the cross-examination to

On the other hand, the documents produced by the accused i.e., the complaint given before the police station, Exs.D.1, D.2, D.3 shows that her husband has given a statement before police on the basis of complaint lodged by her and has admitted about taking the cheques belonging to complainant and he is liable to pay, if any, amount.

Those documents also bear the seal of the concerned police station as a true copy. They are also one of the circumstances to support the defence taken by the accused. Ex.D.4 is the complaint under Section 12(1) of the Protection of Women from Domestic Violence Act, filed against her husband. There also she has taken a similar contention. She has also

In the light of the evidence led before the Court, if the judgment of acquittal passed by the learned JMFC is considered, then, it is evident that when the complainant knew the husband of the accused from last 15 to 20 years and it is her contention that accused has borrowed the loan for her business and making suggestion that for her livelihood, they have taken the amount are contrary to each other. When the accused is a Software Engineer, then the question of doing business does not arise. When the accused has clearly denied any acquaintance on having financial capacity the complainant should have produced documents or any evidence. But the documents produced by her at Exs.P.1 to P.10 does not support her contention.

Learned JMFC has clearly held that mere issuance of cheque is not sufficient, it should be shown that it was issued towards discharge of legally recoverable debt. When the

The Hon’ble Supreme Court in the case of ROHITBHAI JIVANLAL PATEL (referred supra) at para -18 held that the presumption under Section 139 of N.I. Act can be rebutted. The Hon’ble Supreme Court has held that if the complainant has discharged his initial burden, then the onus shifted on the accused to rebut the said presumption and unless the accused had discharged the onus by bringing on record such facts and circumstances and to show that he has rebutted the said presumption by preponderance of probabilities, then the burden again shifts on the complainant and paragraph No.18 reads as under:

In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused. The aspect relevant for consideration had been as to whether the appellant-accused has brought on record such facts/material/circumstances which could be of a reasonably probable defence.

The Hon’ble Supreme Court in the case of Kumar Exports Vs. Sharma Carpets, reported in (2009) 2 SCC 513 discussed with regard to raising presumption under Sections 118 & 139 of N.I Act, and also under Section 114 of Evidence

In this case, admittedly, the accused and her husband were at dispute and there is a matrimonial dispute between them. Admittedly, they obtained divorce also. It is a specific defence of the accused that her husband was doing a business and he has misused the cheques which are kept by her in the house, when she left her matrimonial house. The complainant also admitted that she know the accused husband for last 10 to 15 years and he is doing business. So possibility of husband of the accused misusing the cheque also cannot be ruled out. The accused has produced the probable defence documents to show that she has in fact lodged complaint to the police against her husband. It probabilised her defence. Particularly, in the absence of any relationship or acquaintance

Further, the supreme Court in Rajaram S/o. Sriramulu Naidu (since deceased) through L.Rs. Vs. Maruthachalam (since deceased) through L.Rs. referring to the decision of Rohit Bhai Supra and Bir Singh v. Mukesh Kumar reported in (2019) 4 SCC 197 and at para -12 referred to the decision of Baslingappa and Mudibasappa (supra) and at paragraph Nos.12, 14, 21, 29 and 30 it is held as under: “12. This court in the case of Baslingappa v. Mudibasappa (supra) has summarized the principles on Sections 118(a) and 139 of N.I. Act. It will be relevant to reproduce the same. “25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:

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In the said case, i.e. Baslingappa v. Mudibasappa (supra), the learned Trial Court, after considering the evidence and material on record, held that the accused had raised a probable defence regarding the financial capacity of the complainant. The accused was, therefore, acquitted. Aggrieved thereby, the complainant preferred an appeal before the High court. The High Court reversed the same and convicted the accused. This Court found that unless the High Court came to a finding that the finding of the learned Trial Court regarding financial capacity of the complainant was perverse, it was not permissible for the High Court to interfere with the same.”

The scope of interference in an appeal against acquittal is limited. Unless the High Court found that the appreciation of the evidence is perverse, it could not have interfered with the finding of acquittal recorded by the learned Trial Court.

A distinguishing fact between the criminal proceedings and the civil proceedings in the present case is that, while in the criminal proceedings the complainant had failed to produce the promissory notes, in the civil proceedings, the complainant had proved the promissory notes. The High Court found that the Civil Appeals were required to be decided on the basis of the preponderance of probabilities. The High Court found that the complainant had established that he was

Though it was sought to be argued before the High Court that in view of the judgment in the criminal proceedings, the suit(s) was also liable to be dismissed, the High Court rightly observed that the adjudication in civil matters is based on preponderance of probabilities whereas adjudication in criminal cases is based on the principle that the accused is presumed to be innocent and the guilt of the accused should be proved to the hilt and the proof should be beyond all reasonable doubt."

Further the Hon’ble Supreme Court has also stated at paragraph No.21 of the above said judgment that the scope of High Court in an appeal against acquittal is limited. Unless the High Court found that the appreciation of the evidence is perverse. Therefore, when the accused has led the defence evidence to probabilise his case, then the presumption, if any, under Section 139 of N.I. Act rebutted by accused and onus shifts on the complainant again.

Therefore, from the principles stated in the above referred decisions, particularly, in the facts and circumstances of this case, no records were produced to show lending of such a huge amount to an unknown person for a period of six months, without there being any records, particularly, in the light of strained relationship of accused with her husband alleging misuse of the cheque. But the accused has successfully rebutted the presumption. On the other hand, the complainant has failed to discharge the onus shifted upon her.

Therefore, in the light of the above discussions, I find that judgment of trial Court cannot be said as perverse or illegal. Hence, needs no interference. Accordingly, I proceed to pass the following: