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Criminal Appeal No. 102 of 1976, decided on 16th January, 1983.

Ss. 51(2) & 52‑Income‑tax, assessment to‑Admittedly orders of income‑tax Officer, forming basis of prosecution of accused, already set aside by Commissioner, Income‑tax and cases of alleged mis -declaration and suppression of income remanded back to Income‑tax Officer‑Conviction of accused, held, could not be sustained, is circumstances.

1977 P Cr. I. J X38 and 1975 P Cr. L J 1300 ref.

----‑SSs. 51(2) & 52‑Income‑tax, assessment to‑Benefit of doubt‑No direct evidence to establish exact income allegedly concealed .by accused‑Provisions of S. 51(2) of Income‑tax Act, held, could not be attracted to case of accused‑Accused given benefit of doubt and acquitted, in circumstances.‑[Benefit of doubt].

1971 P T D 457 and 1970 P T D 576 ref.

Ismail Hamirani for Appellant.

Ali Baksh Laghari for the State.

Date of hearing : l lth January, 1983.

Appellant above‑named, being aggrieved by judgment dated 28th April, 1976 of the learned Special Judge (Custom & Taxations) Karachi, in a Criminal Case No. 60/75, by which the appellant has been convicted under sections 51(2) and 52 of the Income‑tax Act and sentenced to suffer R. 1. for one year and to ‑pay fine of Rs. 20,000 or in default to suffer further R. I. for 2 years, has preferred the above appeal, on the following facts and grounds

2. According to prosecution, appellant Moinuddin was assessee of Income‑tax Department. He submitted his Income‑tax Returns for the assessment years 1964‑65, 1965‑66, 1966‑67, 1967‑68, 1968‑69 and 1969‑70 under Self Assessment Scheme, before the concerned Assessing Authority viz 1. T. O. Circle G' East Zone, Karachi. According to the Income‑tax Returns for six years, from 1964‑65 to 1969‑70 the total income of the appellant for said period was Rs. 45,632. In his Return for assessment year 1969‑70, the appellant declared taxable income to be Rs. 8,382. This included income from the property at Rs. 4,182. Subsequently, on 27‑4‑1970 the appellant applied for income‑tax clearance certificate, wherein he mentioned his total investment in the property to be Rs. 50,000. His application was accompanied by a copy of the sale agreement showing that the appellant was to sell his property for Rs. 80,000. In view of said application, the appellant was called upon to substantiate the source from where he had brought Rs. 50,000, which he had invested in the property. During a departmental investigation, it was revealed, that the appellant had constructed, a 6 storeyed building on Plot No. 102, R. C. 3 at Ranchore Lines, Karachi, for an amount estimated at Rs. 1,80,825. In view of this, the department re‑assessed income‑tax upon the appellant for the years 1967‑68 and 1968‑69. In this way, it was alleged, that the appellant had concealed particulars of his income and had deliberately furnished inaccurate particulars of his income by declaring income of Rs. 45,632 for the years 1964‑65 to 1969‑70 and by declaring taxable income to be Rs. 7,600 and Rs. 8,350 for the years during which the building was constructed. It was alleged, that the appellant had suppressed his true income which he had got constructed a building worth Rs. 1,80.825. It was further alleged, that in his Returns for the years 1970‑71. and 1971‑72, the appellant had not shown amounts of Rs. 5,500 and Rs. 7,900 respectively and upon detection, he claimed said amounts as cash credits. It was further alleged, that the appellant made a false statement, that he had invested in his property an amount of Rs. 50,000 although in his Wealth Statement, filed on 30‑6‑1969, he had shown investment in the property to be Rs. 70,OOJ. Lastly, it was alleged that the appellant made false statements to the effect, that his tenants had borne part of the expenses for construction of the building and that he had borrowed some money from his father. Such complaint was lodged by complainant M. A. Aleem, Assistant Income‑tax Officer, after obtaining approval from the Commissioner of Income‑tax, East Zone, Karachi, for prosecution of the appellant.

3. The substance of allegations was read over to the appellant, who pleaded not guilty and claimed trial.

4. Prosecution examined complainant Mt. A. Aleem Exh. 2 and P: W. Asad Arif Exh. 3 and closed prosecution vide Exh. 4.

5. In this statement Exh. 5 the appellant admitted, that he was assessed for income‑tax since the year 1964‑65. pie admitted, that under the Self Assessment Scheme, he submitted returns for years 1964‑65 to 1968‑69 to the concerned Income‑tax Officer, G' Circle, Karachi. He also admitted, that in his Income‑tax Returns Exhs. 2‑A, 2‑B, 2‑C, 2‑D and 2‑E, he showed his income to be Rs. 6,700, Rs. 7,200, Rs. 7,400, Rs. 7,600 and Rs. 8,350 respectively and on such amounts, he paid the tax. Appellant also admitted that on 24‑4‑1970, he made application Exh. 2‑F to the 1. T. O. for a clearance certificate in respect of the property situated on Plots Nos. 9/1‑R. C. 3 and 9/2‑R. C‑3 at Ranchore Quarters, Karachi, but stated that in said application, he showed value of the property sought to be sold at Rs. 70,000 and not at Rs. 50,000. The appellant admitted that in his subsequent correspondence with the I. T. O. and in his Affidavit Exh. 3‑C and in his Wealth Statement Exh. 2‑H, had shown value of said property to be Rs. 70,000. In respect of the property mentioned in application Exh. 2‑F, appellant stated, that the same was got constructed by him personally and not through contractors and that flooring of the various apartments in the building was done by respective tenants, who also installed electric fittings and Sui gas, in their various tenements. The appellant denied having made false declaration in Wealth Statement Exh. 2‑H, that value of his property was Rs. 70,C00 and that he had saving of Rs. 7,100 on 1‑7‑1963. The appellant denied having issued letter Exh. 3‑D to the Income‑tax authorities and‑.explained that he had realised Rs. 25,000 as loan from his father and had taken Rs. 10,000 from his son and said amount of Rs. 35,000, was invested in his said building besides an amount of Rs. 7,000 or Rs. 8,000 which he had in hand before being assessed to income‑tax. The appellant denied having concealed the particulars of his income and having furnished inaccurate particulars of his income in his Income‑tax Returns Exhs. 2‑D and 2‑E for 1967‑68 and 1968‑69. He denied having concealed particulars of his actual income in the Returns Exhs. 2‑A to 2‑E. He denied having furnished inaccurate particulars in said Returns and having suppressed true income spent on construction of the building. The appellant denied having concealed particulars of his income and having deliberately supplied in accurate particulars of his income in the Return Exh. 2‑I for 1970‑71 and in his Return Exh. 2‑J for 1971‑72. In respect of the amounts of Rs. 5,500 and Rs. 7,900 allegedly omitted from said Returns, the appellant explain; d, that said amounts were collected by him as donation for a mosque, but the same were mistakenly deposited in his account in the bank. The appellant reiterated,. that his tenants had spent on electric fittings, on Sui gas installations, on flooring and on shutters in his building. The appellant explained, that he had purchased a house contrary to wishes of Usman, who was friend of Asad Arif and hence the latter had deposed against him. The appellant concluded his statement by saying that his revision application against imposition of penalty of Rs. 60.000 upon him was pending with the Commissioner of Income‑tax, that the matter regarding assessment of his tax was pending in the High Court and that he had suffered a lot due to litigation and he was hard‑pressed due to financial worries.

6. In hiss defence, appellant examined D. Ws. Alijaz Ahmed Exh. 7, Attaur Rehman Exh. 8, Habibur Rehman Exh. 9 and Muhammad Rafi 'Exh. 10. Appellant closed his side under statement Exh. 11.

7. The learned trial Court taking into consideration the evidence adduced before it, convicted and sentenced the appellant above‑named as hereinbefore mentioned and consequently the appellant has filed the above appeal, on the grounds mentioned in the memo. of appeal.

8. The learned Advocate appearing for the appellant submitted in support of the above appeal as under

(a) That the learned trial Court has failed to appreciate the provisions of sections 51(2) and 52 of the Income‑tax Act in the light of the law laid down by cases reported in 1977 P Cr. L J 538, 1975 P Cr. L J 11,00 and judgment of this Court dated 24‑11‑1982 in Criminal Appeal No. 68/76 and as such the impugned judgment of learned trial Court cannot be sustained.

(b) That the impugned orders of the I. T. O. which formed the basis of the prosecution of the present appellant, were set aside by the learned Commissioner of Income‑tax, East Zone, Karachi and the cases of alleged mis-declaration and suppression of income had been remanded back to the I. T O. concerned for rehearing and as such the very basis of the prosecution of the appellant does not exist at present.

(c) The learned Advocate appearing for the State at the outset submitted, that he was not supporting the impugned judgment, as the original orders on the basis of which the prosecution against the appellant was started has been set aside and furthermore the account books and other documents on which the conviction of the appellant has been based were not proved, in accordance with the law, before the learned trial Court.

9. It is admitted position, that orders of I. T. O. which formed basis of the prosecution of the appellant have been set aside by the Commissioner of Income‑tax, East Zone, Karachi and as such cases reported in 1977 P Cr. L J 538 and 1975 P Cr. L J 1300 fully support the contentions of the learned Advocate for the appellant, that on this ground alone, conviction of the appellant cannot be sustained.

10. Furthermore in the absence of direct evidence to establish the exact income alleged to have been concealed by the appellant, provisions o B section 51(2) of Income‑tax Act, 1922 cannot be attracted. This view of mine is fully supported by cases 'reported in 1971 P T D 457 and 1970 P T D 576 as well as judgment dated 24‑11‑1982 of this Court in Criminal Appeal No. 68/76. In my opinion, the learned trial Court has based its judgments on mere surmises and deductions, rather than on any direct evidence about alleged concealment and false statements. I see no cogent reasons to agree with the conclusions and findings of the learned trial Court. I further find that statements of D. Ws. have been rejected without cogent reasons by the learned trial Court. Statement of appellant under section 342, Cr. P. C. coupled with the statements of D. Ws., in my opinion creates reasonable doubt, in prosecution version.

10. Therefore, I allow the above appeal and set aside conviction of the appellant and sentences awarded to him by impugned judgment and acquit him, by giving him benefit of doubt. Bail bonds executed by appellant stand discharged.

Appeal allowed.

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