Thursday, November 24, 2011

The Voluntary Disclosure of Income Scheme - Corruption laws - Disproportionate Property

Ahmedabad: Merely paying income tax over money earned through corrupt practices cannot save a person from being prosecuted, the Gujarat high court observed and rejected an application seeking discharge from the case by a former assistant commissioner of sales tax department.
The officer, Natvarlal Sheth, wanted to be discharged from a criminal case lodged against him under anti-corruption laws on the ground that his wife had disclosed all the property under the Voluntary Disclosure of Income Scheme (VDIS) and paid due tax.
Sheth joined the sales tax department in 1975. In 1999, the anti-corruption bureau (ACB) conducted raids on his premises and registered a case against him for having property disproportionate to his known sources of income. After a detailed inquiry, it was found out that during 1985 and 1999, he got Rs 17 lakh as salary, but he was found to have earned Rs 52 lakh during this period.
As per service rules, Sheth had regularly informed the department about acquisition of property. However,
when disproportionate property was found, it was claimed that the property was earned by his wife and two sons. However, his wife could not give satisfactory answer regarding sources of income and kept on improving her statement before investigating officer.
A sessions case came to be instituted at the Ahmedabad rural court in 2002. Sheth sought quashing of the complaint, but the high court declined the plea. When the trial was to commence in 2006, Sheth moved a discharge application, but it was turned down by the sessions court, which decided to move ahead with the prosecution.
Sheth moved HC seeking discharge mainly on the ground that his family, who owned the property, had already declared the assets and paid tax on the income.
On the other hand, the government pleader contended that the trial court did not seem satisfied with answers of Sheth’s wife regarding sources of income. Moreover, provisions of VDIS would not be applicable in relation to the prosecution of any offence under Prevention of Corruption Act.
Justice R M Chhaya, who heard the case, observed that payment of tax under VDIS cannot exclude a person from being prosecuted, particularly when he is tried for corruption.

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