Supreme Court: In Disproportionate Assets Cases, Income Tax Returns are Presumed To Be Accurate; The court Must Consider Inflation & Dynamic Factors

 We are of the view that the Appellant’s wife’s income

must be considered as well while calculating the total

income and assets. Both the Appellant and his wife

have filed the relevant income tax returns in order to

show their respective incomes and assets. The

Respondents in their Counter-Affidavit have not

denied these income tax returns or alleged them to be

forged or fabricated. Therefore, when a public servant

is submitting his income tax returns, they should be

presumed to be true and correct. If you duly consider

the income tax returns of the Appellant and his wife

for the check period of the year 1996-2020, the total

income is coming up to be Rs.1,21,06,268/-(Rupees

One Crore Twenty One Lakh Six Thousand Two

Hundred Sixty Eight only) which is in fact more than

the assets amounting to Rs.1,16,02,669/- (Rupees

One Crore Sixteen Lakh Two Thousand Six Hundred

Sixty Nine only) which is said to be the

disproportionate assets in question under the present

FIR. {Para 9}

10. Further, we have considered that the check period is

from the year 1996 to 2020, which is almost twenty

five years. It must be taken into account that over

such a long period of time, there is inflation and a

natural progression in the changing economy that

affects the value of assets such as property. This can

understandably lead to discrepancies in declaring the

value of assets over the years. Therefore, there should

be a more dynamic approach while considering an

individual’s income and assets over the span of two

decades, such as in the present case. The notion that

the declared value of an asset such as property or gold

will remain static is flawed. This has to be considered

while examining an individual’s assets and income

while making a determination regarding

disproportionate assets. Such an examination needs

to reflect such adjustments and changes as is natural

with the progression of time.

11. We find it pertinent to note that in cases such as these

where disproportionate assets are being dealt with,

the amounts under scrutiny cannot be looked at in

the same manner as one would do a Bank statement

or daily ledger of income and expenditure. The

scrutiny process cannot be as mechanical as that

when you are examining declared assets and the

income of an individual over such a long period of

time. There has to be a certain margin that is given

while making such an assessment as there are

invariably economical fluctuations that would have

taken place, especially over the course of nearly

twenty-five years. It is crucial to have a nuanced

appreciation of how time and economic conditions

affect asset value in such cases.

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.5009 OF 2024

[ARISING FROM SLP (Crl.) No. 10101/2024]

NIRANKAR NATH PANDEY   Vs  STATE OF U.P. & ORS. 

Dated: DECEMBER 04, 2024. 

Print Page

Supreme Court: The expression "known sources of income" occurring in Section 5(1)(e) of The prevention of Corruption Act mean the sources known to the prosecution and not sources relied upon and known to the accused.

  Even after Section 5(3) was deleted and Section 5(1)(e) was enacted, this Court in the case of Wasudeo Ram Chandra Kaidalwar (supra) has observed that the expression "known sources of income" occurring in Section 5(1)(e) has a definite legal connotation which in the context must mean the sources known to the prosecution and not sources relied upon and known to the accused. Section 5(1)(e), it was observed by this Court, casts a burden on the accused for it uses the words "for which the public servant cannot satisfactorily account". The onus is on the accused to account for and satisfactorily explain the assets.

{Para 40}

The first part of the section casts a burden on the prosecution and the second on the accused. When Section 5(1)(e) uses the words "for which the public servant cannot satisfactorily account", it is implied that the burden is on such public servant to account for the sources for the acquisition of disproportionate assets. The High Court, therefore, was in error in holding that a public servant charged for having disproportionate assets in his possession for which he cannot satisfactorily account, cannot be convicted of an offence under Section 5(2) read with Section 5(1)(e) of the Act unless the prosecution disproves all possible sources of income.

IN THE SUPREME COURT OF INDIA 

CRIMINAL APPELLATE JURISDICTION

 CRIMINAL APPEAL NOS. 1452 – 1453 OF 2022 

STATE Vs  R. SOUNDIRARASU ETC.

 Coram: DINESH MAHESHWARI; J., J.B. PARDIWALA; J.

Author: J.B. PARDIWALA, J.

Dated: SEPTEMBER 5, 2022.

Read full Judgment here: Click here

Print Page

Whether the court can discharge accused in disproportionate asset case after considering documents produced by him?

The High Court could be said to have donned the role of a chartered accountant. This is exactly what this Court observed in the case of Thommandru Hannah Vijayalakshmi @ T.H. Vijayalakshmi (supra). The High Court has completely ignored that it was not at the stage of trial or considering an appeal against a verdict in a trial. The High Court has enquired into the materials produced by the accused persons, compared with the information complied by the investigation agency and pronounced a verdict saying that the explanation offered by the accused persons deserves to be accepted applying the

doctrine of preponderance of probability. This entire exercise has been justified on account of the investigating officer not taking into the explanation offered by the public servant and also not taking into consideration the lawful acquired assets of the wife of the public servant i.e. the Respondent No. 2 herein.

79. By accepting the entire evidence put forward by the accused persons applying the doctrine of preponderance of probability, the case put up by the prosecution cannot be termed as “groundless”. As observed by this Court in C.D.S. Swami (supra) that the accused might have made statements before the investigating officer as to his alleged sources of income, but the same, strictly, would not be evidence in the case.

80. Section 13(1)(e) of the Act 1988 makes a departure from the principle of criminal jurisprudence that the burden will always lie on the prosecution to prove the ingredients of the offences charged and never shifts on the accused to disprove the charge framed against him. The legal effect of Section 13(1)(e) is that it is for the prosecution to establish that the accused was in possession of properties disproportionate to his known sources of income but the term “known sources of income” would mean the sources known to the prosecution and not the sources known to the accused and within the knowledge of the accused. It is for the accused to account satisfactorily for the money/assets in his hands. The onus in this regard is on the accused to give satisfactory explanation. The accused cannot make an attempt to discharge this onus upon him at the stage of Section 239 of the CrPC. At the stage of Section 239 of the CrPC, the Court has to only look into the prima facie case and decide whether the case put up by the prosecution is groundless.

81. In the overall view of the matter, we are convinced that the impugned orders passed by the High Court are not sustainable in law and deserve to be set aside. The circumstances emerging from the record of the case, prima facie, indicate the involvement of the accused persons in the alleged offence. Having regard to the materials on record, it cannot be said that the charge against the accused persons is groundless. There are triable issues in the matter. If there are triable issues, the Court is not expected to go into the veracity of the rival versions.

IN THE SUPREME COURT OF INDIA 

CRIMINAL APPELLATE JURISDICTION

 CRIMINAL APPEAL NOS. 1452 – 1453 OF 2022 

STATE Vs  R. SOUNDIRARASU ETC.

 Coram: DINESH MAHESHWARI; J., J.B. PARDIWALA; J.

Author: J.B. PARDIWALA, J.

Dated: SEPTEMBER 5, 2022

Print Page

Whether non-public servant can be prosecuted U/S 13 of prevention of corruption Act ?

 It would be useful, in the context of the present case, to recollect the decision of this Court, in P. Nallammal v. State (1999) 6 SCC 559 which observed, as follows:

“Thus, the two postulates must combine together for crystallization into the offence, namely, possession of property or resources disproportionate to the known sources of income of public servant and the inability of the public servant to account for it. Burden of proof regarding the first limb is on the prosecution whereas the onus is on the public servant to prove the second limb. So it is contended that a non-public servant has no role in the trial of the said offence and hence he cannot conceivably be tagged with the public servant for the offence under Section 13(1)(e) of the PC Act.”{ Para 30}

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1590 OF 2021

THE STATE BY S.P. THROUGH THE SPE CBI  Vs UTTAMCHAND BOHRA

Author: S. RAVINDRA BHAT, J.

Dated: December 9, 2021.

Print Page

Whether court should consider invalidity of sanction for prosecution while deciding application for discharge of accused?

 Further the issue relating to validity of the

sanction for prosecution could have been considered only

during trial since essentially the conclusion reached by

the High Court is with regard to the defective sanction

since according to the High Court, the procedure of

providing opportunity for explanation was not followed

which will result in the sanction being defective. In that

regard, the decision in the case of Dinesh Kumar vs.

Chairman, Airport Authority of India, (2012) 1 SCC

532 relied upon by the learned Additional Solicitor

General would be relevant since it is held therein that

there is a distinction between the absence of sanction

and the alleged invalidity on account of nonapplication

of mind. The absence of sanction no doubt can be

agitated at the threshold but the invalidity of the sanction

is to be raised during the trial. In the instant facts,

admittedly there is a sanction though the accused seek to

pick holes in the manner the sanction has been granted

and to claim that the same is defective which is a matter

to be considered in the trial.

NONREPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 14891490

OF 2019

Central Bureau of Investigation (CBI)  Vs Mrs. Pramila Virendra Kumar 

Dated:September 25, 2019

A.S. Bopanna,J.

Print Page

Supreme court: Government official’s illegal assets can not be attached if he’s dead

NEW DELHI: Disproportionate assets amassed by a government official cannot be attached from his family members if the officer dies during pendency of trial against him, the Supreme Court ruled on Monday.

Terming the orders of a trial court and the Andhra Pradesh high court allowing attachment of assets of a government official after his death a "gross miscarriage of justice", a bench of Justices S A Bobde and Amitava Roy said no proceedings could be allowed against a dead man.

The bench also slammed the trial court for convicting the accused, Ramachandraiah, for misappropriating Rs 657,355, two years after his death. The attachment order was passed on the basis of the conviction order and the HC also approved the attachment proceedings.

Print Page

Under which circumstances the court should not be frame charge against accused in disproportionate asset case?

Janaki Ballav Patnaik v. State of Orissa, 1995 CRI.L.J. 1110, wherein this Court had held that when a

source of income of the accused or his wife was known to the

prosecution and the prosecution has failed to take that source into consideration and that income would have a vital bearing  on the framing of charge, the Court would be fully justified in refusing to frame the charge, leaving it open for the prosecution to further investigate into the matter and if materials justified to file a fresh charge-sheet.

HIGH COURT OF ORISSA : CUTTACK
CRLMC No. 161 of 2014

Sri Rajendra Kumar Pati  Vs  Union of India

PRESENT :
SHRI JUSTICE S.C. PARIJA

Date of Judgment : 06.01.2015
Citation;2015 CRLJ1392 Orissa

Print Page

Whether accused can put his defence at the time of framing of charge?

At the stage of framing of charge roving and
fishing inquiry is impermissible. If the contention of
the accused is accepted, there would be a mini-trial at
the stage of framing of charge. That would defeat the
object of the Code. It is well settled that at the stage of
framing of charge the defence of the accused cannot be
put forth. The acceptance of the contention of the
learned counsel for the accused would mean
permitting the accused to adduce his defence at the
stage of framing of charge and for examination thereof
at that stage which is against the criminal
jurisprudence. By way of illustration, it may be noted
that the plea of alibi taken by the accused may have to
be examined at the stage of framing of charge if the
contention of the accused is accepted despite the well-
settled proposition that it is for the accused to lead
evidence at the trial to sustain such a plea. The
accused would be entitled to produce materials and
documents in proof of such a plea at the stage of
framing of the charge, in case we accept the contention
put forth on behalf of the accused. That has never
been the intention of the law well settled for over one
hundred years now.
It is in this light that the
provision about hearing the submissions of the
accused as postulated by Section 227 is to be
understood. It only means hearing the submissions of
the accused on the record of the case as filed by the
prosecution and documents submitted therewith and
nothing more.
The expression “hearing the
submissions of the accused” cannot mean opportunity
to file material to be granted to the accused and
thereby changing the settled law. At the stage of
framing of charge hearing the submissions of the
accused has to be confined to the material produced
by the police.
HIGH COURT OF ORISSA : CUTTACK
CRLMC No. 161 of 2014
In the matter of an application under Section 482 of the Code of
Criminal Procedure.

Sri Rajendra Kumar Pati V Union of India

PRESENT :
THE HONOURABLE SHRI JUSTICE S.C. PARIJA

Date of Judgment : 06.01.2015

Citation;2015 CRLJ1392 Orissa

Print Page

Whether offences U/S 13(1)(e) of prevention of corruption Act can be abetted by another person?

Corruption - Public Servants--Kith & Kin--Co-accused--Proceedings initiated against kith and kin of public servants accused of corruption, and such kith and kin arraigned as co-accused--Whether it is permissible for kith and kin to be prosecuted--The contention that the offence under S. 13(1)(e) of the P.C. Act is unabettable, since the nub of the offence is the failure of the public servant to account for the excess wealth which none else can possibly do, cannot be accepted. As shown by several examples given by the learned counsel for the State, it is wholly possible for persons who may be non-public servants to abet the offence of possessing unaccounted wealth disproportionate to the known sources of income of a public servant, therefore such persons, being "abettors", can also be prosecuted along with the public servant. Indian Penal Code: S. 109; Prevention of Corruption Act, 1988: S. 13(1)(e). "..........the two postulates must combine together for crystallization into the offence, namely, possession of property or resources disproportionate to the known sources of income of public servant and the inability of the public servant to account for it. Burden of proof regarding the first limb is on the prosecution whereas the onus is on the public servant to prove the second limb. So it is contended that a non-public servant has no role in the trial of the said offence and hence he cannot conceivably be tagged with the public servant for the offence under Section 13(1)(e) of the P.C. Act. ...........the legislative intent is manifest that abettors of all the different offences under Section 13(1)(e) of the P.C. Act should also be dealt with along with the public servant in the same trial held by the Special Judge. ...........There is no force in the contention that the offences under Section 13(1)(e) cannot be abetted by another person. ...........Shri Shanti Bhushan cited certain illustrations which, according to us, would amplify the cases of abetments fitting with each of the three clauses in Section 107 of the Penal Code vis-a-vis Section 13(1)(e) of the P.C. Act. ........The first illustration cited is this:

If A, a close relative of the public servant tells him of how other public servants have become more wealthy by receiving bribes and A persuades the public servant to do the same in order to become rich and the public servant acts accordingly. If it is a proved position there cannot be any doubt that A has abetted the offence by instigation.

........Next illustration is this:

Four persons including the public servant decide to raise a bulk amount through bribery and the remaining persons prompt the public servant to keep such money in their names. If this is a proved position then all the said persons are guilty of abetment through conspiracy.

........The last illustration is this:

If a public servant tells A, a close friend of him, that he has acquired considerable wealth through bribery but he cannot keep them as he has no known source of income to account, he requests A to keep the said wealth in A's name, and A obliges the public servant in doing so. If it is a proved position A is guilty of abetment filling under the "Thirdly" clause of Section 107 of the Penal Code.

........Such illustrations are apt examples of how the offence under Section 13(1)(e) of the P.C. Act can be abetted by non-public servants. The only mode of prosecuting such offender is through the trial envisaged in the P.C. Act. .........we are unable to appreciate the contentions of the appellants that they are not liable to be proceeded against under the P.C. Act."

IN THE SUPREME COURT OF INDIA

Crl.A. Nos. 758-770 of 1999

Decided On: 09.08.1999

 P. Nallammal Etc. 
Vs.
 State Rep. by Inspector of Police

Hon'ble Judges/Coram:
K.T. Thomas and M.B. Shah, JJ.

Citation:  AIR1999SC2556,  1999CriLJ3967,(1999)6SCC559,

Print Page

When offence of abetment for commission of offence under prevention of corruption Act is not made out?

During the pendency of the present application, original
accused no.1, who was applicant no.1, passed away and, therefore, his

name came to be deleted from the cause title of the application. Now,
the application is being prosecuted only by his wife, accused no. 2.
The present applicant no.2, who is accused no.2, is a non-
public servant and is facing a prosecution for commission of offence of
collecting assets by a public servant disproportionate to his known source
of income. The public servant, the original accused no.1 and husband of
present applicant, is no more alive and, therefore, learned counsel for
applicant no. 2 submits that the offence alleged against the applicant
cannot be proved. Though, learned APP disagrees, he could not show to
me as to how the offence of abetment as alleged against the applicant
no. 2 could be proved in the absence of the public servant, deceased
applicant no. 1 or accused no. 1. If it is the case that the main offence of
amassing illegal wealth disproportionate to the known source of income
cannot be proved by the prosecution against the public servant, i.e.
accused no. 1, having regard to the nature of allegations made against
applicant no. 2, offence of abetment of the offence can obviously be not
proved against the person who is not a public servant, i.e. accused no.2.
Allegations against applicant no. 2 or accused no. 2 are that she abetted
the commission of offence by her husband, the accused no. 1,
intentionally aiding him to amass the wealth.
by
The intentional aiding was
in the nature of holding in her name the assets purchased by her
husband
using ill-gotten money.
The fact that funds used for
purchasing assets were supplied by the husband, the deceased public

servant, has to be proved first in this case. It cannot be proved in the
absence of deceased public servant and, therefore, offence of abetment
of the nature alleged against his wife, the non-public servant,

also be proved.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
CRIMINAL  APPLICATION (apl) No. 1577 OF 2007
1. Prakash Ramaji Ambagade
... DELETED
(As per Court's order dtd. 13.11.2014)
2. Smt. Nalini Prakash Ambagade
VERSUS
The State of Maharashtra,
through Anti Corruption Bureau,
Nagpur.
CORAM  :   
 S.B. SHUKRE, J.
DATED  :  29.01. 2015.
Citation;2015ALLMR(Cri)1564

Print Page

Whether accused can be convicted under prevention of corruption Act when disproportionate asset in his possession in less?

 In State of Maharashtra v. Pollonji Darabshaw Daruwalla MANU/SC/0294/1987 : AIR 1988 SC 88 this Court held as under:
...on a consideration of the matter it cannot be said that there is no disproportion or even a sizeable disproportion.... There are also other possible errors in the calculations in regard to point (c). The finding becomes inescapable that the assets were in excess of the known sources of income. But on the question whether the extent of the disproportion is such as to justify a conviction for criminal misconduct...., a somewhat liberal view requires to be taken of what proportion of assets in excess of the known sources of income constitutes "disproportion" for purposes of Section 5(1)(e) of the Act.

Equivalent Citation: AIR2011SC1363, 2011CriLJ1770, 2011(2)JCC1153, 2011(1)N.C.C.861, 2011(2)RCR(Criminal)99, 2011(2)SCALE735, (2011)4SCC402, (2011)2SCC(Cri)258, [2011]3SCR242
IN THE SUPREME COURT OF INDIA
Criminal Appeal No. 945 of 2003
Decided On: 25.02.2011
Appellants: Ashok Tshering Bhutia
Vs.
Respondent: State of Sikkim
Hon'ble Judges/Coram:
P. Sathasivam and B. S. Chauhan, JJ.

Print Page