Major General Anand Kumar Kapur (Retd) vs C B I
- Court
- Delhi High Court
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 19.02.2026
Judgment pronounced on: 01 .07.2026
+ CRL.A. 1099/2016 & CRL.M.A. 20337/2022, CRL.M.A.
28669/2024
MAJOR GENERAL ANAND KUMAR KAPUR (RETD)
...Appellant
Through: Mr. Vivek Kohli, Sr Adv. with Mr.
Shashank Dewan, Ms. Nikita
Dewan, Mr. Ayush Kumar, Mr.
Manan Kesar, Advs.
versus
CBI ... Respondent
Through:Mr. Rajesh Kumar, SPP-CBI with Mr.
Changez Khan, Adv.
+ CRL.A. 86/2017 & CRL.M.A. 19559/2023, CRL.M.A.
21368/2023
MAJOR GENERAL ANAND KUMAR KAPUR (RETD)
...Appellant
Through: Mr. Vivek Kohli, Sr Adv. with Mr.
Shashank Dewan, Ms. Nikita
Dewan, Mr. Ayush Kumar, Mr.
Manan Kesar, Advs.
versus
CBI ...Respondent
Through: Mr. Rajesh Kumar, SPP-CBI with Mr.
Changez Khan, Adv.
Digitally Signed
By:SAHAJ PREET KAUR
Signing Date:01.07.2026
19:03:16
CRL.A. 1099/2016 and CRL.A. 86/2017 Page 1 of 117
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
J U D G M E N T
CRL.M.A. 28669/2024 in CRL.A. 1099/2016
1. Mr. Kohli, learned senior counsel for the Appellant, on instructions
does not press the present application in view of the Appeal, hence
the same is dismissed as withdrawn.
CRL.A. 1099/2016
FACTUAL BACKGROUND
2. The present appeal has been preferred by the Appellant assailing the
Judgment of Conviction dated 27.09.2016 and the Order on Sentence
dated 29.09.2016 passed by the learned Special Judge, Patiala House
Courts, New Delhi, ( “Trial Court” ) whereby the Appellant has been
convicted under Section 13(1)(e) read with Section 13(2) of the
Prevention of Corruption Act, 1988 ( “PCA” ) and sentenced to
undergo rigorous imprisonment for one year along with fine of Rs.
50,000/-, coupled with confiscation of assets amounting to Rs.
2,22,04,290/-.
3. The Appellant joined the Indian Army in 1971. After undergoing the
rigors of Special Selection Board ( “SSB” ) he was selected for
promotion to the rank of Lieutenant General on 05.11.2007, but the
result was withheld for over ten months, compelling the Appellant to
file W.P.(C) No. 6856/2008 before the High Court of Delhi. During
the proceedings, it emerged that merely 20 days prior to the
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promotion board, the subject FIR had been registered by the CBI on
the basis of an anonymous source complaint.
4. The Hon’ble High Court, vide orders dated 19.02.2009 and
07.10.2009, directed reconsideration of the matter and thereafter
ordered promotion of the Appellant to the rank of Lieutenant General.
Significantly, within 20 days of the order dated 07.10.2009, the CBI
filed the chargesheet in RC AC-2/2007/A/0003/CBI/ACU-II/ND on
26.10.2009 alleging possession of disproportionate assets worth Rs.
3,37,02,592/- during the check period 14.11.1971 to 10.10.2007
against the Appellant and his wife, Ms. Mridula Kapur.
5. Aggrieved by the order dated 07.10.2009 passed by the Hon’ble High
Court of Delhi, the Union of India preferred Civil Appeal No. 27 of
2016 arising out of SLP (C) No. 27107 of 2009 before the Hon’ble
Supreme Court, pursuant whereto the promotion of the Appellant was
stayed and he superannuated as a Major General on 30.11.2009.
6. The Hon’ble Supreme Court, vide order dated 05.01.2016, while
disposing of the appeal on the plea of the Appellant, directed
expeditious conclusion of the trial by September 2016 and observed
that neither side shall seek any unnecessary adjournment before the
Trial Court.
7. Thereafter pursuant to the direction of the Hon’ble Supreme Court,
the Trial proceeded on a fast track basis, and the charges were framed
on 22.02.2016 under Section 13(2) and 13(1)(e) of the PCA. From
02.03.2016 - 07.09.2016, the prosecution examined 80 witnesses and
three days were allotted to the defence for recording of evidence, i.e.,
14.09.2016 - 16.09.2016.
8. The case of the prosecution, in brief, was that an FIR dated
08.10.2007 came to be registered by the CBI on the basis of alleged
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“oral source information”, alleging that the Appellant, while serving
in the Indian Army during the period 14.11.1971 to 31.05.2006, had
amassed assets disproportionate to his known sources of income.
9. The trial culminated in conviction of the Appellant and acquittal of
his wife, Accused No. 2. The Trial Court, while accepting certain
computations of expenditure put forth by the defence, nonetheless
concluded that the Appellant was in possession of disproportionate
assets to the extent of Rs. 2,22,04,290/-. Aggrieved by the said
findings, the Appellant has preferred the present appeal.
10. Further, vide Order on Sentence dated 29.09.2016, the Appellant was
sentenced to undergo rigorous imprisonment for one year along with a
fine of Rs. 50,000/- for the aforesaid offence. Subsequently, by order
dated 30.09.2016, the Trial Court directed confiscation of assets
equivalent to the alleged disproportionate assets amounting to Rs.
2,22,04,290/-. Aggrieved thereby, the Appellant has preferred the
present Criminal Appeal No. 86/2017 challenging the confiscation
order.
SUBMISSIONS ON BEHALF OF THE APPELLANT
11. Mr. Vivek Kohli, leaned senior counsel for the Appellant, submits
that the impugned judgment is unsustainable in law and on facts,
being founded on conjectures, surmises, and inadmissible evidence,
and has resulted in a grave violation of the Appellant’s right to a fair
trial under Article 21 of the Constitution of India.
12. He states that the prosecution has failed to establish the ingredients of
an offence under Section 13(1)(e) of the PCA being disproportionate
assets. The Appellant had duly disclosed all his income, assets, and
financial transactions through Income Tax Returns ( “ITRs” ) and
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official declarations made to the Army authorities. It is further
contended that all transactions were conducted through lawful
banking channels.
Validity of Sanction Order
13. The first ground raised by Mr. Kohli is on validity of sanction order
dated 29.09.2009.It is stated that despite a voluminous investigation
spanning over two years, involving examination of numerous
witnesses and documents, sanction was granted within a short period
of approximately 20 days, rendering the exercise perfunctory.
14. He further states that the sanction for prosecution is vitiated due to
non-application of mind and non-placement of relevant material
before the sanctioning authority as mandated under Section 19 of the
PCA (pre amendment) and para 22.16 of the CBI Manual (Crime),
2005, read with Circular No. 21/33/98-PD dated 06.05.1999. Reliance
is placed on Ashok Kumar Aggarwal v. CBI, 2016 SCC Online Del
214.
15. The prosecution sought sanction on 30.08.2009, which was granted
on 29.09.2009. However, it is an admitted case that the Appellant’s
explanation and complete witness testimonies particularly that of PW-
149, recorded after the file was sent were not placed before the
Sanctioning Authority. Additionally, the Investigating Officer ( “IO” )
(PW-76) acknowledged in his cross-examination that a letter dated
14.09.2008 (Ex. PW-76/DA), received on 15.09.2008, was neither
considered by him nor forwarded to the Sanctioning Authority along
with the explanations furnished by the Appellant in Annexures 1 to 6.
16. Additionally, many relevant documents and testimonies were
considered irrelevant by IO and hence were not placed before the
Sanctioning Authority. It is therefore contended that non-supply of all
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the documents along with explanation of the Appellant to the
Sanctioning Authority hits the foundation of the sanction order.
Defective Investigation
17. The second ground urged is that the investigation was biased,
motivated, and conducted in a perfunctory manner with the object of
obstructing Appellant’s promotion to the rank of Lieutenant General.
Several material witnesses, including the Appellant’s mother,
property owners, tenants, and other key transactional witnesses, were
not examined, resulting in the suppression of crucial evidence
concerning sources of income. The cross-examination of the IO
further revealed multiple investigative lapses, including failure to
consider the Appellant’s explanations, verify income tax returns,
banking and service records, examine relevant wills and witnesses,
etc. These cumulative deficiencies rendered the investigation
incomplete and unreliable, entitling the Appellant to the benefit of
doubt and warranting the setting aside of the impugned judgment.
Mistrial
18. The next contention is that the trial stands vitiated due to the illegal
closure of defence evidence, in violation of the Appellant’s right to a
fair trial under Article 21 of the Constitution of India and Section 386
Cr.P.C. It is submitted that the Trial Court committed a grave error in
closing the Appellant’s right to lead defence evidence on 16.09.2016
solely on account of a lawyers’ strike, despite the Appellant being
during present in Court on that day for his evidence.
19. It is submitted that out of nine defence witnesses, four were
examined, while the remaining including the Appellant himself under
Section 315 Cr.P.C. could not be examined due to circumstances
beyond his control . The Trial Court granted only three consecutive
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days for the recording of defence evidence in respect of nine defence
witnesses. Pursuant thereto, four witnesses were examined and their
testimonies were duly recorded on 14.09.2016 and 15.09.2016.
However, on 16.09.2016, owing to a lawyers' strike, the Appellant
was unable to adduce further evidence.
20. Despite the circumstances being beyond the Appellant’s control, the
Trial Court proceeded to close the defence evidence. Such closure
effectively amounted to an impermissible review of its earlier order
dated 09.09.2016, whereby the Appellant had been permitted to lead
defence evidence, and resulted in a denial of the right guaranteed
under Section 233 Cr.P.C and Right to fair trial under Article 21 of
the Constitution of India. Reliance is placed on Munshi Prasad v.
State of Bihar (2002) 1 SCC 351, DSP, Chennai v. K. Inbasagaran
(2006) 1 SCC 420.
Affidavit of mother and will of the Father of the Appellant
21. It is submitted that the Trial Court erred in rejecting the affidavit of
the Appellant’s mother and the Will of his father, thereby
disregarding the legitimate source of income. The record reflects that
the mother was a person of sufficient means, with substantial assets
and inheritance, which was neither investigated nor rebutted by the
prosecution, despite the IO admitting that he neither considered her
affidavits nor recorded her statement. Additionally, undue emphasis
was placed on the Appellant receiving financial support from his
mother without repayment, which, in the context of familial relations,
cannot be a basis to discard such income. The impugned findings are
thus contradictory, unsupported by evidence. Reliance is placed on
K.Dhanalakshmi v. CBI, 2023 SCC OnLine Del 105.
Long Check Period of 36 years
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22. The next ground urged is of excessive long check period of
approximately 36 years, contending that the same is arbitrary and
prejudicial. It is submitted that such a prolonged period renders it
impossible to produce documentary evidence, particularly when
statutory requirements mandate retention of records only for a limited
duration.
Computation of Disproportionate Assets
23. Mr. Kohli submits that the computation of disproportionate assets is
fundamentally flawed, as the prosecution has:(i) Overvalued assets
without evidence; and (ii) Ignored legitimate income and receipts. It
is argued that a correct computation based on evidence would
demonstrate that the Appellant had surplus income rather than
disproportionate assets.
24. Half Basement, D-23, Defence Colony, New Delhi: It is submitted
that the Trial Court has gravely erred in its assessment of the value of
the said property. The evidence on record, including the testimony of
PW-33 (Sh. Pawan Kumar, EMCD), clearly establishes the sale
consideration at Rs. 15,12,000/-, was duly corroborated by payment
of stamp duty and reflected in municipal records. The same valuation
is also substantiated by ITRs for AY 2008 - 2009 and the testimony of
PW-41. Even the declaration made to Army Headquarters confirms
the said valuation.
25. It is submitted that the reliance placed by the Trial Court on an
unregistered, unattested, and unsigned document indicating a value of
Rs. 41,12,000/- is misplaced. The said document, being merely a
proposed agreement for commercial purposes (leasing to Lord
Krishna Bank), lacks evidentiary value and cannot form the basis of
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valuation. The non-examination of the alleged co-signatory further
renders the document unreliable.
26. The Trial Court has also failed to appreciate the inherent
improbability in valuing a basement at twice the value of a
comparable ground floor property within the same premises. The
accepted value of the ground floor unit at Rs. 20,54,000/- and sale of
another basement portion at Rs. 10,00,000/- to another party
demolishes the prosecution’s valuation. Accordingly, the correct
valuation of Rs. 15,12,000/- ought to be accepted, reducing the
alleged disproportionate assets ( “DA” ) by Rs. 26,00,000/-.
27. Property at Dauna Paula, Goa: It is submitted that the inclusion of
the property at House No. 506, Dauna Paula, Goa, in the assets of the
Appellant is wholly erroneous. The registered Sale Deed (Ex. PW-
75/A) clearly establishes that the property stands in the name of Mr.
Dhruv Kapur, son of the Appellant, who is an independent income tax
assessee. The property was willed by the grandfather to Mrs. Santosh
Kapur ( mother of the Appellant ) who gifted it by gift deed to Dhruv
Kapoor (son of the Appellant). The same is evident from affidavits
(Ex. PW-76/DM-1) and (Ex. PW-76/DN) and the ITRs of Mr. Dhruv
Kapur.
28. Learned senior counsel, further submits that the IO has admitted
failure to verify bank transactions or examine relevant parties,
including the donor and donee. There is no evidence implicating the
Appellant in the acquisition. Accordingly, the inclusion of Rs.
30,21,000/- is unsustainable and liable to be excluded from the DA
computation.
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29. With respect to the movable assets, the Trial Court erred in
disregarding the affidavit of mother, resulting in an incorrect
assessment of the assets attributed to the Appellant. The findings
relating to the movable properties are liable to be set aside for the
following reasons:
(i) PPF Account (SBI, Panipat): The balance in the account
was Rs. 6,68,552/-. Out of this, contributions amounting to
Rs. 2,36,000/- were made by the Appellant’s parents from
known and disclosed sources of income.
(ii) Post Office Investment (Lodhi Road): The investment of
Rs. 3,00,000/- was made to Mrs. Mridula Kapur from
funds gifted by the Appellant’s mother out of the sale
proceeds of her properties. The same is substantiated by
her affidavit.
(iii) HDFC Standard Life Insurance Policy: The premium
amount of Rs. 4,75,000/- was paid by the Appellant’s
mother in the name of Accused No. 2. The inability of the
insurance company to trace records cannot outweigh the
affidavits establishing the source of funds.
(iv) Jewellery: The valuation of jewellery at Rs. 18,00,000/- is
wholly unsupported by evidence. The prosecution neither
proved any valuation report nor examined the valuer. On
the contrary, the Appellant placed on record wealth tax
returns to show the gold in possession. In the absence of
reliable proof of valuation, no adverse inference could
have been drawn.
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(v) Cash: A sum of Rs. 5,00,000/- recovered during the search
belonged to the Appellant’s father-in-law, a fact which was
accepted by the Court and was released. The balance
amount was duly explained as contributions received from
family members for medical treatment and is supported by
affidavits and oral testimony.
(vi) Foreign Currency: The foreign currency recovered
pertained to an advance received by the Appellant’s wife
in the course of her employment with Kimaya Store. The
source of the amount is corroborated by independent
witnesses and affidavits and cannot be attributed to the
Appellant.
30. Agricultural Income: It is submitted that the Trial Court failed to
correctly assess the agricultural income derived from approximately
34 bighas and 46 kanals of agricultural land situated in Panipat and
Karnal. It is submitted that the land was cultivated through a tenant,
Sh. Surjit, and the income was received by the Appellant’s parents on
his behalf and subsequently transferred to the Appellant. The same is
supported by the tenant’s affidavit, the Tehsildar’s certificate, the
testimony of DW-4, and the affidavits and testamentary documents of
the Appellant’s parents. The Appellant further submits that despite the
tenant’s affidavit having been furnished during investigation, he was
neither examined by the IO nor permitted to testify due to the
premature closure of defence evidence. It is therefore contended that
the Trial Court erred in disregarding the evidence and fixing the
agricultural income to a lower amount. Hence the value of income of
Appellant would increase by Rs. 10,83,030/-.
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31. HUF Income: It is submitted that the income of the Hindu Undivided
Family ( “HUF” ) was incorrectly computed by the Trial Court. It is
contended that the agricultural income received by the Appellant’s
parents through the tenant, as reflected in the affidavits and other
documents, was not accounted for. The Appellant also challenges the
treatment of rental income, arguing that the Trial Court wrongly
adopted the income reflected after deduction under Section 24(a) of
the Income Tax Act instead of considering the gross rental receipts.
According to the Appellant, the statutory deduction under the Income
Tax Act is merely a tax benefit and does not diminish the actual
income received from the property which is supported by PW-61
cross examination. Hence, the value of income of the Appellant would
increase by Rs. 14,59,389/-.
32. Interest Income from HDFC and PNB Bank Accounts: Mr. Kohli
submits that the Trial Court erred in computing the interest earned
from the savings bank accounts and fixed deposits maintained with
HDFC Bank. It is contended that the actual interest accrued during the
relevant period is reflected in the ITRs, Form-16 and TDS records
issued by the bank, whereas the Trial Court relied only upon the net
amounts credited in the bank statements without accounting for tax
deducted at source. Consequently, the Appellant claims that the
interest income was understated. The Appellant similarly challenges
the computation of interest earned on fixed deposits maintained with
Punjab National Bank. Hence, the value of income of the Appellant
would increase by Rs. 4,07,083/- and Rs. 1,43,482/- respectively.
33. Rental Income from Defence Colony Property: The Appellant
contends that the Trial Court wrongly assessed the rental income
generated from the Defence Colony property by considering only the
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net income remaining after the standard deduction permissible under
Section 24(a) of the Income Tax Act. It is submitted that the gross rent
received from tenants represents the actual income earned, whereas
the statutory deduction is merely a tax concession granted by law.
Therefore, according to the Appellant, the entire rental receipt ought
to have been included while computing his income. Hence, the value
of income of the Appellant would increase by Rs. 8,85,626/-.
34. Income from Mridula Contract Services: The Appellant further
assails the computation of income derived from Mridula Contract
Services. It is submitted that the Trial Court accepted the income
figures after deducting contractual expenses, while simultaneously
including the same expenses separately under the expenditure head.
According to the Appellant, this resulted in a double deduction of the
same amount and consequently an artificial reduction of the income
attributable to the business. It is therefore contended that the full
income received from the contractual services ought to have been
considered while assessing the Appellant’s financial resources. Hence
the net income of the Appellant would increase by Rs. 9,71,587/-.
35. It is also submitted that the Trial Court has unjustifiably rejected the
following legitimate sources of income, as these amounts, were
transacted through legitimate channels and supported by evidence.
i. Friendly loans (Maj. A. Ganesan, Smt. L. Maira, Sh. H.N.
Maira) duly supported by banking records;
ii. Substantial financial support from the Appellant’s mother (Rs.
50,93,082/-), evidenced through bank transfers and sale
proceeds;
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iii. Gifts from parents and in-laws, supported by affidavits and
financial capacity;
iv. Income from minor children’s investments declared in ITRs;
v. Savings of Mrs. Mridula Kapur from employment in Oman;
vi. Transfers from parental accounts to HUF.
36. Further it is stated that the Trial Court has erroneously treated the
Shimla property transaction as a loss. Evidence on record (Ex. P-102)
establishes that the Appellant earned a profit of Rs. 12,33,000/-. The
non-examination of the purchaser warrants an adverse inference
against the prosecution. Consequently, instead of increasing
expenditure, the said amount ought to reduce it, impacting the DA
computation by Rs. 24,66,000/-.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
37. Mr. Kumar, learned Special Public Prosecutor for the Respondent has
submitted that the present case was registered on the basis of source
information received by the police, which disclosed that during the
period from 14.11.1971 to 31.05.2006, the accused had amassed
assets through corrupt and illegal means either in his own name or in
the names of his family members, which were allegedly
disproportionate to his known sources of income.
38. It is further submitted that, while adjudicating the present matter, the
Trial Court has taken a lenient view and ignored minor expenditures
while assessing the disproportionate assets of the accused. It is also
stated that the prosecution has succeeded in proving its case beyond
reasonable doubt and that the findings recorded by the Trial Court do
not warrant any interference by this Hon’ble Court. With regard to
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other aspects of the case, the following contentions have been put
forth:
Validity Of Sanction
39. It is submitted that the sanction order was proved by the sanctioning
authority, namely R.K. Gupta (PW-8). The said witness categorically
deposed that, prior to according sanction for prosecution of the
Appellant, he had carefully examined the relevant records and
documents placed before him and, upon due application of mind,
granted the sanction in accordance with law. Accordingly, the
sanction accorded against the Appellant is valid in the eyes of law.
Reliance is placed on Parkash Singh Badal v. State of Punjab, (2007)
1 SCC 1, CBI v. Jagat Ram, 2024 SCC OnLine SC 3675.
Effect of Closure of Defence Evidence
40. It is submitted that the Trial Court conducted the proceedings in a
time-bound manner in compliance with the directions issued by the
Hon’ble Supreme Court vide order dated 05.01.2016 in Civil Appeal
No. 27 of 2016 arising out of SLP (C) No. 27107 of 2009. Despite
sufficient opportunities having been granted to the Appellant to lead
defence evidence, no such evidence was produced. Consequently, vide
order dated 16.09.2016, the Trial Court rightly closed the defence
evidence. Reliance is placed on Harish Uppal v. Union of India ,
(2003) 2 SCC 45 wherein it was held that strikes or boycotts by
advocates cannot obstruct judicial proceedings or impede the
administration of justice.
41. It is further submitted that, despite alleging prejudice on account of
closure of defence evidence, the Appellant neither availed the
remedies available under Sections 311 and 315 Cr.P.C. before the
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Trial Court nor filed any application under Section 391 Cr.P.C. at the
time of preferring the present appeal on 17.11.2016. Significantly, the
application under Section 391 Cr.P.C. came to be filed only in the
year 2024, after an unexplained delay of nearly eight years, which
itself demonstrates the absence of any genuine prejudice or urgency in
seeking additional evidence. Hence the Appellant’s right to adduce
evidence was rightly closed.
Alleged Defect in Investigation
42. Mr. Kumar submits that the investigation in the present case was
conducted in a fair and proper manner, with the IO collecting and
proving all material oral and documentary evidence necessary to
establish the guilt of the accused. In any event, even assuming the
existence of any minor irregularity or defect in the investigation, the
same would not vitiate the prosecution case or entitle the Appellant to
acquittal in the absence of any demonstrated prejudice. Reliance is
placed on State of Karnataka v. K. Yarappa Reddy, (1999) 8 SCC 715
and Zindar Ali v. State of West Bengal, (2009) 3 SCC 761 to state that
defects in investigation do not affect a conviction where the evidence
on record otherwise proves the guilt of the accused beyond reasonable
doubt.
Onus of Proof in DA cases
43. It is stated that in DA cases, the burden of proof is divisible into two
distinct parts. The expression “known sources of income” occurring
in the statute refers to the sources known to the prosecution, and the
initial burden squarely rests upon the prosecution to establish the
same. The second part of the provision, namely, “for which the public
servant cannot satisfactorily account”, casts a corresponding burden
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upon the accused to furnish a satisfactory explanation regarding the
assets found in his possession.
44. Reliance has been placed on State of T.N. v. R. Soundirarasu , (2023) 6
SCC 768 wherein it has been held that, in order to bring home a
charge under Criminal misconduct, the prosecution is required to
establish the following foundational facts: (i) that the accused is a
public servant; (ii) the nature and extent of the pecuniary resources or
property found in his possession; (iii) the known sources of income of
the accused, meaning thereby the sources known to the prosecution;
and (iv) that the resources or property so found were disproportionate
to his known sources of income. It has further been held that once the
aforesaid ingredients stand established, the offence of criminal
misconduct stands completed unless the accused is able to
satisfactorily account for such disproportionate assets.
45. At that stage, the burden shifts upon the accused to explain the
possession of such assets, though the standard of proof required on
the part of the accused is not beyond reasonable doubt, but only that
of preponderance of probabilities, as laid down in V.D. Jhingan v.
State of U.P., AIR 1966 SC 1762.
Rejection of Affidavit of Mother and Will of the Father of Appellant
46. With respect to the affidavit of the mother of Appellant and the
alleged will of his father, it is stated that the Trial Court has rightly
rejected both documents as they lack credibility and evidentiary
value. The affidavit of the mother, was executed on 28.03.2012, i.e.,
after filing of the charge-sheet, clearly rendering it an afterthought.
Moreover, the affidavit neither discloses any particulars of bank
accounts nor explains the source of the alleged substantial funds.
Significantly, the registered will dated 27.10.2002 executed by the
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mother does not contain any reference to possession of any large
amount of money, which otherwise would have ordinarily found
mention therein.
47. Similarly, it is stated that the alleged will of the father of Appellant, is
merely a photocopy and remains unregistered. Considering that the
father of Appellant was an advocate, the absence of registration and
non-production of the original creates serious doubt regarding its
genuineness and authenticity.
48. It has been contended on behalf of the Appellant that the Trial Court
erred in law while assessing the assets held by the Appellant prior to
the check period. In this regard, it has been submitted that the
Investigating Agency assessed the pre-check period assets on the
basis of certificate Ex. PW61/E dated 01.10.1971, allegedly written
by Sh. Milkhi Ram, father of the Appellant.
49. The said document formed part of file D-229, which was seized by
the IO from House No. 305, Forest Lane, Sainik Farm, New Delhi,
belonging to Smt. Santosh Kapur, vide Search-cum-Seizure Memo
Ex. PW1/A, wherein the file was reflected at Serial No. 44. It is
further submitted that file Ex. P-31 (D-72), received by the CBI from
the Army authorities, contained certified copies of the property
returns filed by the Appellant, the first of which was filed on
29.12.1973.
50. The said return disclosed agricultural land at Panipat and Karnal as
well as immovable property at Lohgarh, Amritsar, Punjab, all of
which were duly considered by the IO in the charge-sheet. The returns
further disclosed annual agricultural income of Rs.1,000/- each from
the lands at Panipat and Karnal and Rs.310/- from the Lohgarh
property. Though subsequent returns reflected increased agricultural
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income, there was admittedly no disclosure of any NSCs, FDRs or
similar investments.
51. It has also been submitted that the IO adopted a practical approach in
accepting certificate Ex. PW61/E and that the Trial Court has
observed that the IO had already assessed the pre-check period assets
of the Appellant at a value higher than what stood disclosed in the
property returns submitted by him to the Army authorities in the year
1973. It was further observed that had the valuation been confined
strictly to the disclosed property returns, even the benefit of NSCs
could not have been extended to the Appellant. Accordingly, it has
been contended that the evidence on record sufficiently establishes
that the assets held by the Appellant prior to the check period were to
the extent of Rs.41,700/.
52. It has further been submitted that the Trial Court has returned a
justified finding with regard to the non-disclosure of alleged assets
received from the father and mother of the Appellant to the Indian
Army. The record reflects that qua several movable and immovable
assets, the Appellant did not dispute the valuation assessed by the
prosecution and, accordingly, the Trial Court accepted the prosecution
valuation with respect to such uncontested entries. However, insofar
as the properties whose valuation was specifically challenged are
concerned, the Trial Court has dealt with the same by assigning
detailed and cogent reasons.
53. With regard to certain properties and assets, namely the calculation
pertaining to Half Basement, D-23, Defence Colony, New Delhi;
House No. 506, Dona Paula, Panjim, Goa; funds deposited in PPF
A/c, SBI Panipat; deposits in Post Office, Lodhi Road; and HDFC
Standard Life Insurance, the claim of the Appellant has been declined
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primarily on the basis that the explanation furnished in support
thereof rested upon the affidavit of the mother of the Appellant, which
has rightly been discarded by the Trial Court for want of credibility as
it does not disclose the sources of income and secondly it was
prepared on 28.03.2012, i.e., after filing of the chargesheet.
54. It is further submitted that qua valuation of jewellery, the Trial Court
relied upon the valuation reports and relevant documentary evidence
including income tax and wealth tax returns, and after detailed
examination thereof, rightly assessed the value of the jewellery.
55. Similarly, with respect to the cash amount of Rs.11,62,240/-, the Trial
Court rightly disbelieved the testimony of DW-1, (Ms. Pratibha
Sharma, sister in law of the Appellant) observing that the witness had
deposed merely to protect close relatives and that no satisfactory
details regarding expenditure incurred on treatment of M.M. Chibber
were furnished. The foreign currency recovered from the locker was
also rightly treated as belonging to A-2, wife of the Appellant. The
addition of 2500 pounds to the assets of the Appellant was also rightly
upheld, as the testimony of DW-2 (Mr. Kewal Krishan, accountant at
Kimaya Store) failed to inspire confidence and no documentary proof
or bill regarding the alleged transaction was produced.
56. The Trial Court has further rightly assessed the agricultural income,
rental income and interest income after considering the documentary
evidence on record and rejecting unsupported affidavits and
unsubstantiated oral testimonies relied upon by the Appellant. The
affidavits of alleged tenants and agriculturists were rightly discarded
as the witnesses neither entered the witness box nor produced any
documentary evidence in support of the alleged income. Likewise,
while calculating HUF income, rental income from D-23, Defence
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Colony, and interest earned through various bank accounts, the Trial
Court rightly relied upon income tax returns and bank statements,
being the best evidence available on record, and reasonably deducted
expenditure towards repairs and maintenance.
57. The Trial Court has also rightly rejected the alleged friendly loans
claimed to have been taken by the Appellant from DW-3 Major A.
Ganesan, Smt. L. Maira and Sh. H.N. Maira, as no satisfactory
explanation regarding the purpose, necessity or supporting
documentation of such loans was furnished. Similarly, the alleged
loan of Rs.50,93,082/- purportedly advanced by the mother of the
Appellant was rightly disbelieved as the Appellant failed to establish
the financial capacity or source of income of his mother through any
cogent evidence such as income tax returns, bank accounts or other
reliable documents. Accordingly, the findings recorded by the Trial
Court on the aforesaid aspects do not suffer from any illegality or
perversity warranting interference.
58. The Trial Court has rightly rejected the various claims raised by the
Appellant with regard to alleged gifts, investments and savings, as the
same were unsupported by reliable documentary evidence and failed
to inspire confidence. The claim regarding income of Rs.6,16,631/-
from investments in the accounts of minor children was based upon
the alleged will dated 12.08.2000 of Late Sh. Milkhi Ram, Ex.
PW76/DN (Colly.), which was admittedly an unregistered photocopy.
The Trial Court rightly doubted its authenticity, particularly when the
alleged testator was a practicing advocate and no plausible
explanation was furnished for non-registration or non-production of
the original will.
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59. Similarly, the claim of gift of Rs.1,00,000/- from the mother of the
Appellant was rightly rejected, as no material whatsoever was placed
on record to establish the financial capacity or source of income of the
mother. The alleged gift of Rs.10,00,000/- by the parents of Mrs.
Mridula Kapur was also rightly disbelieved by the Trial Court,
observing that it was improbable that such a substantial amount in the
year 1986 would have been retained in cash without being deposited
in any bank account, and no documentary evidence in support thereof
was produced.
60. Further it is stated that the Trial Court rightly rejected the alleged
savings of Rs.4,00,000/- of Mrs. Mridula Kapur from her employment
in Oman prior to marriage, as no evidence regarding the nature of
employment, duration of service, salary or source of income was
produced except her passport, which by itself did not establish any
earnings. Likewise, the claim regarding gift/loan of Rs.4,00,000/-
from the mother of the Appellant was also rightly discarded,
particularly when the amount had been reflected as a loan in the
relevant records and no evidence was produced to establish the source
from which the mother could advance such substantial amounts.
61. The Trial Court has also rightly rejected the alleged gifts of
Rs.2,45,000/- to Dhruv and Dilkash by the father in law of the
Appellant, as the same were never disclosed to the Army authorities.
Similarly, the amount allegedly transferred to the HUF account from
the parental bank account at Panipat was rightly disbelieved since the
same was neither intimated to the Army authorities nor disclosed in
the income tax returns. Thus, the findings recorded by the Trial Court
are based upon proper appreciation of evidence and call for no
interference.
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ANALYSIS AND FINDINGS
62. I have heard the learned counsels for the parties and perused the
record.
63. It is pertinent to note that while dealing with an appeal against
conviction and sentence, the Appellate Court is required to
independently reappreciate the entire evidence on record and arrive at
its own conclusions. It is a settled principle of criminal jurisprudence
that a conviction cannot rest on surmises or conjectures, and the
burden lies squarely upon the prosecution to establish every
ingredient of the alleged offence through cogent, reliable and credible
evidence beyond reasonable doubt. This standard serves as a vital
safeguard against wrongful conviction. Equally well settled is the
principle that the prosecution must stand on its own legs and cannot
derive support from any perceived weakness in the defence;
consequently, where the prosecution case is beset with
inconsistencies, contradictions or evidentiary gaps, the benefit of
doubt must necessarily enure to the accused.
64. The following issues arise for my consideration:
(1) Whether the Trial conducted by the Special Judge violated
principles of natural justice and fair hearing?
(2) Whether the sanction order dated 29.09.2009 is non est?
(3) Whether the Trial Court erred in calculating disproportionate
assets of the Appellant?
65. Before adverting to the merits of the case, it is apposite to note the
grave consequences that a criminal prosecution, particularly one
under the PCA, entails for an accused person. A finding of corruption
against a public servant carries far-reaching consequences, irreparably
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tarnishing his reputation, credibility, and standing in society. These
consequences are even more severe in the case of an officer of the
Indian Army, where integrity, discipline, honour, and selfless service
form the bedrock of his service. A person enters the armed forces
only after undergoing a rigorous process of selection and thereafter
earns promotion through years of dedicated and distinguished service.
66. Allegations of corruption not only expose such an individual to the
rigours of criminal prosecution but also cast a lasting shadow upon
the honour and reputation painstakingly built over the course of an
entire career.
67. Having said that, it is also important to note that corruption is akin to
termites which, though not always visible on the surface, silently and
continuously erode the stability, strength and very fabric of the nation.
Even a remote or stray incident of corruption should not be allowed to
go unpunished.
68. In State of M.P. v. Ram Singh , (2000) 5 SCC 88 it was observed as
under:
“8. Corruption in a civilised society is a disease like cancer,
which if not detected in time, is sure to maliganise (sic) the
polity of the country leading to disastrous consequences. It
is termed as a plague which is not only contagious but if not
controlled spreads like a fire in a jungle. Its virus is
compared with HIV leading to AIDS, being incurable. It has
also been termed as royal thievery. The socio-political
system exposed to such a dreaded communicable disease is
likely to crumble under its own weight. Corruption is
opposed to democracy and social order, being not only anti-
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people, but aimed and targeted against them. It affects the
economy and destroys the cultural heritage. Unless nipped
in the bud at the earliest, it is likely to cause turbulence —
shaking of the socio-economic-political system in an
otherwise healthy, wealthy, effective and vibrating society.‖
69. Findings of guilt under the PCA cannot be arrived at in a cursory or
perfunctory manner, but only where the prosecution has established
its case beyond reasonable doubt. In this view, it is important that the
accused be afforded every reasonable opportunity to defend himself
and establish his innocence . It is, therefore, incumbent upon the Court
to closely scrutinise the prosecution case and the fairness of the trial
before recording a finding that may permanently affect the life, and
reputation, of the accused.
Issue 1: Mistrial
70. Dealing with the contentions urged on behalf of the Appellant, the
first ground raised is that the trial stood vitiated on account of denial
of adequate opportunity to lead defence evidence. It has been
contended that while the prosecution was granted nearly six months,
i.e., from 02.03.2016 till 07.09.2016, to establish its case, the defence
evidence was abruptly closed by relying upon directions issued by the
Hon’ble Supreme Court regarding expeditious disposal of the matter.
71. At this stage it is apposite to appreciate the law on fair trial, in Zahira
Habibulla H. Sheikh v. State of Gujarat, (2004) 4 SCC 158 it was
held as under:
―39. Failure to accord fair hearing either to the accused or
the prosecution violates even minimum standards of due
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process of law. It is inherent in the concept of due process of
law, that condemnation should be rendered only after the
trial in which the hearing is a real one, not sham or a mere
farce and pretence. Since the fair hearing requires an
opportunity to preserve the process, it may be vitiated and
violated by an overhasty, stage-managed, tailored and
partisan trial.
40. The fair trial for a criminal offence consists not only in
technical observance of the frame and forms of law, but also
in recognition and just application of its principles in
substance, to find out the truth and prevent miscarriage of
justice.‖
(Emphasis added)
72. Similarly in J. Jayalalithaa v. State of Karnataka , (2014) 2 SCC 401
it was held as under:
28. Fair trial is the main object of criminal procedure and
such fairness should not be hampered or threatened in any
manner. Fair trial entails the interests of the accused, the
victim and of the society. Thus, fair trial must be accorded
to every accused in the spirit of the right to life and personal
liberty and the accused must get a free and fair, just and
reasonable trial on the charge imputed in a criminal case.
Any breach or violation of public rights and duties
adversely affects the community as a whole and it becomes
harmful to the society in general. In all circumstances, the
courts have a duty to maintain public confidence in the
administration of justice and such duty is to vindicate and
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uphold the ―majesty of the law‖ and the courts cannot turn
a blind eye to vexatious or oppressive conduct that occurs in
relation to criminal proceedings.
29. Denial of a fair trial is as much injustice to the accused
as is to the victim and the society. It necessarily requires a
trial before an impartial Judge, a fair prosecutor and an
atmosphere of judicial calm. Since the object of the trial is
to mete out justice and to convict the guilty and protect the
innocent, the trial should be a search for the truth and not a
bout over technicalities and must be conducted under such
rules as will protect the innocent and punish the guilty.
Justice should not only be done but should be seem to have
been done. Therefore, free and fair trial is a sine qua non of
Article 21 of the Constitution. Right to get a fair trial is not
only a basic fundamental right but a human right also.
Therefore, any hindrance in a fair trial could be violative of
Article 14 of the Constitution. ―No trial can be allowed to
prolong indefinitely due to the lethargy of the prosecuting
agency or the State machinery and that is the raison d'être
in prescribing the time frame‖ for conclusion of the trial.
30. Article 12 of the Universal Declaration of Human Rights
provides for the right to a fair trial what is enshrined in
Article 21 of our Constitution. Therefore, fair trial is the
heart of criminal jurisprudence and, in a way, an important
facet of a democratic polity and is governed by the rule of
law. Denial of fair trial is crucifixion of human rights…‖
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(Emphasis added)
73. A perusal of the aforesaid decisions leaves no manner of doubt that
the concept of a fair trial occupies a central position in criminal
jurisprudence and constitutes an inseparable facet of the Right to life
and personal liberty under Article 21 of the Constitution. The Hon’ble
Supreme Court has consistently held that fairness in a criminal trial is
not confined merely to ensuring an opportunity to the prosecution to
establish its case, but equally extends to safeguarding the rights of the
accused to effectively defend himself.
74. A perusal of the order dated 09.09.2016 reveals that the Appellant
intended to examine nine defence witnesses, out of whom five were to
be produced by the Appellant himself and four were to be summoned
through the Court. The matter was thereafter fixed for defence
evidence on 14.09.2016, 15.09.2016 and 16.09.2016. On 14.09.2016,
DW-1 Ms. Pratibha Sharma and DW-2 Sh. Kewal Krishan were
examined and discharged. Thereafter, on 15.09.2016, DW-3 Maj. A.
Ganesan and DW-4 Hari Maira were examined and discharged. The
matter was then adjourned to 16.09.2016, on which date it was
recorded that final arguments would be heard from 19.09.2016 to
21.09.2016 on a day-to-day basis and judgment would be pronounced
on 27.09.2016.
75. On 16.09.2016, the Trial Court proceeded to close the defence
evidence by observing as under:
―
IN THE COURT OF SPECIAL JUDGE-03,
(P.C. ACT) (CBI) PHC, NEW DELHI
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CC No. 17/2013
CBI Vs. Maj. Gen. Anand Kumar Kapur etc.
Lawyers are on strike today
16.9.2016
Present: Sh. Manoj Shukla, Ld. Sr. B P for CBI.
Accused Maj. Gen. Anand Kumar Kapur (A-1) is present on
bail.
Accused Ms. Mridula Kapur (A-2) is absent.
Ms Alka Sharma and Sh. Bhavesh Verma, proxy counsels
for the accused persons.
Presence of accused Mr. Mridula Kapur (A-2) is exempted
through proxy counsel on an application only for today.
The accused submits that due to strike of lawyers, he is
unable to examine witnesses and seeks adjournment. I am
not inclined to grant any adjournment because it is a time
bound case. Already sufficient opportunity to examine
defence witnesses have been given by this court. By the
order of Hon'ble Supreme Court of India, this case has to be
decided by the end of September 2016. Strike of lawyers
cannot be any ground for any adjournment in light of
aforesaid directions of Hon'ble Supreme Court of India.
Accordingly, I close defence evidence by this order.
The final arguments will be heard from 19.9.2016 to
21.9.2016 on day to day basis. The judgement will be
announced on 27.9.2016.
(Sd/-)
Special Judge-03, CBI
P.C. Act, PHC, New Delhi
16.9.2016‖
76. The order dated 05.01.2016 of the Hon’ble Supreme Court reads as
under:
―At this juncture, Ms. Jyoti Mendiratta, learned counsel
appearing for the respondent, submitted that the trial may
take long time and, therefore, there should be a direction by
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this Court for expeditious disposal of the criminal trial
forming the subject matter of CC No.17/2013 (CBI Case
RCAC-2-2007 A0003). Regard being had to the factual
matrix, it is directed that the trial shall be completed by the
end of September, 2016. Neither the prosecution nor the
accused shall seek unnecessary adjournment before the trial
Court. The disposal of the trial shall be intimated to the
Registry of this Court by the concerned trial Judge.
With the aforesaid observations and directions, the appeal
stands disposed of. There shall be no order as to costs.‖
77. The Respondent has placed reliance on Harish Uppal (supra) to state
that closing of evidence by the trial court was in consonance with the
said judgment.
78. There can be no quarrel with the proposition laid down in Harish
Uppal (supra) that strikes or boycotts by lawyers are illegal and that
Courts are not expected to adjourn matters merely because advocates
have abstained from work. The said judgment was rendered to ensure
that the administration of justice is not held hostage to calls for strike
and that litigants do not suffer on account of professional abstention
by members of the Bar. However, the observations made therein
cannot be construed to mean that in every case where a litigant seeks
a short accommodation due to disruption of court work, the Court is
mandatorily required to shut out the defence altogether, irrespective
of the stage of the proceedings and the consequences involved.
79. In the present case, the Appellant was facing serious charges under
PCA carrying grave penal and reputational consequences. The
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prosecution had already taken nearly six months to lead its evidence,
whereas the defence was effectively confined to three dates for
examination of all its 9 witnesses. The record further reveals that out
of nine cited defence witnesses, four had been examined before the
defence evidence was abruptly closed. The request made on behalf of
the Appellant was not for an indefinite adjournment intended to delay
the proceedings, but for a limited accommodation on account of the
prevailing lawyers’ strike.
80. The Appellant had diligently availed the opportunity granted by the
Trial Court and examined two defence witnesses each on 14.09.2016
and 15.09.2016. The remaining witnesses could not be examined on
16.09.2016 solely on account of the lawyers' strike, a circumstance
entirely beyond the Appellant’s control. Significantly, the Appellant
himself, whose name figured in the list of defence witnesses, was
present before the Court and could have been examined even on that
date. However, the Trial Court proceeded with undue haste to close
the Appellant’s evidence without granting any further opportunity,
thereby causing serious prejudice to the defence.
81. In such circumstances, the Trial Court was required to balance two
competing considerations, the obligation to comply with the
directions of the Hon’ble Supreme Court for expeditious disposal, and
the equally sacrosanct obligation to ensure a fair and meaningful
opportunity to the accused to defend himself. Unfortunately, the
impugned order reflects that the Trial Court proceeded solely with the
objective of adhering to the timeline fixed for conclusion of the case,
without examining whether denial of further opportunity would
occasion prejudice to the defence.
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82. The anxiety of the Trial Court to comply with the directions of the
Hon’ble Supreme Court is understandable and indeed justified.
However, procedural timelines cannot eclipse the constitutional
guarantee of a fair trial under Article 21 of the Constitution of India.
The right of an accused to effectively present his defence is not an
empty formality but a substantive safeguard forming part of the
principles of natural justice. A criminal trial cannot be reduced to a
race against time which overrides the duty to ensure fairness.
83. I am therefore of the opinion that the Trial Court adopted an unduly
technical and hurried approach in closing the defence evidence
without granting a reasonable opportunity to the Appellant to
conclude the examination of his remaining witnesses. While the Court
was justified in discouraging unnecessary adjournments, the facts of
the present case warranted a more calibrated approach so that the
mandate of speedy trial could coexist with the equally important
requirement of a fair trial. No doubt after the passing of the order
dated 16.09.2016 wherein the evidence of Appellant was closed it was
open to the Appellant to challenge the order or file an application
under Section 311 Cr.P.C. Even though the petitioner has not
exercised those rights but the facts enumerated above clearly show
that the Appellant did not get a fair opportunity to prove its case. The
denial of a fair opportunity to defend oneself forms the bedrock of
criminal jurisprudence and cannot be waived/curtailed.
Issue 2: Whether the Sanction Order is non est?
84. Now dealing with the second issue that the sanction order was
invalid/ non est.
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85. The law governing sanction for prosecution under Section 19 of the
PCA is no longer res integra. In Ashok Kumar (supra) , after an
exhaustive analysis of precedents it was held that sanction is a
sacrosanct safeguard intended to protect public servants against
frivolous and vexatious prosecution, and that the sanctioning
authority must independently apply its mind to the entire material
collected during investigation before according sanction. The relevant
paras read as under:
―51. The decision of the Hon'ble Supreme Court in
State of Maharashtra v. Mahesh G. Jain (supra) does
not come to the aid of the official respondents as the
Supreme Court has categorically observed that the
application of mind of the sanctioning authority must
be apparent on the face of the sanction order and it is
for the prosecution to prove that a valid sanction has
been granted. In the instant case, the sanction order
dated 21.06.2002 does not show that the sanctioning
authority had perused all the relevant documents
before granting the said sanction order and the official
respondents have failed to show that the relevant
documents were placed before the sanctioning
authority.
52. It is trite to state that a sanction is a precursory
sacrosanct step to initiate criminal proceedings
against public officer, and the lack of a valid sanction
precludes the court from taking cognizance of the an
offence under section 19(1) POCA. Section 19(1)
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POCA affords protection to those public servants, who
could get trapped in vexatious proceedings while
discharge of their official functions. If this protection is
not afforded to a public servant then the cognizance
taken under section 19(1) POCA also stands vitiated.
…
The CBI Manual at para 22.16 stipulates that on
completion of investigation, the entire record of the
same must be sent to the sanctioning authority in view
of the decision of the Supreme Court in State of Tamil
Nadu v. M.M. Rajendran, reported as (1998) 9 SCC
268.
…
59. There is yet another issue that the paramount
consideration for a valid sanction is ‗due application
of mind‘ by the sanctioning authority, which has been
Summarized by the Hon'ble Supreme Court in the case
of Mansukhlal Vithaldas Chauhan v. State of Gujarat,
reported as (1997) 7 SCC 622 in the following words:
―19. Since the validity of ―Sanction‖ depends on the
applicability of mind by the sanctioning authority to
the facts of the case as also the material and evidence
collected during investigation, it necessarily follows,
that the sanctioning authority has to apply its own
independent mind for the generation of genuine
satisfaction whether prosecution has to be sanctioned
or not. The mind of the sanctioning authority should
not be under pressure from any quarter nor should any
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external force be acting upon it to take decision one
way or the other. Since the discretion to grant or not to
grant sanction vests absolutely in the sanctioning
authority, its discretion should be shown to have not
been affected by any extraneous consideration. If is
shown that the sanctioning authority was unable to
apply its independent mind for any reason whatsoever
or was under an obligation or compulsion or
constraint to grant the sanction, the order will be had
for the reason that the discretion of the authority ―not
to sanction‖ was taken away and it was compelled to
act mechanically to sanction the prosecution.‖
62. For the grant of sanction the Supreme Court has
clearly laid down the process to be followed in the case
of CBI v. Ashok Kumar Aggarwal, reported as (2014)
14 SCC 295 in the following words:
―16. In view of the above, the legal propositions can be
Summarized as under:
16.1 The prosecution must send the entire relevant
record to the sanctioning authority including the FIR,
disclosure statements, statements of witnesses,
recovery memos, draft charge sheet and all other
relevant material. The record so sent should also
contain the material/document, if any, which may tilt
the balance in favour of the accused and on the basis
of which, the competent authority may refuse sanction.
16.2 The authority itself has to do complete and
conscious scrutiny of the whole record so produced by
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the prosecution independently applying its mind and
taking into consideration all the relevant facts before
grant of sanction while discharging its duty to give or
withhold the sanction.
16.3 The power to grant sanction is to be exercised
strictly keeping in mind the public interest and the
protection available to the accused against whom the
sanction is sought.
16.4 The order of sanction should make it evident that
the authority had been aware of all relevant
facts/materials and had applied its mind to all the
relevant material.
16.5 In every individual case, the prosecution has to
establish and satisfy the court by leading evidence that
the entire relevant facts had been placed before the
sanctioning authority and the authority had applied its
mind on the same and that the sanction had
beengranted in accordance with law.
…
67. In the case of Mohd. Iqbal Ahmed v. State of
Andhra Pradesh, (1979) 4 SCC 172 the Hon'ble
Supreme Court has held that the onus of proving that a
valid sanction has been obtained is on the prosecution.
It has been held:
―3 …..It is incumbent on the prosecution to prove that
a valid sanction has been granted by the Sanctioning
Authority after it was satisfied that a case for sanction
has been made out constituting the offence. This should
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be done in two ways; either (1) by producing the
original sanction which itself contains the facts
constituting the offence and the grounds of satisfaction
and (2) by adducing evidence aliunde to show that the
facts placed before the Sanctioning Authority and the
satisfaction arrived at by it. It is well settled that any
case instituted without a proper sanction must fail
because this being a manifest difficult (sic-defect) in
the prosecution, the entire proceedings are rendered
void ab initio.
…
69. Considering the conspectus of decisions above-
referred the following legal propositions can be culled
out:
a) Grant of sanction is a sacrosanct act and is intended
to provide safeguard to a public servant against
frivolous and vexatious litigation.
b) The sanctioning authority after being apprised of all
the facts, must be of an opinion that prima-facie a case
is made out against the public servant.
c) Thus, for a valid sanction the sanctioning authority
must be apprised of all the relevant material and
relevant facts in relation to the commission of the
offence.
d) This application of mind by the sanctioning
authority is a sine qua non for a valid sanction.
e) The ratio of the sanction order must speak for itself
and should enunciate that the sanctioning authority
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has gone through the entire record of the investigation.
Thus, the sanction order must expressly show that the
sanctioning authority has perused the material placed
before it, and after considering the circumstances in
the case against the public servant, has granted
sanction.
f) If the application of mind by the sanctioning
authority is not apparent from the sanction order itself
then the burden of proving that the entire relevant
record was placed before the sanctioning authority
rests on the prosecution. The prosecution must
establish and satisfy the court by leading evidence that
the entire record of investigation was placed before the
sanctioning authority.
…
79. The Special Judge in its order dated 24.05.2014
lost sight of the established position of law that if the
entire material of investigation is not sent to the
sanctioning authority, the consequent sanction order
becomes invalid on account of non-application of mind
by the sanctioning authority. As observed above, a
valid sanction is a sine qua non for initiating
proceedings under POCA against a public officer. The
Special Judge, CBI misdirected himself by taking
recourse to section 19 (3) POCA. The Special Judge
overlooked the mandate that an order is bad in law if it
is based on irrelevant material, or if it has failed to
consider relevant material. And owing to the fact that
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the relevant material, (in the instant case, the entire
material collected during investigation) was not placed
before the Sanctioning Authority, the sanction order
dated 26.11.2002 is invalid and the proceedings before
the Special Judge are vitiated for want of a valid
sanction as per the provisions of section 19(1) POCA.
80. In view of the foregoing, the issue raised in
Criminal Revision Petition No. 338/2014 regarding the
validity of the sanction order dated 26.11.2002 is
invalid, void ab-initio and non-est. Consequently, the
order of the Special Judge (CBI) dated 24.05.2014,
impugned herein, is set aside and quashed.
81. A proper investigation into crime is one of the
essentials of the criminal justice system and an integral
facet of rule of law. The investigation by the police
under the Code has to be fair, impartial and
uninfluenced by external influences. Where
investigation into crime is handled by the CBI under
the Delhi Special Police Establishment Act, 1946
(hereinafter referred to as ‗the DSPE Act‘), the same
principles apply and the CBI as a premier
investigating agency is supposed to discharge its
responsibility with competence, promptness, fairness,
uninfluenced and unhindered by external influences…
…
96. The petitioner has suffered great prejudice since
1998 on account of the prolonged litigation between
him and the official respondents. He has endured
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suffering, humiliation and considerable trauma. A
sense of dubiety has persisted qua the petitioner since
long which reminds one of the lyrics in the famous
song by Bob Dylan: ―How many roads must a man
walk down Before you call him a man?‖
97. Normally, the case would have been remitted back
to the sanctioning authority for reconsideration on a
fresh order of sanction. However, in the circumstance
that the instant case commenced as far back as in 1998
and eighteen years have since lapsed; and in the light
of the decision of the Supreme Court in Mansukhlal
Vithaldas Chauhan v. State of Gujarat (supra), in my
opinion it would be unfair, unjust and contrary to the
interests of justice to expose the petitioner to another
round of litigation and keep him on trial for an
indefinitely long period. It would also offend the
principle enshrined in the provisions of Article 21 of
the Constitution of India. A quietus must be applied to
the present proceedings. Thus, in the interest of justice,
finality is given to these proceedings and it is directed
that no further proceedings in relation to the subject
sanction orders be initiated against the petitioner.‖
Similarly in State Inspr. of Police, Vishakhapattanam
v. Surya Sankaran Kari [(2006) 7 SCO 172] it was
held as under:
―20. The courts are obliged to go into the question of
prejudice of the accused when the main investigation is
concluded without a valid sanction. (See State of
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Andhra Pradesh vs. P.V. Narayana [(1971) 1 SCO
483: AIR 1971 SO 811]. }
21. It is true that only on the basis of the illegal
investigation- a proceeding may not be quashed unless
miscarriage ofjustice is shown, but, in this case, as we
have noticed hereinbefore, the respondent had suffered
miscarriage of justice as the investigation made by
P.W.41 was not fair.‖
(Emphasis added)
86. At the outset, it is to be noted that sanction under Section 19 of the
PCA is not merely a procedural formality but a statutory safeguard
conceived by the legislature to protect public servants against
frivolous and vexatious prosecution in matters arising out of discharge
of official functions. Thus, sanction serves as an important check
against arbitrary prosecution. An invalid sanction order strikes at the
root of criminal trial and any conviction on invalid sanction order
vitiates the trial as well as the conviction.
87. In view of the above law, the evidence on record reveals serious
infirmities in the process by which sanction was obtained in the
present case. The most significant aspect emerges from the testimony
of PW-76, the IO himself. During cross-examination dated
03.08.2016, PW-76 admitted that Annexures 1 to 6, which had been
sought from the Appellant during investigation, were not forwarded to
the sanctioning authority. The IO specifically stated as under:
―Question : Is it a fact that various files including MR631 of
2007 MR640, MR641, MR650, MR652, MR659, MR692,
MR792, MR629 besides the loose pages (6 pages), which
were duly numbered and signed had relevant information
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with regard to the financial position of the accused no.1 and
income from various sources but you did not send the same
to the sanctioning authority or before this court for vested
interest for showing lesser income and financial position of
the accused no.1 so as to frame in the present case. What
have you to say?
Answer : I calculated the income on basis of the income tax
returns seized during the search and due benefits of income
was given as per the income tax returns found during
search.
Question : Is it a fact that after sifting and selectively
choosing files, you returned the above said files to the
accused by stating then to be unrelied upon documents even
though the said files contained material information with
regard to the financial position, sources of income and
deposits etc. What you have to say?
Answer : After examining all the files, I returned all files,
which were not relied upon.
At this stage, the witness has been shown the file no. MR631
of 2007 and he admits the same to have been returned to
accused no.1. The said file contains the pages no.1 to 157 as
mentioned on the cover page of the file.
Question : Please see the pages nos. 6, 7, 15, 21, 22, 46, 65,
66, 83, 84, 107, 114 & 122 and inform whether these relate
to the income from other sources than salary reported to
GHO (ITO Pune) by the accused for the years 1992-93 to
1999-2000 (7 years)?
Answer : It is correct. But I gave the benefit of income tax
returns filed in this court.‖
…
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Question : Did you inquire from the accused persons as to
what were the sources of income for purchasing the assets
that were subject matter of the charge-sheet and stated to
the disproportionate to his known sources of income?
Answer : Yes.
Question : Have you placed the said information on record
of the present case?
Answer : I have not placed on record any such information.
It is incorrect to suggest that despite being satisfied that
there was no anomaly in disclosure of assets either to the
Army or to the Income Tax Authority, I deliberately at the
behest of the vested interest of the accused continued with
the investigation and filed the charge-sheet contrary to the
acceptable norms.
Question : Is it a fact that the accused had given detailed
explanations to the assets owned by him and the income
sources,etc., but the same were withheld from the court for
suppressing important facts?
Answer : The accused had given detailed explanation, but
the same has not been filed on judicial record.
It is incorrect to suggest that the same have been
deliberately withheld.
…
Question: Did you send the comments given by accused no.
1 and duly received by you at the time of sanction to the
sanctioning authority?
Answer: I had sent the explanation given by accused no. 1
to me during investigation to the sanctioning authority.
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Question: Is it correct that you sought the information from
the accused in the proforma of Annexure 1 to 6, as per CBI
rules?
Answer: I had done so.
I have not placed the same on judicial file. I did not send
Annexure 1 to 6 to sanctioning authority. It is incorrect to
suggest that I had deliberately withheld Annexure 1 to 6 and
the explanation of the accused from the sanctioning
authority as well as from this court. I had not got any
questionnaire from the sanctioning authority with regard to
the explanation, if any, given by the accused. I do not
remember as to for how many times I had visited the office
of sanctioning authority. It is incorrect to suggest that I had
come to know about the observation of the Hon‘ble High
Court and that is why I rushed to seek sanction.
I had filed the charge-sheet on 26.10.2009 in the court.
…
Question : Please see the pages no. 81, 84, 139, 141, 147
and 148. Did you send these documents to the sanctioning
authority or filed the same before this court as a part of
charge sheet. What you have to say?
Answer : I did not file the same before the sanctioning
authority or before this court as these were considered not
relevant.
…
Question : Please see file no. MR650 of 2007, which is
tagged and has endorsement on the first and last page and
contains pages 1 to 70 as per the endorsement. What you
have to say?
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Answer : It is correct. The said file is exhibited as
Ex.PW76/DH (colly).
Question : Please see pages no. 14, 15, 33, 34, 35-38, 41,
42-44, 55, 56 and inform whether you had given the said
files with the above relevant pages showing incomes, other
benefits and transactions to the sanctioning authority and
filed before this court. What you have to say?
Answer : I did not consider the said documents relevant and
so did not send the same to the sanctioning authority nor
filed before this court.
…
Question : Please see file no. MR659 of 2007 having pages
1 to 18 and inform whether you had returned the said file to
the accused as unrelied documents. What you have to say?
Answer : It is correct. It is the same file. The said file is
exhibited as Ex.PW76/DK (colly).
Question : Please inform the court whether you had send
the said file Ex.PW76/DK (colly) to the sanctioning
authority or filed before this court along with the charge
sheet. What you have to say?
Answer : I did not consider the same relevant. Hence it is
not sent to the sanctioning authority or filed before this
court.‖
88. Annexures 1 to 6 were important documents which included detailed
explanations furnished by the Appellant regarding his assets, income,
expenditure and financial transactions. In a Section 13(1)(e) case, the
central issue is whether the assets allegedly found in possession of the
public servant are disproportionate to his known sources of income
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and whether the public servant is able to satisfactorily account for the
same. Therefore, explanations furnished by the accused regarding his
lawful income and expenditure are not peripheral material; rather,
they go to the very root of the allegation. Once such explanations
were admittedly available with the investigating agency, the same
were required to be placed before the sanctioning authority so that the
authority could independently assess whether a prima facie case for
prosecution was made out. The IO could not have assumed the role of
adjudicator by unilaterally deciding that such material was “not
relevant”.
89. The IO is merely an investigating authority and is not required to
adjudicate upon the relevance or evidentiary value of documents
furnished by the accused. His duty is to place all material collected
during the investigation, including the explanations and documents
submitted by the accused, before the sanctioning authority to enable it
to take an independent and informed decision.
90. In the present case, it is an admitted position that certain material
documents furnished by the Appellant were not forwarded to the
sanctioning authority, as the IO, in his own assessment, considered
them to be irrelevant. Such an approach effectively resulted in the IO
substituting his judgment for that of the sanctioning authority and
deprived the latter of the opportunity to consider the complete
material before arriving at its decision.
91. This concern becomes more serious in view of further admissions
made by PW-76 during cross-examination dated 12.08.2016. The
witness admitted that several files containing documents pertaining to
the financial position, income and transactions of the Appellant were
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neither sent to the sanctioning authority nor filed before the Court.
Specifically, PW-76 admitted that files bearing numbers MR-631,
640, 641, 650, 652, 659, 692, 792 and 629 of 2007, along with loose
pages relating to the Appellant’s financial transactions and income
from various sources, were not forwarded because he considered them
“not relevant”. Likewise, with respect to another file Ex. PW-76/DK
(colly), the witness admitted that those documents were not relevant.
92. These admissions clearly establish that the sanctioning authority was
not furnished with the complete investigative record. The authority
was shown only such material as the IO subjectively chose to
forward. This approach is directly contrary to the law laid down in
CBI v. Ashok Kumar Aggarwal , (2014) 14 SCC 295 wherein the
Hon’ble Supreme Court expressly held that even material favourable
to the accused must be placed before the sanctioning authority.
93. Further it is an admitted fact that the statement of PW-149 (Mr.
Pradeep Hirani) under Section 161 Cr.P.C. was recorded only on
23.09.2009, whereas the request for sanction had already been sent to
the competent authority in August 2009 or September first week. The
relevant question to PW 76 reads as under:
―Question: When did you apply for sanction for prosecution
of the accused?
Answer: May be in the last week of August or first week of
September 2009.‖
94. The statement of PW-149 recorded after application for sanction
reads as under:
―Case No.RC AC 22007 A0003 Dated 23.09.2009
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Statement of Shri. Pradeep Hirani, Chairman M/S Kirmaya
Fashion Pvt. Ltd., Age 46 years 1, Asha Colony Juhu Tara
Road Juhu Mumbai-400049, S/o Shri Kishan Hirani R/o 2,
Betty Apartments, 146, Perry Road, Bandra, Mumbai
400050 Mob No. 9821020003. Tel No. 022- 26605575
-----x----x----x----
On being asked stated that:-
I launched M/S Kimaya Fashion in 2002 and opened a show
room. I visited Haridwar/Rishikesh alongwith my family in
connection with picnic sometime in 2004, where I came into
contact with Major Gen. Anand Kumar Kapur. He also
visited there alongwith his family for picnic. At that time I
was learning to open a shop at 1 style Mill Mehrauli and
looking for a person who could look after the work of the
same shop. Major Genl. Kapur proposed that his wife Smt.
Mridula Kapur can do the work. On this I appointed her as
incharge of the shop on the salary of Rs. 30,000/- P.M. She
was appointed in October 2004. Our company paid her Rs.
1,67,000/- for the period October, 2004 to March, 2006 and
3,60,000/- for the period April, 2005 to March,2006. During
search conducted on 10.10.2007, at my shop by CBI, some
documents were seized including the salary details of Smt.
Mridula Kapur on being shown the salary details of Smt.
Mridula Kapur at Page 4 and 5 , I state that, it contained
the details of payment made from my company M/S Kimaya
Fashion Pvt. Ltd., Delhi. The --- details retrieved from the
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computer installed in our office and signed by Sh. Sudesh
Naik, my Chief Accountant. I identify his signatures. As per
the details our company paid Rs. 1,67,000/- for the payment
Oct 2004- March 2005 and Rs. 3,60,000/- for the payment
April,2005 to March, 2006 to Smt. Mridula Kapur. Later on
due to ---the services of Smt. Kapur were terminated.
Before me
Sd/-‖
95. Therefore, even the entirety of the prosecution evidence had not
crystallized when the proposal for sanction was forwarded. This
further demonstrates that the sanctioning authority was not in
possession of the complete investigative record at the time sanction
was accorded on 29.09.2009.
96. The Respondent has strongly relied upon the testimony of PW-8 Shri
R.K. Gupta to contend that sanction was granted after due application
of mind. PW-8 indeed stated during cross-examination that he had
gone through all the documents submitted by the CBI and that
approximately two weeks were consumed in examining the files
before preparing notes.
97. However, the testimony of PW-8 does not cure the fundamental
defect pointed out by the Appellant. The issue is not whether PW-8
examined the documents that were forwarded by the CBI; rather, the
issue is whether the complete and relevant material was forwarded at
all. Once the IO himself admits that explanations furnished by the
Appellant and several financial documents were withheld from the
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sanctioning authority, the testimony of PW-8 merely establishes that
he examined an incomplete and filtered record. The contention of the
respondent that the sanction took approximately twenty-two days and
therefore cannot be termed mechanical also does not impress me. The
legality of sanction cannot be determined merely on the basis of time
consumed in processing the file. The real test is whether the authority
had before it the complete material necessary to form an informed
opinion. Even prolonged consideration would not validate a sanction
if the authority was denied access to relevant documents.
98. Equally, the recital in the sanction order that statements and
documents were considered cannot by itself establish valid
application of mind when the prosecution’s own evidence
demonstrates that substantial material was withheld. It is well settled
that where application of mind is not apparent from the record, the
prosecution must affirmatively establish that all relevant material was
placed before the sanctioning authority. In the present case, the
prosecution has failed to discharge that burden.
99. Learned counsel for the Respondent has placed reliance on Parkash
Singh Badal (supra) to state that mere error, omission or irregularity
in sanction order will not lead to acquittal or reversing the finding of
conviction. The reliance is misplaced as can be seen from State of
Karnataka v. Ameerjan , (2007) 11 SCC 273 wherein the Court
differentiated the ratio laid down in Parkash Singh Badal (supra) .
The relevant findings read as under:
“15. Our attention, however, was drawn to a recent decision
of this Court in Parkash Singh Badal v. State of
Punjab [(2007) 1 SCC 1 : (2007) 1 SCC (Cri) 193] by Mr
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Hegde to contend that having regard to sub-sections (3) and
(4) of Section 19 of the Act, only because an order of
sanction contains certain irregularities, the court would not
set aside an order of conviction.
16. In Parkash Singh Badal [(2007) 1 SCC 1 : (2007) 1
SCC (Cri) 193] the question which arose for consideration
before this Court was as to whether an order of sanction is
required to be passed in terms of Section 197 of the Code of
Criminal Procedure in relation to an accused who has
ceased to be a public servant. It was in that context a
question arose before this Court as to whether the act
alleged to be performed under the colour of office is for the
benefit of the officer or for his own pleasure. In the context
of question as to whether the public servant concerned
should receive continuous protection, it was opined: (SCC
p. 25, para 29)
―29. The effect of sub-sections (3) and (4) of Section 19
of the Act are of considerable significance. In sub-
section (3) the stress is on ‗failure of justice‘ and that
too ‗in the opinion of the court‘. In sub-section (4), the
stress is on raising the plea at the appropriate time.
Significantly, the ‗failure of justice‘ is relatable to
error, omission or irregularity in the sanction.
Therefore, mere error, omission or irregularity in
sanction is (sic not) considered fatal unless it has
resulted in failure of justice or has been occasioned
thereby. Section 19(1) is a matter of procedure and
does not go to the root of jurisdiction as observed in
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para 95 of Narasimha Rao case [P.V. Narasimha
Rao v. State (CBI/SPE), (1998) 4 SCC 626 : 1998 SCC
(Cri) 1108] . Sub-section (3)(c) of Section 19 reduces
the rigour of prohibition. In Section 6(2) of the old Act
[Section 19(2) of the Act] question relates to doubt
about authority to grant sanction and not whether
sanction is necessary.‖
…
17. Parkash Singh Badal [(2007) 1 SCC 1 : (2007) 1 SCC
(Cri) 193] , therefore, is not an authority for the proposition
that even when an order of sanction is held to be wholly
invalid inter alia on the premise that the order is a nullity
having been suffering from the vice of total non-application
of mind. We, therefore, are of the opinion that the said
decision cannot be said to have any application in the
instant case.
…
19. In this case, the High Court called for the original
records. It had gone thereinto. It was found that except the
report, no other record was made available before the
sanctioning authority. The order of sanction also stated so.
PW 8 also did not have the occasion to consider the records
except the purported report.‖
100. Thus, Ameerjan (supra) clearly distinguishes between a mere
irregularity in sanction and a sanction vitiated by total non-application
of mind. While Section 19(3) may cure procedural defects, it does not
save a sanction that is fundamentally invalid for want of due
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consideration of the relevant material. Consequently, the reliance
placed by the Respondent on Parkash Singh Badal (supra) is
misplaced.
101. Similarly reliance on Jagat Ram (supra) does not aid the
Respondent’s case as firstly, there is no quarrel with the settled legal
position that a finding, sentence or order is not liable to be reversed
merely on account of any error, omission or irregularity in the grant
of sanction, unless such defect has occasioned a failure of justice.
Equally, it is well established that every irregularity in the sanctioning
process does not ipso facto vitiate the sanction. Secondly, in Jagat
Ram (supra) the Court permitted the Respondent to contest the issue
of failure of justice before the High Court and remanded the matter
back with respect to the issue of legality of sanction.
102. The reliance on P.I. Babu (supra ) is equally misplaced. In that case,
the Special Court had acquitted the accused solely on the ground of
invalid sanction without recording any findings on the merits of the
charges. It was in those peculiar circumstances that the Hon’ble
Supreme Court remanded the matter for a fresh decision on merits.
103. In my opinion, the admitted suppression of Annexures 1 to 6 and the
financial documents relating to the Appellant’s lawful income and
transactions strikes at the very foundation of the sanction process. The
sanctioning authority was denied the opportunity to consider material
which was directly relevant to the core issue in the case, namely
whether the Appellant had satisfactorily explained the
disproportionate assets attributed to him.
104. The requirement of sanction under Section 19 of the PCA is intended
to ensure independent scrutiny by the competent authority before a
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public servant is exposed to criminal prosecution. That safeguard
stands rendered illusory if the investigating agency is permitted to
selectively withhold material favourable to the accused and present
only incriminating circumstances before the sanctioning authority.
105. It is also difficult to understand how the Trial Court rejected the
arguments of Appellant especially when it is clear from the records
and the cross examination that important documents proving the side
of the defense were ignored. The relevant findings read as under:
―I disagree with this submission. Whether the Government
machinery acted in efficient manner or in lethargic manner
is not an issue before this court. If the process of according
sanction is taken about more than 22 days, it does not mean
that the Government had granted sanction to prosecute the
accused under Section 19 of PC Act in great haste. PW8 P.
K. Gupta, the then Director (Vigilance) in Ministry of
Defence testified that the competent authority examined the
material including statement of witnesses and documents
sent by CBI. Perusal of the sanction order Ex.PW8/A shows
that it mentions the material which was considered by the
competent authority for according the sanction. P. K. Gupta
(PW8) only authenticated the sanction order, which is
Ex.PW8/A (D236).
I do not find any material on record to show that the
sanction order suffers from nonapplication of mind or that
the entire material was not considered by the sanctioning
authority.‖
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106. Accordingly, I am constrained to hold that the prosecution has failed
to establish that the entire relevant material collected during
investigation was placed before the sanctioning authority prior to
grant of sanction dated 29.09.2009. The sanction therefore suffers
from non-application of mind and stands vitiated in law.
107. I am of the view that the record demonstrates that the entirety of the
defence evidence was not duly taken into account by the learned
Special Judge. Ordinarily, such a deficiency may have warranted a
remand of the matter for retrial from the stage of defence evidence.
However, having regard to the peculiar facts and circumstances of the
present case, particularly the fact that the proceedings have remained
pending for over two decades, I am of the view that directing a retrial
at this stage would neither serve the ends of justice nor comport with
the constitutional mandate of a fair and expeditious trial.
108. The prolonged pendency of the matter and the prejudice inherently
occasioned by subjecting the Appellant to another round of criminal
proceedings cannot be overlooked. Guided by the principles
enunciated by the Hon’ble Supreme Court in Mansukhlal Vithaldas
Chauhan v. State of Gujarat, (1997) 7 SCC 622 , this Court is
satisfied that it would be unfair, unjust and contrary to the interests of
justice to compel the Appellant to undergo a fresh trial after such an
inordinate lapse of time. Such a course would effectively perpetuate
the ordeal of prosecution and would run afoul of the guarantee of life
and personal liberty under Article 21 of the Constitution of India,
which encompasses the right to a fair and speedy trial.
109. In view of the findings recorded above that the Appellant was denied
a fair opportunity to lead evidence and that the sanction order is
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invalid, the present appeals deserve to be allowed on these grounds
alone. However, since submissions have also been addressed on the
merits of the matter, I deem it appropriate to examine and deal with
the contentions on merits as well.
110. Before examining the merits of the case, it is necessary to bear in
mind that in a disproportionate assets case, although the accused is
required to account for the assets alleged to be disproportionate to his
known sources of income, the burden upon him is not as onerous as
that resting on the prosecution. The standard applicable to the accused
is one of preponderance of probabilities and not proof beyond
reasonable doubt. After all in words of Sir William Blackstone, “ It is
better that ten guilty persons escape, than that one innocent suffer. ”
111. In P. Satyanarayana Murthy v. State of A.P., (2015) 10 SCC 152 it
was held as under:
―20. This Court in A. Subair v. State of Kerala [(2009) 6
SCC 587 : (2009) 3 SCC (Cri) 85] , while dwelling on the
purport of the statutory prescription of Sections 7 and
13(1)(d) of the Act ruled that (at SCC p. 593, para 28) the
prosecution has to prove the charge thereunder beyond
reasonable doubt like any other criminal offence and that
the accused should be considered to be innocent till it is
established otherwise by proper proof of demand and
acceptance of illegal gratification, which are vital
ingredients necessary to be proved to record a conviction.
…
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26. In reiteration of the golden principle which runs through
the web of administration of justice in criminal cases, this
Court in Sujit Biswas v. State of Assam [(2013) 12 SCC 406
: (2014) 1 SCC (Cri) 677] had held that suspicion, however
grave, cannot take the place of proof and the prosecution
cannot afford to rest its case in the realm of ―may be‖ true
but has to upgrade it in the domain of ―must be‖ true in
order to steer clear of any possible surmise or conjecture. It
was held, that the court must ensure that miscarriage of
justice is avoided and if in the facts and circumstances, two
views are plausible, then the benefit of doubt must be given
to the accused.‖
(Emphasis added)
112. Now dealing with merits of the case, the first asset which requires
consideration is the half basement portion of property bearing No. D-
23, Defence Colony, New Delhi. The prosecution has valued the said
property at Rs.41,12,000/-, whereas according to the registered sale
documents and evidence relied upon by the defence, the acquisition
cost was Rs.15,52,000/- inclusive of stamp duty and registration
charges.
113. The Trial Court observed as follows:
―I have considered the submissions of Ld. Defence counsel,
which appear to be specious. It is a known fact that the
actual sale amount of immovable property, specially if it is
situated in posh areas of Delhi, is much higher than the
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actual sale deed. Unfortunately, this situation is so common
in this country that it is almost a rule. Where there is no
evidence of higher value, the courts have no option but to
accept the value mentioned in the sale deeds, which is the
situation in case of the property at Item No. 01. However, if
specific evidence is coming of the higher consideration
value, the court cannot close its eyes to the ground reality.
In case of the property at Item No. 2, hand written
agreement to sell, dated 31.03.2001 was recovered from the
file D64 [Ex.PW72/D (colly.)], which shows the total
consideration amount of Rs.43 lacs, out of which Rs.5 lacs
had already been paid and remaining amount of Rs.38 lacs
was to be paid subsequently. In my opinion, the realistic
approach to accept the real value of this property as Rs.43
lacs and not the sale deed value of Rs. 14 lacs. It is a well
known fact that properties are shown of much lesser value
than the actual value for various reasons e.g. for the
purpose of saving stamp duty etc. It is argued by Ld.
Defence counsel that prosecution should have examined M.
L. Chandan to prove the agreement to sell dated 31.03.2001
and to prove that the actual transaction was for Rs.43 lacs.
I may point out that summons were issued to M. L. Chandan
but he could not be served because he is out of country.
Therefore, it is not a deliberate withholding of the evidence.
However, it does not make \ any difference because this
agreement to sell has been seized from A1 himself. A1 does
not state that it is a false document. Therefore, I am not
inclined to accept the submissions of Ld. Defence counsel. I
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am of the opinion that this document shows the real value of
the property and the sale deed is showing a highly low value
of the same. The Investigating Officer should have taken the
value as Rs.43 lacs but since he has taken a lower value of
Rs.41,12,000/, I accept the same as the true value of the
property.‖
114. The foundation of the prosecution's valuation and Trial Court’s
finding is a handwritten Agreement to Sell dated 31.03.2001,
recovered during the search of locker No.325, HDFC Bank, Defence
Colony, and exhibited as Ex.PW-72/D. According to the prosecution,
the said document reflected a total sale consideration of Rs.43 Lakhs
and therefore constituted evidence that the actual purchase price of
the property was substantially higher than the amount disclosed in the
registered sale deed.
115. The Trial Court substituted proof with a generalized assumption that
immovable properties in Delhi are ordinarily transacted at values
higher than those reflected in registered conveyances. Such a finding
is contrary to the settled principle that criminal liability cannot rest
upon conjectures, suspicion or presumed market practices. As
observed by in K. Dhanalakshmi (supra) adverse findings in a
disproportionate assets case cannot be founded upon assumptions
while disregarding the documentary record and the absence of
supporting evidence.
116. The prosecution has principally relied upon the recovery of Ex.PW-
72/D. However, mere recovery of a document does not prove the truth
of its contents. The prosecution was required to establish the
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authorship, execution of the said document and further demonstrate
its connection with the eventual sale/ purchase of the property. No
such evidence has been brought on record.
117. Significantly, none of the prosecution witnesses have stated that
Ex.PW-72/D constituted the basis of the transaction by which the
Appellant acquired the property. It has not been stated by any witness
that the terms contained therein were ever acted upon or that the
consideration mentioned therein was actually paid or that the
document culminated into the registered sale deed executed in favour
of the Appellant.
118. A perusal of Ex.PW-72/D itself reveals that it was a conditional
arrangement linked to the proposed leasing of the premises to a
particular bank. The prosecution has not led any evidence to establish
that the condition contemplated therein was ever fulfilled. In the
absence of proof regarding fulfilment of the condition and
implementation of the arrangement, the document remains at best a
proposed transaction and not evidence of a concluded sale for the
consideration mentioned therein. The onus of proof on the
prosecution to establish that the Agreement to Sell was valid was not
discharged.
119. The failure of the prosecution to examine Shri M.L. Chandan, is also
fatal. He was cited as a prosecution witness but was ultimately not
produced on the ground that summons could not be served and that he
was abroad. The vendor was the most material witness for
establishing whether the consideration reflected in Ex.PW-72/D was
ever paid and whether the registered sale deed reflected the true
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consideration. In the absence of his testimony, the prosecution's case
remains unsupported by any direct evidence.
120. The testimony of PW-65 Rajinder Sharma also does not advance the
prosecution case. On the contrary, he acknowledged that the valuation
adopted by the municipal authorities for assessment purposes was
approximately Rs.14 lakhs. Though municipal valuation may not be
determinative of market value, it nevertheless lends support to the
value reflected in the registered documents and does not corroborate
the prosecution's theory of a transaction worth Rs.43 lakhs.
121. The evidence of PW-76, the IO, is equally inadequate. During his
examination-in-chief, he nowhere stated that the investigation had
revealed Ex.PW-72/D to be the actual agreement pursuant to which
the property was purchased. He nowhere deposed that the registered
sale deed undervalued the property or that the Appellant had paid
Rs.43 lakhs towards its acquisition. There is also no evidence from
him that any witness examined during investigation disclosed
payment of any undisclosed consideration.
122. I am also unable to overlook the fact that the prosecution and the Trial
Court accepted the value of the ground floor portion of the same
property at Rs.20,54,000/- while calculating another asset in the
charge-sheet. No satisfactory explanation has been furnished as to
how the basement portion of the same property could command a
value exceeding Rs.41 lakhs, which is more than twice the value
accepted by the prosecution for the ground floor. No valuation report,
or any other evidence has been produced to justify such a conclusion.
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123. The settled position of law is that suspicion, however strong, cannot
take the place of proof. Before an asset can be included in the
computation of disproportionate assets at a particular value, the
prosecution must establish such value through evidence. The burden
cannot be discharged on the basis of assumptions, conjectures or
unproved documents.
124. In the present case, the prosecution has failed to prove that the
Appellant paid any amount over and above the consideration reflected
in the registered sale deed. The execution and operative effect of
Ex.PW-72/D have not been established. No witness to the transaction
has been examined. No evidence of actual payment has been
produced. The IO’s assumptions, unsupported by independent
evidence, cannot form the basis of a criminal finding.
125. Accordingly, I am of the view that the prosecution has failed to
establish that the acquisition cost of the basement portion of property
No. D-23, Defence Colony was Rs.41,12,000/-. The valuation
adopted by the Trial Court is therefore not supported by legally
admissible evidence and could not have been relied upon for
computing the alleged disproportionate assets of the Appellant. Under
Section 50 of the Registration Act, 1908, a registered document will
override an unregistered document.
Asset No. 9 – House No. 506, Dona Paula, Panjim, Goa
126. The next asset which falls for consideration is House No. 506, Dona
Paula, Panjim, Goa, valued by the prosecution and accepted by the
Trial Court at Rs.30,21,000/-. The Trial Court included the said
property in the assets of the Appellant principally on the ground that
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Mr. Dhruv Kapur, in whose name the property stood recorded, was a
student and allegedly dependent upon the Appellant at the relevant
time. The Trial Court further observed that the explanation regarding
the source of funds, namely the financial assistance allegedly
provided by Smt. Santosh Kapur, mother of the Appellant, was not
satisfactorily established through documentary evidence and therefore
could not be accepted. The Trial Court’s finding with respect to this
property reads as under:
―It is true that the purchase of the house was declared to the
ITO by Dhruv Kapur in Income Tax Returns. However, it is
not the case of the accused that Dhruv Kapur was having an
independent earning at that time. Ld. Defence counsel is
relying upon the affidavit of his mother and will of his father
dated 12.08.2000 to prove that money for purchase of this
house was gifted to Dhruv Kapur by Smt. Santosh Kapur
(i.e. mother of A1 and grandmother of Dhruv Kapur).
However, to my mind it is not a convincing explanation. It is
required to be shown by A1 as to what was the financial
condition and source of income of Smt Santosh Kapur. The
affidavit of Smt. Santosh Kapur is dated 28.03.2012. In para
16 of this affidavit, she stated that her husband left behind
deposits and investments worth Rs.40 lacs and she looked
after that amount till 2005, when Dhruv's 18th birthday
occurred. It is further stated in the affidavit that on her
asking, Dhruv purchased a house in Goa and that she (i.e.
Smt. Santosh Kapur) gave Rs.28,50,000/in bank drafts to
him in December 2005. Although, in her affidavit she has
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stated that her husband Diwan Milkhi Ram Kapur was a
wealthy and renowned landlord, but she has not explained
in this affidavit as to what was her bank accounts and how
she was having such a huge amount of money. Merely her
affidavit will not amount to a sufficient explanation by A1.
Something more is to be shown by him. The accused could
have shown the statements of bank accounts of Smt. Santosh
Kapur, he could have filed her income tax returns, because
if such a huge is kept with her, she should be paying some
income tax also. The affidavit is dated 28.3.2012, which was
prepared much after filing of the charge sheet. It is pertinent
to note that a Will of Smt. Santosh Kapur dated 27.10.2002,
which is duly registered is Ex.PW76/DN (colly) in which she
has referred to the property in Panipat, house in Model
Town, Panipat and House No. D23, Defence Colony only. If
she was having such huge amounts with her, she would have
also mentioned the same in her will.‖
127. At the outset, it is necessary to note that the property admittedly
stands in the name of Mr. Dhruv Kapur. The registered title
documents do not reflect the Appellant as purchaser or a co-owner.
The prosecution has not disputed the existence or authenticity of the
title documents. Equally, there is no allegation in the charge-sheet that
the property was acquired through a benami transaction in the name
of Mr. Dhruv Kapur or that the sale deed was a sham transaction
intended to conceal the ownership of the Appellant.
128. PW-41, Shri Akarsh Kashyap, Chartered Accountant, deposed that
Mr. Dhruv Kapur had disclosed the purchase of the property in his
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ITRs for the FYs 2005-06 and 2006-07. He further deposed that the
documents relating to ownership of the property and the source of
funds utilised for its acquisition had been furnished before the Income
Tax Department in the ordinary course. These disclosures were made
much prior to the culmination of investigation in the present case. The
relevant portion of the cross examination reads as under:
―I have brought the photocopy of income tax return of Mr.
Dhruv Kapur for the assessment year 2006-2007 and 2007-
2008, respectively. Same are as per information given to me
by Dhruv Kapur. Income tax returns are Ex.PW41/DE (03
pages) and Ex.PW41/DF (02 pages). (These documents
have been objected to by Ld. Sr. PP on the ground that the
same are not admissible in evidence being the photocopy). I
had filed said two returns on behalf of Dhruv Kapur on his
instructions.‖
129. The Respondent has placed reliance on Jayalalithaa (supra) which is
misconceived. Though in this case the Hon’ble Supreme Court held
that returns and orders in IT proceedings would not themselves
establish that income had been received from lawful sources but it
was also clarified that returns and orders do not ipso facto either
conclusively prove or disprove the charges under PCA and at best are
pieces of evidence which need to be evaluated with other materials on
record.
130. Significantly, the prosecution neither challenged the genuineness of
the ITRs nor produced any evidence to establish that the disclosures
contained therein were false or misleading. No witness from the
Income Tax Department was examined to dispute the returns or the
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accompanying documents. The same is evident from the following
cross of the IO:
―Question : Is it a fact that the statement of 70 witnesses
was recorded between January 2009 and August 2009 in a
chaste haste after the proceedings of the Hon'ble High
Court of Delhi?
Answer : I examined them in a routine manner not in haste.
Question : Did you examine any Income Tax Officer with
regard to the declaration of assets, sources of income and
filing of Income Tax Returns and Wealth Tax Returns, etc.
by the accused and his family separately for the entire check
period i.e. from 1971 to 2007?
Answer : I did not examine any Income Tax Officer, but
collected the documents, however, I can give the date only
after examining the record.‖
131. During cross-examination, the IO admitted that as per the ITRs, Mr.
Dhruv Kapur was the recorded owner and purchaser of the property.
―Question : Did you verify who was the owner of property
no. 506, Dona Paula Goa?
Answer : Yes, the said property was purchased in the name
of Dhruv Kapur son of the accused.
Question : Did you verify from the ITR as to who was the
recorded owner and purchaser of the said property?
Answer : Dhruv Kapur.
Question : Did you check that the source of funding of the
above said purchase of property was by way of bank drafts
from the account of Mr. Dhruv Kapur?
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Answer : Dhruv Kapur was the student and dependent on
accused. I did not check the source of bank drafts by virtue
of which the said property was purchased.
Question : I put it to you that ITRs of Mr. Dhruv Kapur
were submitted to you for purchase of the above said
property and the affidavit of Mrs. Santosh Kapur also
categorically mentioned the amounts given by her as gift to
Mr. Dhruv Kapur but you deliberately ignored all this.
What you have to say?
Answer : I did not recall.
It is incorrect to suggest that despite submission of
documents and actual proof of purchase of the property by
Mr. Dhruv Kapur, I wrongly attributed the purchase of the
same to the accused to fix him. It is wrong to suggest that I
deliberately did not take the statement of Mr. Dhruv Kapur
or Mrs. Santosh Kapur as that would have brought out the
truth.‖
132. It is also noteworthy that the prosecution did not examine Mr. Dhruv
Kapur, the recorded owner of the property, despite being the person in
whose name the property stood purchased and despite the ITRs
forming part of the record, no attempt was made to confront him with
the documents or to ascertain the source of funds disclosed by him.
The prosecution also did not examine the vendor of the property or
any person connected with the transaction who could have shed light
on the source of consideration.
133. Further, Smt. Santosh Kapur, mother of the Appellant, was never
examined by the prosecution despite her affidavit asserting that she
had provided funds for the purchase of the property. The prosecution,
therefore, failed to test or rebut this explanation through evidence. As
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held in M. Krishna Reddy v. State Deputy Superintendent of Police,
Hyderabad, (1992) 4 SCC 45 , in a prosecution for disproportionate
assets, the initial burden lies upon the prosecution to establish the
foundational facts constituting the offence, and only thereafter does
the onus shift upon the accused to satisfactorily account for the assets.
In the present case, the prosecution failed to discharge its initial
burden through a fair and complete investigation and consequently
cannot derive any benefit from the alleged inability of the Appellant
to explain the assets in question.
134. The relevant portion of the cross of the IO reads as under:
― Question: Did you examine any witness from Panipat to
know the assets of parents and background of accused no.1
at Panipat?
Answer: Yes, I examined one witness namely Mr. K. C.
Aneja.
It is correct that Mr. K. C. Aneja used to file income tax
returns of the accused.
Question: Did you take the statement of mother of accused
with regard to the assets owned by her and the various
declarations made by her to various authorities?
Answer: No. I did not examine.‖
135. The Trial Court drew an adverse inference against the Appellant on
the ground that sufficient material had not been produced to establish
the financial capacity of Smt. Santosh Kapur. However, the record
reveals that the investigation itself remained incomplete on this
aspect. The prosecution, despite being aware of the claim made by
Smt. Santosh Kapur, chose not to investigate the same. An omission
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on the part of the investigating agency cannot subsequently be
converted into a circumstance adverse to the accused.
136. The burden in a prosecution under Section 13(1)(e) of the PCA
initially lies upon the prosecution to establish that a particular asset is
owned, possessed or acquired by the public servant. Before an asset
standing in the name of another person can be attributed to the
accused, the prosecution must place on record evidence
demonstrating a nexus between the accused and the acquisition of that
asset. Mere relationship between the accused and the recorded owner
cannot by itself constitute such proof.
137. In this regard, the observations in K. Dhanalaxmi (supra) upheld by
the Hon’ble Supreme Court are relevant. The Court observed that
where there is no material connecting properties standing in the name
of a private individual with the public servant concerned, such
properties cannot be included in the assets of the public servant
merely on the basis of conjecture or assumption. The relevant paras
reads as under:
―72. Similarly, the mother who was also financially secure
and was living with the petitioner would have contributed to
the household assets.
73. Moreover, too much emphasis has been laid on
petitioner borrowing from her mother and not returning the
same. The ld. Special judge failed to appreciate that
borrowing from a parent does not mandate that the
petitioner will be required to keeps receipts of the same.
Borrowing from a parent, without returning, is plausible
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explanation and should be not have been considered in
calculating disproportionate income/assets of the Petitioner
especially since the mother was staying with Petitioner and
the Petitioner was taking care of the mother's needs.
74. The special judge, while computing the assets also
adjudged the amount recovered from the house, the amount
in the joint account of the Petitioner and her mother, the
household items as all belonging to the Petitioner especially
when the Petitioner gave explanation that the said amount
belongs to her mother. To equate the relationship of the
petitioner and her mother to that of borrower and creditor
where every penny will have to be accounted for and has to
be satisfactorily explained is not possible, neither, will
failure to give documentary proof of the same should lead to
an adverse inference. It is not too much of a stretch to think
that the mother would help her own daughter especially
when the mother was staying with the daughter.
…
76. It is clear that the Special Judge in passing the order
has only looked into the material adduced by the CBI,
compared it with the information provided by the CBI in the
chargesheet and then pronounced a verdict on the merits of
each individual allegation. It has not considered the
material contradictions, but relied on some conjectures and
miscalculations.‖
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138. The law is equally well settled that where a property stands in the
name of a person under a valid registered conveyance, the title
reflected therein must prevail unless displaced by cogent evidence.
Sections 54 and 55 of the Transfer of Property Act and Sections 17
and 49 of the Registration Act recognise the legal sanctity of a
registered instrument. In the absence of evidence demonstrating that
the transaction was benami or that the consideration emanated from
the public servant, the recorded owner must be treated as the owner of
the property. It was incumbent upon the prosecution to verify the
source of funds in the hands of the mother of the Appellant which the
prosecution failed to even examine.
139. In the present case, the prosecution has not produced any bank record,
statement of the vendor or any other documentary evidence showing
that the consideration for the property originated from the Appellant.
The conclusion reached by the Trial Court is therefore founded
primarily on the circumstance that Mr. Dhruv Kapur was the son of
the Appellant and was allegedly dependent upon him.
140. Such a circumstance, by itself, is insufficient to establish ownership
or financial contribution especially in view of the affidavit of Mrs.
Santosh Kapur stating to the contrary. Criminal liability must rest
upon evidence and not upon presumptions arising from status or
relationship.
Asset 3 – Investments
141. The next issue concerns the inclusion of investments made in the Post
Office, Lodhi Road, New Delhi and HDFC Standard Life Insurance
Policy, which have been valued by the prosecution at Rs.9,60,000/-
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and Rs.7,75,000/- respectively and treated as assets attributable to the
Appellant.
142. With regard to these, the Trial Court has recorded findings as under:
―My view
The defence is solely based upon the affidavit of the mother
dated 28.3.2012, which I have already rejected, therefore, I
accept the full amount as Rs.9.60,000/.
…
My view
I have already rejected the affidavit of the mother of A1,
which is the sole basis of reliance by A1. Hence, I accept the
value at Rs.7,75,000/.‖
143. The evidence on record reveals that PW-6, Shri Ashok Kumar
Lohmod, proved the statement of account pertaining to SBI Account
No. 18105 standing in the name of Smt. Santosh Kapur. His testimony
establishes that the account was originally maintained by Smt. Santosh
Kapur and that the name of the Appellant was added subsequently.
The witness further confirmed that records prior to the year 2005 were
not called for during investigation. Further it is not beyond plausible
explanation that the Grandmother was providing sums to Grandson for
purchasing the property situated at Goa.
144. Even PW-61, Shri K.C. Aneja, Chartered Accountant, stated that he
had examined documents relating to the bank accounts and financial
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affairs of Smt. Santosh Kapur, which disclosed that she possessed
substantial assets of her own. The existence of independent financial
resources in the hands of Smt. Santosh Kapur therefore stands borne
out from the prosecution evidence itself.
145. The record further discloses that Smt. Santosh Kapur had specifically
stated that she had contributed a sum of Rs.3,00,000/- towards the
purchase of KVPs/NSCs and a further sum of Rs.4,75,000/- towards
the HDFC Life Insurance Policy standing in the name of Mrs.
Mridula Kapur.
146. What is important is the admission of PW-76 that an amount of
Rs.50,93,082/- stood transferred from the account of Smt. Santosh
Kapur to the account of the Appellant on 25.09.2004. Despite
acknowledging the existence of this transaction, the IO did not
examine its implications while computing the financial resources
available to the family. Likewise, he admitted that the Appellant had
disclosed a loan of Rs.1 lakh from his mother in documents submitted
to the Income Tax Department, yet the same was not considered while
assessing the financial position of the Appellant.
147. The cumulative effect of these admissions demonstrates that the
investigation proceeded without examining the most material witness,
namely Smt. Santosh Kapur, despite the existence of documentary
material suggesting that she possessed substantial independent means
and had contributed funds towards the disputed investments. The
prosecution neither disproved her financial capacity nor established
that the investments emanated from the income of the Appellant.
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148. In a prosecution for disproportionate assets, the burden undoubtedly
rests upon the prosecution to establish that a particular asset belongs
to, or has been acquired from the resources of, the public servant.
Such burden cannot be discharged by ignoring material evidence
pointing towards ownership or contribution by another person. Once
contemporaneous documents and financial records indicating
contribution by a third party are brought on record, it becomes
incumbent upon the investigating agency to examine and verify the
same before attributing the asset to the accused.
149. In the present case, the prosecution has failed to produce any evidence
demonstrating that the funds invested in the Post Office instruments
or the HDFC Life Insurance Policy originated from the Appellant.
Equally, it has failed to rebut the material indicating contribution by
Smt. Santosh Kapur. The omission to investigate the claims of the
contributor herself, despite her availability and despite the existence
of supporting documents, constitutes a serious lacuna in the
prosecution case.
150. Accordingly, I am of the view that the prosecution has failed to
establish that the entirety of the investments in the Post Office and
HDFC Life Insurance Policy represented assets acquired from the
resources of the Appellant. The inclusion of the said amounts in the
computation of disproportionate assets is therefore not supported by
satisfactory evidence and cannot be sustained to the extent attributed
by the prosecution.
Cash
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151. The next asset under consideration is the cash amount of
Rs.11,62,240/, which has been included by the prosecution and
accepted by the Trial Court as an unexplained asset attributable to the
Appellant. The findings of the Trial Court with respect to this read as
under:
―I have carefully gone through the testimony of Pratibha
Sharma (DW1) and the application Ex.PW76/DR. Although
there is nothing abnormal in brothers and sisters
contributing for treatment of the old aged father. However,
accused persons did not bring on record as to how much
money was being spent on the treatment of Sh. M. M.
Chhibber. In absence of such evidence, I am not inclined to
accept the testimony of DW1. It is clear that she is just
testifying with a view to save her close relatives. The
application Ex.PW76/DR is also an afterthought. As per D-
23 (Ex.PW4/A), in this locker, apart from Rs.5 lacs, foreign
currency of 2560 pounds was also found. This foreign
currency is admittedly of A2. Therefore, this locker is not
only of A-2 but also is being used by her to put her own
money. Hence, I take the value of Rs. 11,62,240/.‖
152. The approach adopted by the Trial Court cannot be sustained. The
issue before the Court was not whether the entire amount contributed
by the family members had actually been expended on medical
treatment. The relevant question was whether the prosecution had
established that the recovered cash represented money belonging to
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the Appellant and constituted an unexplained asset acquired by him
during the check period.
153. DW-1, Mrs. Pratibha Sharma, clearly stated in her testimony that she
and her sisters had contributed funds for the treatment and care of
their father, who was residing with Mrs. Mridula Kapur. She
specifically stated that she had contributed Rs.1.5 lakhs, while two of
her sisters had contributed Rs.3 lakhs each. She further stated that Dr.
S.N. Bakshi had also contributed approximately Rs.60,000/-. The
witness identified the affidavits executed by the contributors, which
were exhibited as Ex. PW-76/DT-1 to Ex. PW-76/DT-4.
154. The testimony of DW-1 was not discredited in cross-examination. No
evidence was led by the prosecution to establish that the contributors
lacked the financial means to make such contributions. The Trial
Court rejected the testimony merely on the assumption that the
witness was attempting to protect her relatives. Such a conclusion,
unsupported by any evidence on record, is impermissible in criminal
law.
155. Equally unsustainable is the finding that the explanation should be
discarded because the defence did not prove the exact amount spent
on medical treatment. The defence case was that the money had been
collected and retained for the treatment and care of an aged and ailing
parent. Whether the entire amount had eventually been spent, partly
spent or remained unutilised does not determine the source from
which the money originated. The source of the funds and the
subsequent utilisation thereof are distinct questions. The absence of
evidence regarding expenditure cannot by itself establish that the
money belonged to the Appellant.
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156. The Trial Court also characterised Ex. PW-76/DR as an afterthought.
However, the record reveals that the relevant affidavits and
supporting material had been brought before the investigating agency
during the course of proceedings. More importantly, the IO did not
undertake any investigation to verify or disprove the assertions
contained therein. No material was collected to establish that the
explanation was false. An explanation cannot be rejected merely by
describing it as an afterthought unless there exists evidence
demonstrating its falsity.
157. It is also material to note that the defence evidence was curtailed
before all relevant witnesses could be examined. Consequently, the
defence was deprived of the opportunity to place additional material
regarding the contributions made by family members and the
circumstances in which the funds were retained. The resulting
evidentiary gap cannot be used to relieve the prosecution of its burden
of proving ownership of the cash.
158. The prosecution was required to establish, by cogent and reliable
evidence, that the recovered cash belonged to the Appellant and
represented an asset acquired by him during the check period from
undisclosed sources. That burden never shifted and was not
discharged. The defence, on the other hand, furnished a plausible and
supported explanation regarding the source and ownership of the
money, which remained unrefuted. It is well settled that suspicion,
however strong, cannot substitute proof and that the weakness of the
defence cannot be treated as evidence in favour of the prosecution. In
these circumstances, the sum of Rs.11,62,240/- could not have been
included as an unexplained asset of the Appellant.
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Foreign Currency
159. The next item under challenge is the foreign exchange valued at
Rs.2,13,632/-, which has been included by the prosecution and
accepted by the Trial Court as an asset of the Appellant.
160. The Trial Court rejected the explanation furnished by the defence by
observing that the version put forward through DW-2, Shri Kewal
Krishan, was a “cock and bull story”. The relevant findings read as
under:
―It is clearly cock and bull story woven by DW-2 Kewal
Krishan. He is an Accountant at Kimaya Store. It is strange
that he does not issue any bill relating to the sale of goods
to Mr. Chetlani. Even if, Mr. Chetlani, the buyer of articles
from Kimaya Store, did not have Indian currency, no one
prevented DW-2 to issue a bill in the name of said Mr.
Chetlani. I have already reproduced the testimony of DW-2
and I have no hesitation to say that version of DW-2 is not
acceptable. Accordingly, I take full value at Rs.2,13,632/.‖
161. The reasoning adopted by the Trial Court, however, does not address
the foundational question, namely, whether the prosecution had
established that the foreign exchange belonged to the Appellant. The
mere rejection of a defence explanation does not automatically
establish the prosecution case. The burden always remains upon the
prosecution to prove that the asset sought to be included in the
disproportionate assets statement belonged to the public servant
concerned.
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162. On the contrary, the record discloses material indicating that the
amount was connected with Mrs. Mridula Kapur. The affidavit of Shri
Ram Chetlani, exhibited as Ex. PW-76/DN, specifically records that
the money had been left with Mrs. Mridula Kapur as an advance
towards a proposed future purchase. The existence of this document is
not disputed.
163. DW-2, Shri Kewal Krishan, also explained the circumstances in
which no bill had been issued. His testimony was that the transaction
had not culminated in a completed sale and that the bill would have
been generated only upon finalisation of the purchase and delivery of
the goods. Whether such explanation ultimately inspires confidence
or not, the fact remains that it constituted evidence on record which
required evaluation in light of the entirety of the material available.
164. Even assuming that the explanation furnished by DW-2 was open to
doubt, the prosecution was still required to establish that the foreign
exchange belonged to the Appellant. The Trial Court appears to have
proceeded on the premise that once the defence explanation was
disbelieved, the prosecution case automatically stood proved. Such an
approach is contrary to law.
165. It is equally significant that the evidence on record indicates that Mrs.
Mridula Kapur possessed an independent source of income and was
gainfully employed at Kimaya store separate from those of the
Appellant. The prosecution itself did not dispute this position. In such
circumstances, recovery of foreign currency connected with her
business dealings could not, without further evidence, be treated as an
asset of the Appellant.
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166. In the absence of any evidence connecting the foreign exchange
amounting to Rs.2,13,632/- with the Appellant, and having regard to
the material on record indicating its connection with Mrs. Mridula
Kapur, the inclusion of the said amount in the assets of the Appellant
cannot be sustained and is liable to be excluded from consideration.
Most importantly Mrs. Mridula Kapur, wife of the Appellant, has
already been acquitted. The relevant para of the impugned judgment
reads as under:
―So far as A-2 is concerned, she is the wife of A-1 and it is
argued on her behalf that there is no evidence that she
abetted A1 in amassing the said properties. It is true that
there cannot be any direct evidence but the manner in which
properties have been purchased and jewellery was found in
her lockers, there may appear to be reasons to believe that
she abetted this crime. However, the court cannot be
oblivious of the social realities. In this unequal society, wife
has to stand with her husband and she might even not know
as to what is being got done through her. Therefore, I give
benefit of doubt to A-2 and acquit her.‖
Assets prior to check period
167. The Appellant has further assailed the computation of assets held
prior to the commencement of the check period. The prosecution and
the Trial Court assessed the value of such assets at Rs.41,700/-,
whereas the defence contends that the value was substantially higher
and stood proved through documentary evidence.
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168. The Trial Court appears to have placed considerable reliance upon the
property return submitted by the Appellant on 29.12.1973. While
accepting the figures mentioned therein, the Trial Court failed to
consider other contemporaneous material available on record,
including the affidavit dated 10.09.1987 and the Will dated
12.08.2000 executed by Late Shri Milkhi Ram Kapur, father of the
Appellant, which were recovered during investigation and exhibited
through the prosecution witnesses themselves.
169. The aforesaid documents indicate that substantial amounts, including
bank deposits, National Savings Certificates and recurring deposits,
had been provided to the Appellant during the period between 1957
and 1963. These documents pre-date the registration of the FIR by
several years and therefore cannot be dismissed as documents brought
into existence to meet the prosecution case.
170. The evidence of PW-61, Chartered Accountant, is also relevant.
During cross-examination he accepted that assets acquired during the
late 1950s and early 1960s would have appreciated substantially by
the year 1971. Despite such evidence, the Trial Court adopted the
figures reflected in the earliest return without undertaking any
realistic assessment of the value of the assets available to the
Appellant at the commencement of the check period.
171. The purpose of determining opening assets is to ascertain the actual
financial position of the accused at the beginning of the check period.
If assets legitimately acquired prior to the check period are
undervalued or ignored, the entire computation of disproportionate
assets becomes distorted.
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172. In the present case, the contemporaneous documents executed by the
Appellant's father, and the admissions of the prosecution witnesses,
show that the Appellant possessed assets and financial resources
substantially in excess of those taken into account by the prosecution.
The failure to consider such material has resulted in an
understatement of the opening assets available to the Appellant and
has consequently inflated the alleged disproportion.
173. The computation adopted by the Trial Court on this aspect therefore
cannot be relied upon.
Computation of Jewellery
174. The next asset requiring consideration is the jewellery valued by the
prosecution at Rs.18,51,215/-, which has been treated as an
unexplained asset acquired during the check period. The Trial Court
held as under:
―As per the declaration of both A1 and A2, they had total
jewellery weighing 1632.490 gram + 1458 gram +
3090.490 gram. As per the declaration in Wealth Tax
Return dt 31.3.2000, A1 had 139.960 gram whereas his wife
had 1805.75 gram. Total comes to 1945.710 gram. It means
that A1 acquired/purchased 1144.78 gram (3090.490 gram
– 1945.710 gram) during 1-4-2000 to 31-3-2006.
On the date of search i.e. 10-10-2007, Major General had
3345 gram Gold jewellery which were found at her
residence and in various lockers. As per Wealth Tax Returns
dt 31.3.2007, they had 3090.490 gram gold jewellery. It is
obvious that they purchased 254.510 gram (3345 –
3090.490 gram). A-1 and A-2 declared in their respective
Wealth Tax Returns about Gold jewellery. But during
search, the diamond jewellery were also found and got
evaluated through the Government Valuer namely Sh. Om
Prakash Malhotra. The prosecution could not examine the
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valuer due to his old age but Investigating Officer has
proved the said valuation of the jewellery as under:
…
From the above it is found that Major General Kapur
purchased diamond and stone jewellery weighing 697.900
gram for Rs.15,35,640/during 1-4-2000 to 10-10- 2007.
Whereas he purchased 1399.290 gram during 1-4-2000 to
10-10-2007. Hence Shri Kapur purchased 701.390 gram
gold ornaments during the said period. The rates of gold
were obtained for the period 2000-2007as per the said rate
list provided by Sh. O. P. Malhotra, Government approved
Valuer, the rates of gold was Rs.4,380 on 31.3.2000,
Rs.4,210/ on 31.3.2001, Rs. 5050/ on 31.3.2002, Rs.5310/
on 31.3.2003, Rs.6065 on 31.3.2004, Rs.6150 on 31.3.2005,
Rs.8500/ on 31.3.2006, Rs.8500/ on 31.3.2007.
Considering the average rate of gold ornament during 2000
to 2007 as Rs.4500/- per10 gram, the cost of the said gold
ornament would be Rs.3,15,575/ As such the cost of gold
and diamond jewellery to be acquired by Major General
Kapur during 2000 to 10-10-2007 is come to Rs.15,25,640
+ 3,15,575 + 18,41,265/.
It is true that O. P. Malhotra has not been examined but
Investigating Officer has placed on record the said
valuation reports, which are Ex.PW1/C,
Ex.PW71/A,Ex.PW76/C, Ex.PW76/D, Ex.PW76/E,
Ex.PW76/F andEx.PW76/G. If the valuation is incorrect, the
accused was at liberty to prove by examining a valuer in the
defence to show that actual value is much less. I am not
inclined to give any benefit of mistake of tola and grams as
pointed out by Ld. Defence Counsel simply because the
difference between the two cannot be better understood than
by a person like A1, who is from the wealthy family as per
his own submissions.
It is argued by Ld. Defence counsel that the jewellery of
mother of A-1 has also been calculated. I disagree with this
submission. If A-1 & A-2 have kept such large amount of
jewellery in their lockers, they will keep some part of
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jewellery at residence also so that the same are readily
available for social functions. Hence, prosecution has
rightly attributed the aforesaid jewellery to A1.
…”
175. The prosecution case proceeded on the assumption that the jewellery
recovered during the course of investigation represented acquisitions
made by the Appellant and his family during the check period.
However, a careful scrutiny of the evidence shows that the
prosecution has failed to properly account for the substantial quantity
of jewellery already disclosed by the Appellant and his wife long
before commencement of the check period.
176. The relevant portions of the cross examination of the IO read as
under:
―Question : Did you obtain any second opinion from any
jeweller with regard to valuation of jewellery seized from
the house of mother of accused and the locker?
Answer: No.
It is incorrect to suggest that valuation of the jewellery was
done in cursory manner through a stock valuer of CBI so
that accused can be fixed for a higher value of assets i.e.
jewllery. It is incorrect to suggest that I deliberately did not
produce Mr. O. P. Malhotra valuer of the jewellery as that
would have brought the cat out of the bag.
Question: Did you examine the age of the jewellery from
recognized jewellery valuation companies?
Answer: I did not.
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It is incorrect to suggest that I carried out the search and
seizure and registration of the present case against the
accused based upon my own notional understanding at the
behest of vested interest and did not place the relevant
material before this court and misrepresented various facts
to this court with malice and sole objective of denial of
promotion of accused. It is incorrect to suggest that I am
deposing falsely.
Vol. I want to explain that I have given benefit of Rs. 5 lacs
earned by selling the land at Panipat against agreement to
sale.‖
177. The charge-sheet itself acknowledges that the Appellant possessed
approximately 87.5 tolas of gold prior to the commencement of the
check period. The record further reveals that such jewellery had been
consistently disclosed in Income Tax and Wealth Tax Returns filed
over the years. Further, during cross-examination, PW-61, Shri
Kailash Chand Aneja admitted that the Income Tax Return for
Assessment Year 1998-99 specifically recorded that Mrs. Mridula
Kapur had acquired substantial quantities of gold jewellery as
stridhan at the time of her marriage, including jewellery received
from her parents and in-laws. He further admitted that such jewellery
was distinct from the assets of the Hindu Undivided Family. The
cross of PW – 61 reads as under:
―Now I have been shown documents at page no. 8 to 15,
which pertain of D-77. I say that I have seen these
documents earlier as I have the copies of the said
documents also. The same are exhibited as Ex. PW61/DD
(colly) . These documents are the statement of accounts of
Smt. Santosh Kapur for issuing of bank drafts. The said
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documents also show the bank deposits of Ms. Santosh
Kapur along with the FDR numbers.
I have seen the document at page no. 17 & 18 of D-77,
which is exhibited as Ex. PW61/DE (colly) . The same
relates to the certificate issued by the father of Mrs. Mridula
Kapur.
It is correct that as per the income tax return for the
assessment year 1998-99, it is mentioned that the assessee
except gold jewellery ornaments acquired as ―stridhan‖ at
the occasion of marriage in 1986 from parents about 80
tolas and 75 tolas from in-laws. It is also correct that the
said gold acquired by Mrs. Mridula Kapur is distinct from
Anand Kumar Kapur HUF.‖
178. The evidence of PW-41, Shri Akarsh Kashyap, Chartered Accountant,
further establishes that Mrs. Mridula Kapur had declared
approximately 1458 grams of gold jewellery in her Income Tax
Returns for Financial Years 2005-06 and 2006-07. Likewise, the
Appellant had disclosed possession of approximately 1632.49 grams
of jewellery during the same period. These declarations were made
much prior to registration of the present case and were available with
the Income Tax Department in the ordinary course. The ITR records
are reproduced as under:
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Ms. Mridula Kapur’s ITR for 1998-99
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Ms. Mridula Kapur’s Wealth Tax Return for 2006-2007
Name KAPUR MRIDULA
Father's Name MADAN MOHAN BAKSHI
Addressoffice SAINIK FARMS, NEW DELHI, 110068
Address Residence 305 FOREST LANE, NEB SARAI EXTENTION, SAINIK
FARMS, NEW DELHI, 110068
Status 01 Assessment Year 2006-2007
Ward CIR 24 (1) Valuation Date 31/03/2006
PAN ACUPK0209M Date of Birth 12/07/1959
Computation of Net Wealth
Immovable Property 1400000
Building(s)S.2(ea)(i)
House at Mashobtra Shimla 1400000
Less: Debt 0 1400000
Movable Property 1064340
Jewellery, etc., S.2(ea)(iii)
Gold Jewellary 125 Tola i.e
125*11.664=1458 gm @ 730/- per gm 1064340
Less: Debt: 0 1064340
Net wealth 2464300
Net wealth Rounded off u/s 44C 2464340
Tax on Net wealth 9643
Add: Interest on late filing of return 482
Total tax and interest payable 10125
Less: Prepaid tax 0
Tax payable 10125
Assets claimed exampt: 0
1/2 Share 407A Unitech park New Delhi 0
Less: Debt 0 0
1/2 Share K-8 Jangpura Extention, New 0
Delhi
Less: Debt 0 0
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Ms. Mridula Kapur’s Wealth Tax Return for 2007-2008
Name KAPUR MRIDULA
Father’s Name MADAN MOHAN BAKSHI
Address Office SAINIK FARMS, NEW DELHI, NEW DELHI, 110068
Address Residence 305 FOREST LANE, NEB SARAI EXTENTION, SAINIK
FARMS, NEW DELHI, 110068
Status 01 Assessment Year 2007-2008
ward CIR 24 (1) Valuation Date 31/03/2007
PAN ACUPK0209M Date of Birth 12/07/1959
Computation of Net Wealth
Immovable Property 2000000
Building(s)S.2(ea)(i)
House at Mashobra Shimla 2000000
Less:Debt 0 2000000
Movable Property 1239300
Jewellery.etc.,S.2(ea)(iii)
Gold Jewellary 125 Tola i.e
125*11.664=1458gm@850/- per gm 1239300
Less:Debt: 0 1239300
Net wealth 3239300
Net wealth Rounded off u/s 44C 3239300
Tax on Net wealth 17393
Add: Interest on late filing of return 0
Total tax and interest payable 17393
Less:Prepaid tax 0
Tax payable 17393
Due date of filing of return 31/07/2007
Assets claimed exempt: 0
1/2 Share K-8, Jungpura Extension New 0
Delhi
Less:Debt 0 0
1/2 Share 407A Unitech Park 0
Less:Debt 0 0
1/2 Share 408A Vatika Tower 0
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Less:Debt 0 0
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Appellant’s Wealth Tax Return for 2007-2008
Name ANAND KUMAR KAPOOR (HUF)
Address office NEW DEKHI, NEW DELHI
Address residence 305 FOREST LANE, NEB SARAI EXTENSION, SAINIK FARMS,
NEW DELHI, 110068
Status 02 Assessment Year 2007-2008
Ward Circle 24(1) Valuation Date 31/03/2007
PAN AAEHA0696L Date of Incorporation 15/09/1986
Computation of Net Wealth
Immovable Property 990000
Building(s)S.2(ea)(i)
PI 0
Less Debt 0 0
Urban Land S.2(ea)(v)
Plot No 32/52 HUDA Gurgaon 475000
Less Debt 0 475000
Plot No 33P/52, HUDA, Gurgaon 515000
Less Debt 0 515000
Movable Property 1387616
Jewellery, etc., S.2(ea)(iii)
Gold Jewellary 139.96 tola 1387616
i.e 139.96*11.664-1632.49 gm @850/-gm
Less Debt 0 1387616
Net wealth 2377616
Net wealth Rounded off u/s 44C 2377600
Tax on Net wealth 8776 0
Add: Interest on late filing of return 0
Total tax and interest payable 8776
Less: Prepaid tax 0
Tax payable 8776
Due date of filling of return 31/07/2007
Assets claimed exempt: 0
1/2 Share Basement & 1/2 Share GF at D- 0
23Defence Colony
Less: Debt 0 0
B111, Ansal Plaza New Delhi 0
Less: Debt 0 0
1/2 Share 407A Unitech Park 0
Less Debt 0 0
102 LSC Munirka 0
Less: Debt 0 0
1/2 Share 408A Vatika Trade Tower 0
Less Debt 0 0
1/2 Share k-B, JangpuraExtention N Delhi 0
Less Debt 0 0
Agriculture land 0
Less Debt 0 0
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Appellant’s Wealth Tax Return for 2006-2007
Name ANAND KUMAR KAPUR (HUF)
Address Office NEW DELHI, NEW DELHI
Address Residence 305 FOREST LANE, NEB SARAI EXTENTION, SAINIK
FARMS, NEW DELHI, 110068
Status 02 Assessment Year 2006-2007
Ward Circle 24(1) Valuation date 31/03/2006
PAN AAEHA0696L Date of incorporation 15/09/1996
Computation of Net Wealth
Immovable property 990000
Urban land S.2 (ea) (v)
Plot No. 32/52 HUDA, Gurgaon 475000
Less Debt 0 475000
Plot No. 33P/52 HUDA, Gurgaon 515000
Less Debt 0 515000
Movable Property 1191717
Jewellery, etc. , S.2 (ea) (iii)
Gold Jewellery 139.96 tola i.e.
139-96*11.664= 1632.49 gm @730/- per gm 1191717
Less Debt 0 1191717
0
0 0
Net Wealth 2181717
Net Wealth Rounded off under Section 44C 2181700
Tax on Net Wealth 6817
Add: Interest on late filing of return 341
Total tax and interest payable 7158
Less : Prepaid tax 0
Tax payable 7158
Details of Prepaid Tax 0
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Date Name of Bank and Branch Branch Code Amount
0
Assets claimed exempt: 0
1/2 Share Basement & 1/2 Share GF at D-23 0
Defence Colony, New Delhi 0
Less: Debt 0 0
B-111 Ansal Plaza, New Delhi 0
Less: Debt 0 0
1/2 Share 407A Unitech Park, New Delhi 0
Less: Debt 0 0
102 LSC Munirka 0
Less: Debt 0 0
1/2 Share K-8, Jangpura Extension New Delhi 0
Less: Debt 0 0
179. The evidence on record therefore demonstrates that substantial
quantities of jewellery stood disclosed by the Appellant and his wife
long before initiation of criminal proceedings. Significantly, the
prosecution had not produced any evidence to show that the
declarations made before the Income Tax Department were rejected,
or found to be false.
180. The prosecution has also failed to appreciate that jewellery received
by way of inheritance, gifts or stridhan cannot automatically be
treated as assets acquired during the check period. The evidence on
record indicates that a substantial portion of the jewellery was
inherited or received on ceremonial occasions much prior to the
relevant period. No investigation appears to have been conducted to
ascertain the age of the jewellery, the dates of acquisition, or the
circumstances under which the same came into possession of the
family.
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181. The prosecution has also not satisfactorily addressed the fact that
certain articles contained diamonds and precious stones embedded in
gold ornaments. The absence of separate declarations regarding the
weight of stones in wealth tax records cannot automatically lead to an
inference of concealment, particularly when such stones formed an
integral part of the jewellery itself.
182. Further, the prosecution sought to establish the value, purity and age
of the alleged recovered gold and precious stones through valuation
reports marked as Ex. PW-1/C; however, the author of the said
reports, Sh. O.P. Malhotra, though cited as a witness, was never
examined during trial. It is settled law that a document does not stand
proved merely because it is exhibited, and the contents of a valuation
report can only be proved through its maker, who alone is competent
to depose regarding the basis and methodology of valuation and be
subjected to cross-examination. Even, the prosecution's request to
summon an alternative witness was declined by the Trial Court vide
order dated 24.05.2016, resulting in the reports remaining unproved.
183. In these circumstances, the prosecution has failed to discharge its
burden of proving that jewellery valued at Rs.18,51,215/- constituted
an unexplained asset acquired during the check period.
Agricultural Income
184. The next head pertains to the computation of income under the head
“Agricultural Income, Rent and Interest”. The prosecution and the
Trial Court have taken the income under this head at Rs.1,19,078/-,
whereas according to the Appellant, the income established on record
is Rs.12,02,108/-. The principal dispute concerns the agricultural
income derived from approximately 34 bighas and 46 kanals of
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agricultural land situated in Panipat and Karnal during the check
period. The Trial Court findings read as under:
―In this application he has prayed that an income certificate
may be issued. Below this application, there is a certificate
that ―Prarthi ki mutabik shapath patra anusar varshik aaye
1,77,000 rupay sahi hai. Report paish hai.‖ I may mention
that the word ―sahi‖ i.e ―correct‖ appears to bean
interpolation. Even if this certificate is not interpolated, it is
clear from the language that it has been issued on the basis
of the application and not on the basis of actual income. I
may mention here that A-1 has not examined Tehsildar as a
defence witness and therefore, the certificate in question is
of no value.
Similarly, the tenant Sukhbir has not been examined in
defence and therefore, the affidavit of Sukhbir cannot be
accepted. So far as the testimony of DW-4 is concerned, I
would say that he claims himself to be an agriculturist and
he testifies that land of A-1 was given on contract for three
years to one Surjit and annual income per acre was around
Rs.3000/ to Rs.3500/ per acre and that the income had
increased to Rs.30,000/acre per annum. He testified that
said Surjit used to give money directly to the father of A-1.
As per his testimony, DW-4 is having agricultural land in
Panipat itself. He could have brought his own receipts of
income from the sale of agriculture produce to prove his
version about the income from the agriculture. He has not
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produced any documentary evidence as to how much he
used to earn from the agricultural income. Therefore, I am
not inclined to accept his testimony.
...
Now, I will refer to the property return of A-1, filed in the
year 1973, which is placed at page 150 of D-78 (Ex.P-31).
It mentions the income of Rs. 1,000/ from each of the
agricultural land per annum and an income of Rs.310/ from
the property at Lohgarh, Amritsar. It means that earnings
from the aforesaid properties was Rs.2,310/ per year. The
Investigating Officer has calculated income from 1971 to
1974. Thereafter, he has relied upon the income tax returns
filed by A-1 through PW-61. However, these income tax
returns (placed in D-76) are not proved, though, it was
seized by the Investigating Officer. Defence has also neither
admitted this document nor has taken any benefit from it.
Since after 1976, A-1 has not shown agricultural income in
his property returns to his department nor the income tax
returns in D-76 have been proved by any party, one way to
appreciate evidence would be to presume that A-1 had no
agricultural income after 1976. But that would not be a
good approach. There has to be some agricultural income
of A1. Therefore, I would like to leave it aside and see as to
how had income from agriculture has been shown by A-1 in
his property returns after 1973.I have already stated that
income of A-1 from rent and agriculture was Rs.2310/ in
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1973. The returns filed by him dated 28.09.1976 shows
agricultural income @ Rs.1,500/ +Rs. 1,000/ +RS.310/ =
Rs.2,810/. Thus it shows that in 5 years income from
agricultural and rent increased by a small fraction of
Rs.500/. In view of above trend, I take the income from
agricultural and rent to be around Rs.3500/ in 1986.
Similarly, interest on the fixed deposit of Rs.21,700/ and
NSCs of Rs.20,000 in the year 1971 had been calculated by
Investigating Officer to be Rs.77.003/.This has been
calculated from the income tax returns filed by A1 in D-76,
which has not been proved. However, it can be fairly
accepted that roughly this calculation is correct. I have
already discussed above regarding the agricultural income,
which is supported by the documentary evidence. On the
other hand, the defence is relying upon the testimony of
DW-4, who has given a vague evidence without bringing on
record any documentary evidence as to what was being
produced in the farms of A-1 and what is the value of
agricultural produce. In such a situation, I would like to see
D-76 to ascertain as to whether my assessment of the
income as above is correct or not. Interestingly, the income
tax returns of the year 1986, do not help the accused in any
manner. Therefore, I accept the value of agricultural
income, rent and interest at Rs. 1,19,078/.‖
185. The Trial Court rejected the agricultural income claimed by the
Appellant primarily on the ground that the tenant, Surjit, was not
examined as a defence witness and that the certificate issued by the
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Tehsildar, Panipat was not formally proved through its author. In
doing so, however, the Court overlooked the fact that both these
materials had been furnished to the IO during the course of
investigation itself. The affidavit of the tenant detailing the amounts
paid by him towards cultivation of the land and remitted to the
Appellant's family was admittedly available with the prosecution.
Despite possessing such material, the IO chose neither to examine the
tenant nor to undertake any inquiry to verify or disprove the
assertions contained therein.
186. Once specific material explaining the source and extent of agricultural
income had been placed before the investigating agency, it was
incumbent upon the prosecution to investigate the same fairly and
objectively. The prosecution could not simply ignore material
favourable to the defence and thereafter contend that the claim
remained unproved. The omission to verify the affidavit of the tenant,
despite its availability during investigation, reflects a selective
approach which materially affected the assessment of the Appellant's
income.
187. The adverse inference drawn by the Trial Court on account of the
non-examination of Surjit is also unsustainable for an additional
reason. The record demonstrates that Surjit had been cited as a
defence witness and the defence intended to examine him. However,
before all defence witnesses could be produced, the defence evidence
was closed. Having curtailed the defence evidence, it was not open to
the Court to subsequently reject the defence case on the ground that
the very witness who was sought to be examined had not entered the
witness box.
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188. Equally significant is the fact that the agricultural income claimed by
the Appellant was not based solely upon the affidavit of the tenant.
The claim stood corroborated by multiple independent pieces of
evidence. The affidavit of the Appellant's mother, the Will executed
by the Appellant's father, and the testimony of DW-4 (Mr. Hari
Maira) all state that the agricultural lands were being cultivated
through a tenant and that the agricultural proceeds were received by
the parents of the Appellant during the period when he was posted
elsewhere in service. The evidence of DW-4, who was himself
engaged in agriculture and familiar with the cultivation practices and
yields in the area, lends further support to the defence version
regarding the income generated from the land. The examination in
chief reads as under:
―I am an agriculturist, but now I have retired from the
vocation. My lands are located in Panipat. Maj. Gen. Anand
Kapur also has land in Panipat. The lands are reasonably
adjacent. The land of A-1 was given on the contract for
three years at a time to one Surjeet. As on date, the annual
income from the cultivation to the land owner is about Rs.
50,000/- per acre and the cultivator/contractor earns about
Rs. 30,000/- per acre as his net profit per year. My family
had been very close to the family of A-1 and as the father of
A-1 late Mikhi Ram Kapur also known as ‗Diwan Saheb‘
used to tell me to oversee the agricultural activities from
time to time, so I was involved in looking after the land of A-
1.
In the year 1971, as I recalled, the annual income per
acre to the land owner was in the domain of Rs. 3,000/- to
Rs. 3,500/- . In the next 30 years, the income had increased
to Rs. 30,000/- per acre, per annum for the land owner. A-1
had owned approximately, 7.5 acres of land in Patti
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Rajputan Village in Panipat. Surjeet used to give the money
directly to late Diwan Saheb, Surjeet continued to be the
cultivator of the said land from 1971 to 1999-2000, when A-
1 sold the land.‖
189. The reasons assigned by the Trial Court for discarding the testimony
of DW-4 are likewise not persuasive. The witness was not produced
to establish his own agricultural income but to depose regarding the
nature of cultivation, prevailing agricultural yields and the income
generated from similarly situated lands in the locality.
190. The Trial Court further discarded the certificate issued by the
Tehsildar, Panipat on the assumption that it was based only upon the
information supplied by the Appellant. However, the certificate
constituted an official assessment regarding the average agricultural
income generated from land of the relevant nature and extent within
the area. Even if the Court was not inclined to accept the certificate as
conclusive proof of income, it nevertheless constituted corroborative
material which could not have been completely ignored, particularly
when read together with the affidavit of the tenant, the statements of
the family members and the testimony of DW-4.
191. It is also material that PW-61, the Chartered Accountant, admitted
that the income claimed by the Appellant was broadly consistent with
the average agricultural income that could be expected from
agricultural land of the size and nature owned by the Appellant.
192. In contrast, the figure ultimately adopted by the Trial Court is not
founded upon any positive evidence regarding actual agricultural
yields or market returns. The Court effectively discarded the defence
evidence and proceeded to estimate the agricultural income on the
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basis of assumptions drawn from certain property returns and tax
records.
193. The cumulative effect of the affidavit of the tenant, the affidavit of the
Appellant's mother, the Will of the Appellant's father, the certificate
of the Tehsildar, the testimony of DW-4 and the admissions of PW-61
raises a credible and probable explanation regarding the agricultural
income earned from the land holdings of the Appellant. At the very
least, this material created a substantial doubt regarding the
correctness of the restricted figure adopted by the prosecution and
accepted by the Trial Court.
194. In these circumstances, the Trial Court was not justified in restricting
the income from agriculture to Rs.1,19,078/-.
HUF Income
195. The Appellant further challenges the finding of the Trial Court
whereby the income of the HUF was restricted to Rs.21,89,538/-. It is
submitted that the evidence on record demonstrates that the HUF
income was substantially higher and ought to have been assessed at
Rs.36,48,927/.
196. The principal dispute under this head relates to two components of
income, namely, agricultural income derived from the agricultural
lands owned by the family and rental income from immovable
properties. The Trial Court rejected a substantial portion of the
agricultural income and further reduced the rental income by treating
the statutory deduction available under the Income Tax Act as an
actual expenditure. Both findings, it is submitted, are unsustainable.
The findings of the Trial Court read as under:
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―My view
I have already discussed the agricultural and rent income
up to 1986 in discussion of item no. 4. Now, I take up the
HUF income, which is contained in the file D- 75 [Ex.PW-
61/A (Colly.)]. In these income tax returns, 1/6th of the
income was deducted for repairs of the flat etc. Ld. Defence
counsel is relying upon the testimony of PW- 61 that it is not
an actual expenditure but only a tax benefit. I have
considered this testimony and I am of the opinion that this
deduction is done because after all, immovable property
requires repairs, etc. from time to time and it is reasonable
to believe that at least 1/6th of the income is spent on
repairs etc. of the property. Hence, I am not inclined to
accept that it is not an actual expenditure. I have perused
the balance sheets filed by A-1 and I am not inclined to
leave 1/6 deduction aside. Accordingly, I accept the HUF
income to be Rs.21,89,538/-.‖
197. Insofar as the agricultural income component of the HUF income is
concerned, the same arises out of the very agricultural lands and
receipts which have already been dealt with while considering Item
No. 4. The findings recorded above while dealing with Item No. 4
shall equally govern the determination of agricultural income forming
part of the HUF income and are not being repeated herein for the sake
of brevity.
198. The surviving dispute under this head relates to the treatment of rental
income. The Trial Court accepted only the net income reflected in the
income-tax returns after deducting the statutory allowance available
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under the Income Tax Act and treated such deduction as representing
actual expenditure incurred on repairs and maintenance. The
reasoning adopted by the Court is contrary to the evidence on record.
199. PW-61 stated during cross-examination that the deduction allowed
from rental income was a statutory deduction available for tax
purposes and did not necessarily represent actual expenditure incurred
by the owner. The purpose of such deduction is to arrive at taxable
income under the Income Tax Act. It does not establish that an
equivalent amount was actually spent on repairs, maintenance or
renovation of the property. The burden to prove the amount lies
squarely on the Prosecution and cannot be discharged through
assumptions or conjectures. The Court must remain conscious that, in
a corruption case, income and expenditure cannot be determined on
presumptions. The Prosecution is required to establish both the
income in the hands of the accused and the expenditure incurred by
him through reliable and cogent evidence.
200. It is well settled that taxable income and actual income are distinct
concepts. Deductions and allowances available under fiscal statutes
are legislative concessions for tax computation and cannot
automatically be treated as expenditure actually incurred. Therefore,
while determining the actual income available to an accused in
disproportionate assets proceedings, the statutory deduction under the
Income Tax Act cannot be excluded unless supported by evidence of
actual expenditure.
201. The Trial Court, therefore, erred in reducing the rental income by
Rs.83,270/- solely on account of the statutory deduction claimed in
the income-tax returns. The said amount ought to have been included
while computing the actual income of the Appellant.
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Loans from Family
202. The Appellant challenges the rejection of three loan transactions,
namely, Rs.3,50,000/- from Maj. A. Ganesan, Rs.10,00,000/- from
Smt. L. Maira and Rs.3,00,000/- from Sh. Hari N. Maira.
203. The Trial Court rejected these amounts solely on the ground that it
was not satisfied as to why the lenders had advanced the loans. The
relevant findings read as under:
―Loan Maj A Ganesan 3,50,000
Note: Friendly Loan taken by A1 shown in Bank Statement
Ex. P9(D36).Ch No. 0067545 dt 10/01/2007.PW 41, Ex.
PW41/DC also confirm. DW3 has stated this and placed his
bank statement at Ex. DW3/1.
My view
I have perused the testimony of DW- 3Maj. A. Ganesan, but
I am not convinced as to for what purpose he had given loan
of Rs.3.5 lacs to A1 in the month of January 2007. I am not
inclined to accept this plea and the explanation is not
satisfactory.
6. Loan Smt L Maira 10,00,000
Note: Friendly Loan taken by A-2 shown in Bank Statement
at Ex. P8 (D-35).Ch. No. 488037 dt 26/10/2005 for 5.00 L
and Ch. No.488042 dt 06/12/05 for 5.00 L of ING Vysya
Bank Panchsheel. PW41, Ex. PW41/DD also confirm. DW4
has stated this and placed her bank statement at Ex. DW4/1.
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My view
Defence has examined DW-4 Hari Maira, who testified that
his mother Mrs. Lalti Maira had given a loan of Rs.10 lacs
to A-2 through two cheques. This is highly suspicious
transaction. I am not convinced as to why this huge loan
was given by the mother of DW4. The explanation is not
satisfactory.
7. Loan Sh. H.N. Maira 3,00,000
Note: Friendly Loan taken by A-2 shown in Bank Statement
at Ex. P8(D35)vide ch no.0806611 dt. 06/07/2006. PW 41,
Ex.PW41/DD also confirm DW-4 has stated this and placed
his bank statement atEx.DW4/2.
My view
No explanation is coming as to for what this loan was given
by DW4 to A2. I do not accept this income.‖
204. Such an approach is unsustainable. In the present case, all three loans
were advanced through identifiable banking channels and stood
corroborated by the bank statements of both the lenders and the
recipient. Maj. A. Ganesan (DW-3) and Hari Maira (DW-4)
testimonies support the same. The relevant bank records were also
exhibited on record.
205. Significantly, the prosecution did not dispute the identity or financial
capacity of the lenders, nor did it lead any evidence to establish that
the transactions were sham, fictitious or that the funds actually
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belonged to the Appellant. The genuineness of the banking
transactions remained uncontroverted. The testimonies of DW-3 and
DW-4 read as under:
―CC No. 17/13
RC No. AC-2/2007/A0003/CBI/ACU-II/ND
CBI Vs. Maj. Gen. Anand Kumar Kapur etc.
DW-3
15.09.2016
DW-3: Maj. A. Ganesan, son of Sh. G.S. Annaswamy
aged 68 years, r/o Flat 2A, Sundaram Apartment, No. 2
Fifth Avenue, Basant Nagar, Chennai-600090.
On S.A.
I have received summons in the above matter and in
compliance of the same I have come to this court.
Maj. Gen. Anand Kapur and myself were batch mates
since 1971. I had given a loan of Rs. 3.5 lacs in the month of
January 2007. I have brought the statement of account,
which is duly signed by the bank i.e. Indian Overseas Bank,
Yusuf Sarai Bank, Green Park, New Delhi. The relevant
entry is at Serial No. 11 and the statement is marked as Ex.
DW3/1 (objected to). After a few months of having taken the
loan, the mother of A-1 returned the said amount to me.
I had a Bose Wave Portable radio system. I have seen
Ex. PW50/E, which pertains to the abovesaid Bose Wave
Portable Radio system. Maj. Gen. Anand Kapur was moving
to Jaipur and wanted to have a small system, I had lent the
same to him and later on the returned it to me.
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XXXXX BY Sh. Manoj Shukla, Ld. Senior Public
Prosecutor for CBI.
It is correct that in the bank statement Ex. DW3/1, it is
not reflected as to in whose bank account, the aforesaid
amount has been transferred. I cannot remember the date,
month or year on which the mother of A-1 had returned the
money to me. Volunteered : I do not remember due to lapse
of long time. I do not recollect the mode of payment made to
me by the mother of A-1.
It is incorrect to suggest that no payment was made by
me as a loan to Maj.Gen. Anand Kumar Kapur nor any
money was returned to me as stated by me above. It is
incorrect to suggest that I have testified with a view to help
A1, being my close friend and batch-mate.
It is incorrect to suggest that the Bose Wave music system
was purchased by A-1 and was not lent by me to him and
the retail invoice Ex. PW50/E was actually issued to A-1, it
is further incorrect to suggest that A-1 got issued the said
invoice in my name. It is correct that the said invoice was
seized from the house of A-1. Volunteered : I had given the
complete box alongwith the invoice to A-1.
It is incorrect to suggest that I have deposed today at
behest of and at tutoring of A-1.
CBI Vs. Maj. Gen. Anand Kumar Kapur etc.
DW-4
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15.09.2016
DW-4: Sh. Hari Maira, son of late Sh. S.N. Maira, aged
61 years, r/o S-234, Panchsheel Park, New Delhi-110017.
On S.A.
I have known A-1 since my childhood and our
relationship goes back to three generations.
I had given a loan of about Rs. 3 lacs to Mrs. Mridula
Kapur in 2006. She had also requested for a loan from my
mother Mrs. Lalti Maira in 2005 for a total amount of Rs.
10 lacs, which was given to A-2 through two cheques of Rs.
5 lacs each.
I have brought the statement of account of my mother,
wherein the entry comes on page 03 dated 27.10.2005 and
08.12.2005. The said statement is Ex. DW4/1 (objected to)
and the relevant portion is highlighted at portions A and B,
respectively. I have also brought my statement of account of
Kotak Mahindra Bank, wherein the entry is figuring as date
of 07.07.2006. The said statement of account is Ex. DW4/2
(objected to) and the relevant entry is highlighted as portion
A.
I do not remember the date, but I received the money
back from A-2 in the year 2008.
I am an agriculturist, but now I have retired from the
vocation. My lands are located in Panipat. Maj. Gen. Anand
Kapur also has land in Panipat. The lands are reasonably
adjacent. The land of A-1 was given on the contract for
three years at a time to one Surjeet. As on date, the annual
income from the cultivation to the land owner is about Rs.
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50,000/- per acre and the cultivator/contractor earns about
Rs. 30,000/- per acre as his net profit per year. My family
had been very close to the family of A-1 and as the father of
A-1 late Mikhi Ram Kapur also known as ‗Diwan Saheb‘
used to tell me to oversee the agricultural activities from
time to time, so I was involved in looking after the land of A-
1.
In the year 1971, as I recalled, the annual income per
acre to the land owner was in the domain of Rs. 3,000/- to
Rs. 3,500/- . In the next 30 years, the income had increased
to Rs. 30,000/- per acre, per annum for the land owner. A-1
had owned approximately, 7.5 acres of land in Patti
Rajputan Village in Panipat. Surjeet used to give the money
directly to late Diwan Saheb, Surjeet continued to be the
cultivator of the said land from 1971 to 1999-2000, when A-
1 sold the land.
XXXXX By Sh. Manoj Shukla, Ld. Senior Public
Prosecutor for CBI.
Question: You have stated that in the year 1971, the annual
per acre to the land owner was in the domain of Rs. 3,000/-
to Rs. 3,500/- . I put it to you that it was only your
assumption and you do not have any documentary evidence
to prove it. What do you say?
Answer: It is correct that I do not have any documentary
evidence in support of my evidence. But, I was handling
agricultural operations even during 1971 and therefore, I
am testifying as above.
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Signing Date:01.07.2026
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Question: I put it to you that the income from cultivation
from a land is dependent on the crop which is grown and
measures of agriculture adopted and so the income may
vary what do you say?
Answer: It is correct.
I cannot produce any lease agreement between Diwan
Saheb and Sh. Surjeet, at this juncture. It is incorrect to
suggest that no such lease agreement exists and therefore I
cannot produce the same. It is incorrect to suggest that no
agricultural land of A-1 was never leased out to Sh. Surjeet
by father of A-1.
It is incorrect to suggest that I or my mother never gave
any loan to Smt. Mridula Kapur.
Question: I put it to you that actually A-1 had given you
amount in cash and asked from you to provide cheques of
the same amount. What do you say?
Answer: It is incorrect.
It is incorrect to suggest that I have deposed falsely today at
the behest of A-1 due to my old and good relationship with
A-1. It is further incorrect to suggest that I have deposed on
the tutoring of A-1.‖
206. In these circumstances, the loans could not have been rejected merely
because the Trial Court was not convinced about the reasons for
which they were advanced. Suspicion cannot substitute proof. Once
the transactions were supported by oral and documentary evidence,
the burden was upon the prosecution to establish their falsity, which it
failed to do.
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By:SAHAJ PREET KAUR
Signing Date:01.07.2026
19:03:16
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207. Additionally no questions were asked to DW 3 and DW 4 their
capacity to advance the loan to the Appellant and his wife. In fact the
loan of Rs. 13 lakhs was not even advanced to the Appellant but his
wife. Accordingly, the exclusion of the loan amounts of Rs.3,50,000/-
, Rs.10,00,000/- and Rs.3,00,000/- is unsustainable and the said sum
of Rs.16,50,000/- is liable to be included in the income of the
Appellant.
Transfer of Rs. 50,93,082/- from Smt. Santosh Kapur
208. The Appellant also assails the rejection of the sum of Rs.50,93,082/-
transferred by his mother. The Trial Court discarded the transaction
on the ground that the source of funds available with the mother had
not been established. The relevant findings read as under:
―My view
Such big amounts are coming from the mother of A-land
during trial, A-1 had been unable to show as to what were
the sources of mother of A-1 through which she was getting
so much money. No income tax returns nor any bank
account of mother of A-1 has been shown to this court. The
receipt of these amounts are highly suspicious.‖
209. Suffice it to note that the transfer admittedly originated from the bank
account of the Appellant's mother and was reflected in the
corresponding bank records. The defence had also relied upon the
affidavit of the mother explaining the source of funds and the
circumstances under which the amount was transferred. Significantly,
the IO admitted during cross-examination that he had neither
considered the said affidavit nor undertaken any investigation
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Signing Date:01.07.2026
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regarding the transaction. Even the Trial Court closed the defence
evidence in haste, therefore the findings related to Appellant’s mother
cannot be sustained.
Gifts
210. The Appellant further assails the rejection of the gifts received from
his mother and the parents of his wife, as well as the amounts
received by his children from their maternal grandfather.
211. Insofar as the gifts from the Appellant's mother are concerned, the
Trial Court rejected the same on the ground that the source of funds
available with the mother had not been established. This issue has
already been dealt with while considering the financial resources and
transfers made by the mother of the Appellant and is not being
repeated for the sake of brevity. For the reasons recorded therein, the
exclusion of the gifts of Rs.1,00,000/- and Rs.4,00,000/- cannot be
sustained.
212. With respect to the gift of Rs.10,00,000/- made by the parents of Mrs.
Mridula Kapur at the time of her marriage, the Trial Court rejected
the claim primarily on the ground that it was difficult to believe that
such an amount would have been retained in cash and because no
income-tax record was produced. However, the defence relied upon
the affidavit of the father of Mrs. Mridula Kapur and the testimony of
DW-1 in support of the said gift. The father was stated to be
employed as a telecom engineer in Oman and the prosecution did not
lead any evidence to show that he lacked the financial capacity to
make such a gift.
213. Similar views apply to the sum of Rs.4,00,000/- claimed to represent
the savings of Mrs. Mridula Kapur from her employment in Oman
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Signing Date:01.07.2026
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prior to her marriage. The defence relied upon the affidavit of her
father and the testimony of DW-1.
214. The gifts received by Dhruv and Dilkash from their maternal
grandfather amounting to Rs.2,45,000/- stand on an even stronger
footing as the same were reflected in the records relied upon by the
defence and supported by the affidavit of the donor. No evidence was
led by the prosecution to establish that the gifts were fictitious or that
the donor lacked the means to make them.
215. The Trial Court's conclusions in respect of these amounts are founded
largely upon suspicion and assumptions rather than any evidence
establishing falsity of the defence case. Accordingly, the exclusion of
the gifts and savings amounting to Rs.17,45,000/- is liable to be
rejected and the said amounts deserve to be included in the income
available to the Appellant during the check period.
216. The Appellant further challenges the exclusion of Rs.23,30,000/-
transferred from the parental bank account at Panipat to the HUF
account. It is the specific case of the Appellant that the relevant bank
records evidencing the transfer formed part of the material collected
during investigation.
217. The omission goes to the root of the matter as the sanctioning
authority was thereby deprived of the opportunity to consider material
which was directly relevant to the source of funds and the explanation
offered by the Appellant.
218. In these circumstances, when material supporting the Appellant's
explanation was admittedly not placed before the sanctioning
authority and was consequently not considered at the relevant stage,
the benefit of doubt arising therefrom must necessarily be given to the
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Signing Date:01.07.2026
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Appellant. Accordingly, the exclusion of the sum of Rs.23,30,000/-
cannot be sustained.
Interest PNB and HDFC Savings Bank Accounts
219. The Appellant further challenges the computation of interest income
under the heads relating to the HDFC Bank accounts and the PNB
account.
220. Insofar as the interest credited in the HDFC Bank accounts is
concerned, the Trial Court preferred the amounts reflected in the bank
statements over the figures disclosed in the Income Tax Returns and
TDS records on the premise that the bank statements constituted the
best evidence. However, the Trial Court failed to appreciate that the
amounts reflected as credits in the savings accounts do not necessarily
represent the total interest accrued or paid by the bank, particularly
where tax is deducted at source. The complete interest earned is
reflected in the TDS certificates and corresponding income-tax
records relied upon by the defence and proved through PW-41.
Consequently, the interest income could not have been restricted
merely to the net amounts reflected in the bank statements.
221. Similarly, while considering the interest earned from the PNB account
and fixed deposits, the Trial Court accepted only the amount reflected
in the income-tax records and declined to consider the interest
credited on the FDRs during the check period, despite the relevant
bank records having been placed on record. In doing so, the Trial
Court adopted an approach directly contrary to the one employed
while determining the HDFC Bank interest, where the bank
statements were treated as the best evidence.
222. The calculation of income cannot be based on two different standards
depending upon whether the result favours or prejudices the
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By:SAHAJ PREET KAUR
Signing Date:01.07.2026
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Appellant. Once the documentary record evidencing accrual of
interest on the FDRs during the check period was available, the same
was required to be taken into consideration while computing the
income of the Appellant.
223. Accordingly, the treatment of the interest income by the Trial Court is
incorrect and should have been computed on the basis of the complete
record, including the TDS certificates, income-tax records and bank
statements, and the benefit thereof ought to have been given to the
Appellant.
224. Insofar as the rental income from the Defence Colony property is
concerned, the deduction under Section 24(a) of the Income Tax Act
is a statutory allowance for tax computation and does not reduce the
actual rental receipts earned by the owner. The evidence on record,
including the Income Tax Returns, reflects gross rental receipts and
the entire amount has to be included the income of the Appellant.
225. Similarly, with regard to the income from Mridula Contract Services,
the Trial Court has committed a clear error by effectively deducting
the maintenance expenses twice, first while computing the net
business income and again by separately treating the same amount as
expenditure. Such duplication resulted in an artificial reduction of
income and distortion of the financial position of the Appellant.
Consequently, the difference of Rs. 9,71,587/- is liable to be restored
to the income side. Accordingly, the income of the Appellant should
have been enhanced by a further sum of Rs. 9,71,587/-.
CONCLUSION
226. For the reasons stated above, I am of the view that the sanction
accorded for prosecution was invalid in law, the Appellant was denied
Digitally Signed
By:SAHAJ PREET KAUR
Signing Date:01.07.2026
19:03:16
CRL.A. 1099/2016 and CRL.A. 86/2017 Page 116 of 117
a fair and adequate opportunity to lead defence evidence, and the
prosecution has failed to discharge its burden of proving that the
Appellant had amassed assets disproportionate to his known sources
of income during the check period.
227. Consequently, the conviction recorded against the Appellant cannot be
sustained and the appeals are allowed.
228. Hence, the judgment of conviction dated 27.09.2016 along with the
order of sentence dated 29.09.2016 are hereby set aside.
229. The appeals along with pending applications, if any, are disposed of.
JASMEET SINGH, J
JULY 1st , 2026/DE
Digitally Signed
By:SAHAJ PREET KAUR
Signing Date:01.07.2026
19:03:16
CRL.A. 1099/2016 and CRL.A. 86/2017 Page 117 of 117