Whether the notice under Sec.147 [1] issued to the assessee shows sufficient reasons to believe on the part of the assessing officer to reopen the assessment ? No -since the revenue has failed to show non­disclosure of facts the notice having been issued after a period of 4 years is required to be quashed. Whether the subsequent facts which come to the knowledge of the assessing officer can be taken into account to decide whether the assessment proceedings should be re­opened or not. ? Yes - the Information which comes to the notice of the assessing officer during proceedings for subsequent assessment years can definitely form tangible material to invoke powers vested with the assessing officer under Section 147 of the Act. whether the revenue can take the benefit of theextended period of limitation of 6 years for initiating proceedings under the first proviso Section 147 of the Act. Held that This can only be done if the revenue can show that the assessee had failed to disclose fully and truly all material facts necessary for its assessment. The assessee, in our view had disclosed all the factsit was bound to disclose. If the revenue wanted to investigate the matter further at that stage it could have easily directed the assessee to furnish more facts. Whether the disclosure of secondary facts is not necessary. No- it is the duty of the assessee to disclose full and truly all material facts which it termed as primary facts. Nondisclosure of other facts which may be termed as secondary facts is not necessary. Whether the notice issued to the assessee shows sufficient reasons to believe on the part of the assessing officer to reopen the assessment ? No since the revenue has failed to show non­disclosure of facts the notice having been issued after a period of 4 years is required to be quashed. whether on facts of this case the revenue could take benefit of the second proviso or not.? but the revenue may issue fresh notice taking benefit of the second proviso extended limitation of 6 years, if otherwise permissible under law.

               2020 [4] advocatemmmohan apex court cases  2


Whether  the notice under Sec.147 [1]  issued to the assessee shows sufficient reasons to believe on the part of the assessing officer to reopen the assessment ? 
No -since the revenue has failed to show non­disclosure of facts the notice having been issued after a period of 4 years is required to be quashed.  

Whether the subsequent facts which come to the knowledge of the assessing officer   can   be   taken   into   account   to   decide   whether   the assessment proceedings should be re­opened or not. ?
Yes - the Information which   comes   to   the   notice   of   the   assessing   officer   during proceedings for subsequent assessment years can definitely form tangible   material   to   invoke  powers   vested   with   the   assessing officer under Section 147 of the Act. 

 whether the revenue can take the benefit of theextended period of limitation of 6 years for initiating proceedings under the first proviso Section 147 of the Act. 
Held that This can only be done if the revenue can show that the assessee had failed to disclose   fully   and   truly   all   material   facts   necessary   for   its assessment.  
The assessee, in our view had disclosed all the factsit was bound to disclose.  

If the revenue wanted to investigate the matter further at that stage it could have easily directed the assessee to furnish more facts.

Whether the disclosure of secondary facts  is not necessary. 
 No- it is the duty of the assessee to disclose full and truly all material facts which it termed as primary facts.   Nondisclosure of other facts which may be termed as secondary facts is not necessary. 

Whether  the notice issued to the assessee shows sufficient reasons to believe on the part of the assessing officer to reopen the assessment ? No
since the revenue has failed to show non­disclosure of facts the notice having been issued after a period of 4 years is required to be quashed.  

 whether   on   facts   of   this   case   the revenue   could   take   benefit   of   the   second   proviso   or   not.?
but  the revenue may issue fresh notice taking benefit of the second proviso extended limitation of 6 years, if otherwise permissible under law.  

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1008 OF 2020
NEW DELHI TELEVISION LTD.          …APPELLANT(S)
VERSUS
DEPUTY COMMISSIONER OF
INCOME TAX                   …RESPONDENT(S)
J U D G M E N T
Deepak Gupta, J.
1. The   appellant   New   Delhi   Television   Limited   (hereinafter
referred to as ‘the assessee’) is an Indian company engaged in
running television channels of various kinds.   It has various
foreign subsidiaries to which we shall refer in detail later on but
we are concerned mainly with the subsidiary based in the United
Kingdom   (UK)   named   NDTV   Network   Plc.,   U.K.   (hereinafter
referred to as ‘NNPLC’). 
2. The assessee submitted a return for the financial year 2007­
08 i.e. assessment year 2008­09 on 29.09.2008 declaring a loss.
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This return was processed under Section 143 of the Income Tax
Act, 1961 (hereinafter referred to as ‘the Act’).   The case was
selected for scrutiny and notice under Section 143(2) of the Act
was issued and a notice under Section 142(1) of the Act was also
sent to the assessee.   Thereafter, the case of the assessee was
taken   up   for   consideration   and   final   assessment   order   was
passed on 03.08.2012. 
3. We are mainly concerned with that part of the assessment
order   which   relates   to   the   issue   of   step­up   coupon   bonds
amounting to US$100 million.  These bonds were issued in July,
2007 through the Bank of New York for a period of 5 years.    The
case of the assesee is that NNPLC issued step­up coupon bonds
of US$ 100 million which were arranged by Jeffries International
and the funds were received by NNPLC through Bank of New
York. The assessee had agreed to furnish corporate guarantee for
this transaction.   These bonds were subscribed to by various
entities to whom we shall refer to in detail at a later stage.  These
bonds were to be redeemed at a premium of 7.5% after the expiry
of the period of 5 years.  However, these bonds were redeemed in
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advance at a discounted price of US $74.2 million in November,
2009. 
4. The   assessing   officer   held   that   NNPLC   had   virtually   no
financial worth, it had no business of the name and therefore it
could not be believed that it could have issued convertible bonds
of US$ 100 million, unless the repayment along with interest was
secured. This was secured only because of the assessee agreeing
to furnish guarantee in this regard. Though the assessee had
never actually issued such guarantee, the assessing officer was of
the view that the subsidiary of the assessee could not have raised
such a huge amount without having this assurance from the
assessee. The transaction was of such a nature that the assessee
should   be   required   to   maintain   an   arm’s   length   from   its
subsidiary, meaning that it should be treated like a guarantee
issued   by   any   corporate   guarantor   in   favour   of   some   other
corporate entity.  The assessing officer did not doubt the validity
of the transaction but imposed guarantee fee @ rate of 4.68% by
treating it as a business transaction and added Rs. 18.72 crores
to the income of the assessee, vide order dated 03.08.2012.
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5.  On 31.03.2015, the revenue sent a notice to the assessee
wherein it was stated that the authority has reason to believe
that net income chargeable to tax for the assessment year 2008­
09 had escaped assessment within the meaning of Section 148 of
the Act.  This notice did not give any reasons.  The assessee then
asked for reasons and thereafter on 04.08.2015 reasons were
supplied.     The   main   reason   given   was   that   in   the   following
assessment   year   i.e.   assessment   year   2009­10,   the   assessing
officer had proposed a substantial addition of Rs.642 crores to
the account of the assessee on account of monies raised by the
assessee through its subsidiaries NDTV BV, The Netherlands,
NDTV Networks BV, The Netherlands (NNBV), NDTV Networks
International Holdings BV, The Netherlands (NNIH) and NNPLC.
The   assessee   had   raised   its   objection   before   the   Dispute
Resolution Panel (DRP) which came to the conclusion that all
these transactions with the subsidiary companies in Netherlands
were sham and bogus transactions and that these transactions
were done with a view to get the undisclosed income, for which
tax had not been paid, back to India by this circuitous round
tripping. 
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6. The   assessing   officer   relies   upon   the   order   of   the   DRP
holding that there is reason to believe that funds received by
NNPLC were actually the funds of the assessee. It was specified
that NNPLC had a capital of only Rs.40 lakhs.  It did not have
any business activities in the United Kingdom except a postal
address.   Therefore, it appeared to the assessing officer that it
was unnatural for anyone to make such a huge investment of
$100   million   in   a   virtually   non­functioning   company   and
thereafter   get   back   only   72%   of   their   original   investment.
According to the assessing officer “The natural inference could be
that it was NDTV’s own funds introduced in NNPLC in the grab of
the impugned bonds.”   The details of the investors are given in
this communication giving reasons.  Mention has also been made
of complaints received from a minority shareholder in which it is
alleged   that   the   money   introduced   in   NNPLC   was   shifted   to
another subsidiary of the assessee in Mauritius from where it
was taken to a subsidiary of the assessee in Mumbai and finally
to the assessee.   NNPLC itself was placed under liquidation on
28.03.2011.  Therefore, the assessing officer was of the opinion
that there were reasons to believe that the funds received by
NNPLC were the funds of the assessee under a sham transaction
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and that the amount of Rs.405.09 crores introduced into the
books of NNPLC during the financial year 2007­08 corresponding
to   the   assessment   year   2008­09   through   the   transaction
involving the step­up coupon convertible bonds pertains to the
assessee. The last portion of the communication dt. 04.08.2015
giving reasons to the assessee reads as follows:­
“7.  In view of the above facts and circumstances of the case
and considering the findings of the DRP holding the funds
received by NNPLC as the funds of the assessee New Delhi
Television Limited under sham transactions, there is a reason
to   believe   that   the   funds   amounting   to   Rs.405.09   crores
introduced into the books of NNPLC during the FY 2007­08 in
the form of Step Up Coupon Bonds pertain to the assessee
New Delhi Television Limited only.  I have therefore reason to
believe that the income of the assessee New Delhi Television
Limited for AY 2008­09 amounting to at least Rs.405.09 crores
has   escaped   assessment.     It   is   also   recorded   that   the
escapement is due to failure on the part of the assessee to
disclose fully and truly all facts material for assessment.”
7. The assessee filed reply to the notice and reasons given, and
claimed that there had been no failure on the part of the assessee
to disclose fully and truly all material facts necessary to make an
assessment.   Assessee also claimed that the proceedings had
been initiated on a mere change of opinion and there was no
reason to believe.  The assessee also claimed that the transaction
of step­up bonds was a legal and valid transaction.  In addition,
it was claimed that the assessing officer had no valid reasons to
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believe that the income of the assessee had escaped assessment.
According to the assessee the assessment officer had accepted
the   genuineness   of   the   transaction   wherein   NNPLC,   the
subsidiary,   had   issued   convertible   bonds   which   had   been
subscribed by many entities.   It was urged that the assessing
officer   had   treated   the   transaction   to   be   genuine   by   levying
guarantee fees and adding it back to the income of the assessee.
In the alternative, it was submitted that the notice had been
issued beyond the period of limitation of 4 years.  According to
the   assessee   it   had   not   withheld   any   material   facts   and,
therefore, limitation of 6 years as applicable to the first proviso to
Section 147 would not apply. 
8. The assessing officer did not accept these objections.  The
claim of the assessee was disposed of by the assessing officer vide
order dated 23.11.2015 wherein the assessing officer held that
there was non­disclosure of material facts by the assessee and
the notice would be within limitation since NNPLC was a foreign
entity   and   admittedly   a   subsidiary   of   the   assessee   and   the
income was being derived through this foreign entity.  Hence, the
case of the assessee would fall within the 2nd proviso of Section
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147 of the Act and the extended period of 16 years would be
applicable.  The objections were accordingly rejected.
9. Aggrieved, the petitioner filed a writ petition in the High
Court challenging the notice.  The writ petition was dismissed on
10.08.2017.     Against   this   the   assessee   has   filed   the   present
Appeal.
10. We have heard Shri Arvind P. Datar, learned senior counsel
for the assessee, Shri Tushar Mehta, learned Solicitor General
and   Shri   Zoheb   Hossain,   learned   counsel   appearing   for   the
revenue.
11. In our opinion, the following issues arise for consideration
in this case:­
(i) Whether in the facts and circumstances of the case, it
can be said that the revenue had a valid reason to
believe   that   undisclosed   income   had   escaped
assessment?
(ii) Whether the assessee did not disclose fully and truly
all   material   facts   during   the   course   of   original
assessment   which   led   to   the   finalisation   of   the
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assessment   order   and   undisclosed   income   escaping
detection?
(iii) Whether   the   notice   dated   31.03.2015   along   with
reasons communicated on 04.08.2015 could be termed
to be a notice invoking the provisions of the second
proviso to Section 147 of the Act?
12. At the outset we may note that it has been strenuously
urged on behalf of the assessee that its assessment was done
under   scrutiny   procedure   and   a   very   detailed   procedure   was
followed   during   the   original   assessment   proceedings   and   all
aspects of the case were noted by the assessing officer.  That may
be true, but merely the fact that the original assessment is a
detailed one, cannot take away the powers of the assessing officer
to issue notice under Section 147 of the Act.
Question No.1
13. We would like to make it clear that we are not going into the
merits of the allegations made against the assessee.  At this stage
we are only required to decide whether the revenue has sufficient
reasons to believe that undisclosed income of the asseessee has
escaped assessment and therefore there are grounds to issue
notice.     Obviously,   during   the   assessment   proceedings   the
assessee will have the right to place material on record to show
that the transaction in question was a genuine transaction.
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14. It is trite law that an assessing officer can only re­open an
assessment if he has ‘reason to believe’ that undisclosed income
has   escaped   assessment.     Mere   change   of   opinion   of   the
assessing   officer   is   not   a   sufficient   to   meet   the   standard   of
‘reason to believe’.   Relevant portion of Section 147 reads as
follows:­
147.   Income   escaping   assessment.­If   the   Assessing
Officer, has reason to believe that any income chargeable to
tax has escaped assessment for any assessment year, he may,
subject to the provisions of sections 148 to 153, assess or
reassess such income and also any other income chargeable to
tax which has escaped assessment and which comes to his
notice subsequently in the course of the proceedings under
this   section,   or   recompute   the   loss   or   the   depreciation
allowance or any other allowance, as the case may be, for the
assessment year concerned (hereafter in this section and in
sections 148 to 153 referred to as the relevant assessment
year):
Provided that where an assessment under sub­section (3) of
section 143 or this section has been made for the relevant
assessment year, no action shall be taken under this section
after the expiry of four years from the end of the relevant
assessment year, unless any income chargeable to tax has
escaped assessment for such assessment year by reason of the
failure on the part of the assessee to make a return under
section   139   or  in   response   to   a   notice   issued   under   subsection (1) of section 142 or section 148 or to disclose fully and
truly all material facts necessary for his assessment for that
assessment year:
Provided further that nothing contained in the first proviso
shall apply in a case where any income in relation to any asset
(including   financial   interest   in   any   entity)   located   outside
India,   chargeable   to   tax,   has   escaped   assessment   for   any
assessment year:
Provided   also   that   the   Assessing   Officer   may   assess   or
reassess such income, other than the income involving matters
which   are   the   subject­matter   of   any   appeal,   reference   or
revision,   which   is   chargeable   to   tax   and   has   escaped
assessment.
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Explanation   1.—Production   before   the   Assessing   Officer   of
account books or other evidence from which material evidence
could,   with   due   diligence,   have   been   discovered   by   the
Assessing  Officer  will   not  necessarily  amount   to  disclosure
within the meaning of the foregoing proviso.
Explanation 2.—For the purposes of this section, the following
shall also be deemed to be cases where income chargeable to
tax has escaped assessment, namely :—
(a)  where no return of income has been furnished by the
assessee although his total income or the total income
of   any   other   person   in   respect   of   which   he   is
assessable   under  this  Act  during the  previous  year
exceeded   the   maximum   amount   which   is   not
chargeable to income­tax;
(b)   where a return of income has been furnished by the
assessee but no assessment has been made and it is
noticed by the Assessing Officer that the assessee has
understated the income or has claimed excessive loss,
deduction, allowance or relief in the return;
(ba) where the assessee has failed to furnish a report in
respect of any international transaction which he was
so required under section 92E;
(c)  where an assessment has been made, but—
 (i)  income chargeable to tax has been underassessed;
or
(ii)  such income has been assessed at too low a rate;
or
  (iii)   such   income   has   been   made   the   subject   of
excessive relief under this Act; or
(iv)   excessive loss or depreciation allowance or any
other allowance under this Act has been computed.
(ca) where a return of income has not been furnished by
the assessee or a return of income has been furnished
by him and on the basis of information or document
received   from   the   prescribed   income­tax   authority,
under sub­section (2) of section 133C, it is noticed by
the Assessing Officer that the income of the assessee
exceeds the maximum amount not chargeable to tax,
or as the case may be, the assessee has understated
the income or has claimed excessive loss, deduction,
allowance or relief in the return;
(d)  where a person is found to have any asset (including
financial interest in any entity) located outside India.
   
          xxx                                   xxx                                      xxx
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15. The case of the assessee is that the transaction of step­up
coupon bonds was scrutinised in great detail by the assessing
officer   before   he   passed   the   order   of   assessment   dated
03.08.2012.   According to the assessee there is an attempt on
behalf   of   the   revenue   to   deliberately   mix­up   the   transactions
relating to the Netherlands subsidiary with the U.K. subsidiary.
According   to   the   assessee   the   order   of   the   DRP   for   the
assessment year 2009­10 is in two distinct compartments. While
the DRP held the Netherlands’ transactions of Rs.642 crores to be
a   sham,   the   transaction   of   issuance   of   US$   100   million
convertible bonds was not questioned.   Therefore, according to
the assessee there was no fresh material before the assessing
officer to have reason to believe that the undisclosed income of
the assessee had escaped assessment.
16. On behalf of the assessee it has been urged that once the
transaction of step­up coupon bonds has been accepted to be
correct, then the revenue cannot re­open the same and doubt the
genuiness of the transaction.  We are not in agreement with the
first part of the submission but we make it clear that we are not
commenting on the genuineness of the transaction, which will be
considered by the concerned assessing officer. 
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17. On the other hand, on behalf of the revenue it is submitted
that at the stage of issue of show cause notice the revenue only
has to establish a tentative and prima facie view.  At this stage,
this Court is not expected to go into the merits of the case but
can only ascertain whether the revenue has prima facie ground to
show that it had reasons to believe that income has escaped
assessment.   It is further submitted that the scope of judicial
review in such matters is very limited.  It is also submitted that
since the revenue discovered fresh tangible material subsequent
to the assessment order of 03.08.2012, it cannot be said that the
assessing officer did not have reasons to believe that income had
escaped assessment.
18. The  main  issue is whether there was  sufficient  material
before the assessing officer to take a prima facie view that income
of the assessee had escaped assessment. The original order of
assessment was passed on 03.08.2012.   It was thereafter on
31.12.2013 that the DRP in the case of AY 2009­10 raised doubts
with regard to the corporate structure of the assessee and its
subsidiaries.  It was noted in the order of the DRP that certain
shares   of   NNPLC   had   been   acquired   by   Universal   Studios
International B.V., Netherlands, indirectly by subscribing to the
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shares of NNIH.  As already noted above it was recorded in the
reasons   communicated   on   04.08.2015   that   NNPLC   was   not
having any business activity in London.  It had no fixed assets
and was not even paying rent.  Other than the fact that NNPLC
was   incorporated   in   the   U.K.,   it   had   no   other   commercial
business there.  NNPLC had declared a loss of Rs.8.34 crores for
the relevant year.   It was also noticed from the order of the
assessing   officer   that   the   assessee   is   the   parent   company   of
NNPLC and it is the dictates of the assessee which are important
for running NNPLC.
19. Pursuant to the directions of the DRP, the assessing officer
passed the final assessment order for AY 2009­10 on 21.02.2014
which also disclosed similar facts.
20. According to the revenue Tax Evasion Petitions were filed by
the minority shareholders of the assessee company on various
dates, i.e., 11.03.2014, 25.07.2014, 13.10.2014 and 11.03.2015,
which complaints describe in detail the communication between
the   assessee   and   the   subsidiaries   and   also   allegedly   showed
evidence of round tripping of the assessee’s undisclosed income
through a layer of subsidiaries which led to the issuance of the
notice in question.
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21. Whether   the   facts   which   came   to   the   knowledge   of   the
assessment   officer   after   the   assessment   proceedings   for   the
relevant year were completed, could be taken into consideration
for coming to the conclusion that there were reasons to believe
that   income   had   escaped   assessment   is   the   question   that
requires to be answered.  Though a number of judgments have
been cited in this behalf, we shall make reference to only a few.
In  Claggett  Brachi  Co.  Ltd.,  London     vs.  Commissioner  of
Income Tax, Andhra Pradesh1
, this Court held as follows:­
“7.     Two points have been urged before us by learned
counsel for the assessee. It is contended that the Income Tax
Officer has no jurisdiction to take proceedings under Sections
147 and 148 of the Income Tax Act because the conditions
prerequisite for making the reassessments were not satisfied.
The re­assessments were made with reference to clause (b) of
Section 147 of the Act, and apparently the Income Tax Officer
proceeded on the basis that in consequence of information in
his   possession   he   had   reason   to   believe   that   income
chargeable   to   tax   had   escaped   assessment   for   the   two
assessment years. From the material before us it appears that
the   Income   Tax   Officer   came   to   realise   that   income   had
escaped assessment for the two assessment years when he
was in the process of making assessment for a subsequent
assessment year. While making that assessment he came to
know from the documents pertaining to that assessment that
the overhead expenses related to the entire business including
the business as commission agents and were not confined to
the business of purchase and sale. It is true, as the High Court
has observed, that this information could have been acquired
by the Income Tax Officer if he had exercised due diligence at
the time of the original assessment itself. It does not appear,
however,   that   the   attention   of  the  Income   Tax   Officer  was
directed by anything before him to the fact that the overhead
expenses   related   to   the   entire   business.   The   information
derived   by  the   Income   Tax   Officer   evidently  came   into   his
possession   when   taking   assessment   proceedings   for   the
1 1989 Supp(2) SCC 182
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subsequent year. In the circumstances, it cannot be doubted
that the case falls within the terms of clause (b) of Section 147
of  the  Act,  and  that,  therefore,  the High  Court  is  right  in
holding against the assessee.”
In  M/s  Phool  Chand  Bajrang  Lal  and  Another   vs.   Income
Tax Officer and Another2
, this Court held as follows:­
“19…Acquiring fresh information, specific in nature and
reliable   in   character,   relating  to   the   concluded   assessment
which goes to expose the falsity of the statement made by the
assessee at the time of original assessment is different from
drawing a fresh inference from the same facts and material
which   was   available   with   the   ITO   at   the   time   of   original
assessment proceedings. The two situations are distinct and
different. Thus, where the transaction itself on the basis of
subsequent information, is found to be a bogus transaction,
the mere disclosure of that transaction at the time of original
assessment proceedings, cannot be said to be disclosure of the
“true” and “full” facts in the case and the ITO would have the
jurisdiction to reopen the concluded assessment in such a
case.   It   is   correct   that   the   assessing  authority   could   have
deferred the completion of the original assessment proceedings
for further enquiry and investigation into the genuineness to
the loan transaction but in our opinion his failure to do so and
complete the original assessment proceedings would not take
away his jurisdiction to act under Section 147 of the Act, on
receipt   of   the   information   subsequently.   The   subsequent
information on the basis of which the ITO acquired reasons to
believe that income chargeable to tax had escaped assessment
on account of the omission of the assessee to make a full and
true disclosure of the primary facts was relevant, reliable and
specific. It was not at all vague or non­specific.”
In  Ess   Kay   Engineering   Co.(P)   Ltd.   vs.   Commissioner   of
Income Tax, Amritsar3
, this Court held as follows:­
“This   is   a   case   of   reopening.   We   have   perused   the
documents. We find there was material on the basis of which
the Income Tax Officer could proceed to reopen the case. It is
not a case of mere change of opinion. We are not inclined to
interfere with the decision of the High Court merely because
the case of the assessee was accepted as correct in the original
2 (1993) 4 SCC 77
3 (2001) 10 SCC 189
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assessment for this assessment year. It does not preclude the
Income   Tax   Officer   from   reopening   the   assessment   of   an
earlier year on the basis of his findings of fact made on the
basis of fresh materials in course of assessment of the next
assessment   year.   The   appeal   is   dismissed.   No   order   as   to
costs.”
22. A perusal of the aforesaid judgments clearly shows that
subsequent facts which come to the knowledge of the assessing
officer   can   be   taken   into   account   to   decide   whether   the
assessment proceedings should be re­opened or not.  Information
which   comes   to   the   notice   of   the   assessing   officer   during
proceedings for subsequent assessment years can definitely form
tangible   material   to   invoke   powers   vested   with   the   assessing
officer under Section 147 of the Act. 
23. The material disclosed in the assessment proceedings for
the subsequent years as well as the material placed on record by
the minority shareholders form the basis for taking action under
Section 147 of the Act.   At the stage of issuance of notice, the
assessing officer is to only form a prima facie view. In our opinion
the material disclosed in assessment proceedings for subsequent
years was sufficient to form such a view. We accordingly hold
that   there   were   reasons   to   believe   that   income   had   escaped
assessment in this case.  Question No.1 is answered accordingly.
Question No.2
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24. Coming to the second question as to whether there was
failure   on   the   part   of   the   assessee   to   make   a   full   and   true
disclosure of all the relevant facts.  The case of the assessee is
that it had disclosed all facts which were required to be disclosed.
25. The revenue has placed reliance on certain complaints made
by   the   minority   shareholders   and   it   is   alleged   that   those
complaints   reveal   that   the   assessee   was   indulging   in   roundtripping of its funds.   According to the revenue  the material
disclosed in these complaints clearly shows that the assessee is
guilty of creating a network of shell companies with a view to
transfer its un­taxed income in India to entities abroad and then
bring it back to India thereby avoiding taxation.  We make it clear
that we are not going into this aspect of the matter because those
complaints have not seen light of the day either before the High
Court or this Court and, therefore,   it would be unfair to the
assessee if we rely upon such material which the assessee has
not been confronted with.
26. Even   before   the   assessment   order   was   passed   on
03.08.2012, the assessing officer was aware of the entities which
had subscribed to the convertible bonds.  This is apparent from
the communication dated 08.04.2011.  The case of the revenue is
that the assessee did not disclose the amount subscribed by each
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of  the   entities  and  furthermore  the  management   structure  of
these companies.  We are not in agreement with this submission
of the revenue.  It is apparent from the records of the case that
the revenue was aware of the entities which subscribed to the
convertible   bonds.     It   has   been   urged   that   these   are   bogus
companies, but we are not concerned with that at this stage.  The
issue before us is whether the revenue can take the benefit of the
extended period of limitation of 6 years for initiating proceedings
under the first proviso Section 147 of the Act.  This can only be
done if the revenue can show that the assessee had failed to
disclose   fully   and   truly   all   material   facts   necessary   for   its
assessment.  The assessee, in our view had disclosed all the facts
it was bound to disclose.  If the revenue wanted to investigate the
matter further at that stage it could have easily directed the
assessee to furnish more facts.
27. The   High   Court   held   that   there   was   no   “true   and   fair
disclosure” in view of the law laid down by this Court in Phool
Chand’s case (supra), and the judgment of the Delhi High Court
in  Honda   Siel   Power   Products   Limited    vs.    Deputy
Commissioner   Income­Tax   and   Another4
.   We have already
4 (2012) 340 ITR 53 (Delhi)
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referred to the judgment in Phool Chand’s case (supra), wherein
it was held that where the transaction of a particular assessment
year is found to be a bogus   transaction, the disclosures made
could not be said to be all “true” and “full”.   Relying upon the
said   judgment   the   High   Court   held   that   merely   because   the
transaction of convertible bonds was disclosed at the time of
original assessment does not mean that there is true and full
disclosure of facts. 
28. We are unable to agree with this reasoning given by the
High Court.  The assessee as mentioned above made a disclosure
about having agreed to stand guarantee for the transaction by
NNPLC and it had also disclosed the factum of the issuance of
convertible bonds and their redemption.   The income, if any,
arose because of the redemption at a discounted price.  This was
an event which took place subsequent to the assessment year in
question though it may be income for the assessment year.  As
we have observed above, all relevant facts were duly within the
knowledge of the assessing officer.   The assessing officer knew
who were the entities who had subscribed to other convertible
bonds and in other proceedings relating to the subsidiaries the
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same   assessing   officer   had   knowledge   of   addresses   and   the
consideration paid by each of the bondholders as is apparent
from assessment orders dated 03.08.2012 passed in the cases of
M/s. NDTV Labs Ltd. and M/s. NDTV Lifestyle Ltd.  Therefore, in
our opinion there was full and true disclosure of all material facts
necessary for its assessment by the assessee.
29. The fact that step­up coupon bonds for US$ 100 million
were issued by NNPLC was disclosed; who were the entities which
subscribed to the bonds was disclosed; and the fact that the
bonds were discounted at a lower rate was also disclosed before
the assessment was finalised.  This transaction was accepted by
the assessing officer and it was clearly held that the assessee was
only liable to receive a guarantee fees on the same which was
added to its income.  Without saying anything further on merits
of the transaction we are of the view that it cannot be said that
the assessee had withheld any material information from the
revenue.
30. According to the revenue the assessee to avoid detection of
the actual source of funds of its subsidiaries did not disclose the
details of the subsidiaries in its final accounts, balance sheets,
and   profit   and   loss   account   for   the   relevant   period   as   was
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mandatory under the provisions of the Indian Companies Act,
1956.   It   is   not   disputed   that   the   assessee   had   obtained   an
exemption from the competent authority under the Companies
Act,   1956   from   providing   such   details   in   its   final   accounts,
balance sheets, etc. As such it cannot be said that the assessee
was   bound   to   disclose   this   to   the   Assessing   Officer.   The
Assessing Officer before finalising the assessment of 03.08.2012
had never asked the assessee to furnish the details.
31. The revenue now has come up with the plea that certain
documents   were   not   supplied   but   according   to   us   all   these
documents cannot be said to be documents which the assessee
was bound to disclose at the time of assessment.   The main
ground raised by the revenue is that the assessee did not disclose
as   to   who   had   subscribed   what   amount   and   what   was   its
relationship   with   the   assessee.     As   far   as   the   first   part   is
concerned it does not appear to be correct.  There is material on
record   to   show   that   on   08.04.2011   NNPLC   had   sent   a
communication   to   the   Deputy   Director   of   Income   Tax
(Investigation), wherein it had not only disclosed the names of all
the  bond  holders but  also their  addresses; number of  bonds
along with the total consideration received.  This chart forms part
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of the assessment orders dated 03.08.2012 in the case of M/s.
NDTV Labs Ltd. and M/s. NDTV Lifestyle Ltd.   The said two
assessment orders were passed by the same officer who had
passed the assessment order in the case of the assessee on the
same date itself.  Therefore, the entire material was available with
the revenue.
32. A number of decisions have been cited as to what is meant
by   true   and   full   disclosure.     It   is   not   necessary   to   multiply
decisions, as law in this regard has been succinctly laid down by
a Constitution Bench of this Court in  Calcutta  Discount  Co.
Ltd.  vs.  Income­tax Officer, Companies District I, Calcutta
and Another5
, wherein it was held as follows :­
“(8)…The words used are “omission or failure to disclose fully
and truly all material facts necessary for his assessment for
that year”. It postulates a duty on every assessee to disclose
fully and truly all material facts necessary for his assessment.
What facts are material, and necessary for assessment will
differ from case to case. In every assessment proceeding, the
assessing   authority   will,   for   the   purpose   of   computing   or
determining the proper tax due from an assessee, require to
know all the facts which help him in coming to the correct
conclusion. From the primary facts in his possession, whether
on disclosure by the assessee, or discovered by him on the
basis   of   the   facts   disclosed,   or  otherwise   —   the   assessing
authority has to draw inferences as regards certain other facts;
and ultimately, from the primary facts and the further facts
inferred from them, the authority has to draw the proper legal
inferences, and ascertain on a correct interpretation of the
taxing   enactment,   the   proper   tax   leviable.   Thus,   when   a
question   arises   whether   certain   income   received   by   an
5 AIR 1961 SC 372
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assessee is capital receipt, or revenue receipt, the assessing
authority has to find out what primary facts have been proved,
what other facts can be inferred from them, and taking all
these together, to decide what the legal inference should be.
(9) There can be no doubt that the duty of disclosing all the
primary facts relevant to the decision of the question before
the   assessing   authority   lies   on   the   assessee.   To   meet   a
possible contention that when some account books or other
evidence has been produced, there is no duty on the assessee
to disclose further facts, which on due diligence, the Incometax Officer might have discovered, the Legislature has put in
the Explanation, which has been set out above. In view of the
Explanation, it will not be open to the assessee to say, for
example   —   “I   have   produced   the   account   books   and   the
documents: You, the assessing officer examine them, and find
out the facts necessary for your purpose: My duty is done with
disclosing   these   account­books   and   the   documents.”   His
omission to bring to the assessing authority’s attention these
particular   items   in   the   account   books,   or   the   particular
portions of the documents, which are relevant, will amount to
“omission   to   disclose   fully   and   truly   all   material   facts
necessary for his assessment.” Nor will he be able to contend
successfully that by disclosing certain evidence, he should be
deemed to have disclosed other evidence, which might have
been discovered by the assessing authority if he had pursued
investigation on the basis of what has been disclosed. The
Explanation   to   the   section,   gives   a   quietus   to   all   such
contentions; and the position remains that so far as primary
facts are concerned, it is the assessee’s duty to disclose all of
them   —   including   particular   entries   in   account   books,
particular portions of documents and documents, and other
evidence, which could have been discovered by the assessing
authority, from the documents and other evidence disclosed.
(10) Does the duty however extend beyond the full and
truthful disclosure of all primary facts? In our opinion, the
answer to this question must be in the negative. Once all the
primary facts are before the assessing authority, he requires
no further assistance by way of disclosure. It is for him to
decide what inferences of facts can be reasonably drawn and
what legal inferences have ultimately to be drawn. It is not for
somebody else — far less the assessee — to tell the assessing
authority what inferences — whether of facts or law should be
drawn. Indeed, when it is remembered that people often differ
as regards what inferences should be drawn from given facts,
it   will   be   meaningless   to   demand   that   the   assessee   must
disclose what inferences — whether of facts or law —   he
would draw from the primary facts.
(11) If from primary facts more inferences than one could
be drawn, it would not be possible to say that the assessee
should   have   drawn   any   particular   inference   and
communicated it to the assessing authority. How could an
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assessee be charged with failure to communicate an inference,
which he might or might not have drawn?”
A careful analysis of this judgment indicates that the Constitution
Bench held that it is the duty of the assessee to disclose full and
truly all material facts which it termed as primary facts.   Nondisclosure of other facts which may be termed as secondary facts is
not necessary.  In light of the above law, we shall deal with the facts
of the present case.
33. In our view the assessee disclosed all the primary facts
necessary for assessment of its case to  the assessing officer.
What the revenue urges is that the assessee did not make a full
and true disclosure of certain other facts.  We are of the view that
the assessee had disclosed all primary facts before the assessing
officer and it was not required to give any further assistance to
the assessing officer by disclosure of other facts.  It was for the
assessing officer at this stage to decide what inference should be
drawn   from   the   facts   of   the   case.     In   the   present   case   the
assessing officer on the basis of the facts disclosed to him did not
doubt the genuiness of the transaction set up by the assessee.
This the assessing officer could have done even at that stage on
the basis of the facts which he already knew.   The other facts
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relied upon by the revenue are the proceedings before the DRP
and   facts   subsequent   to   the   assessment   order,   and   we   have
already dealt with the same while deciding Issue No.1.  However,
that cannot lead to the conclusion that there is non­disclosure of
true and material facts by the assessee.
34. It is interesting to note that whereas before this Court the
revenue is strenuously urging that the assessee is guilty of nondisclosure of material facts, before the High Court the case of the
revenue   was   just   opposite.     We   may   quote   a   portion   of   the
counter­affidavit  filed  by  the  revenue   in  response  to   the  writ
petition filed by the assessee before the High Court which reads
as follows:­
    “…It   is   evident   from   these   facts   that   second   proviso   to
Section 147 is clearly attracted in this case and first proviso to
Section 147 is not applicable to facts of this case, i.e. in this
case, the only requirement to reopen assessment U/s 147 was
that the AO has reason to believe that any income chargeable
to tax has escaped assessment.  The second condition that the
income should have escaped assessment  due to failure on the
part of the assessee to disclose fully and truly all material facts
necessary  for  making  assessment is  not  relevant  to  decide
issue before the Hon’ble Court”
               
This submission has been repeated a number of times in the
counter­affidavit.  Therefore, in our opinion the revenue cannot
now turn around and urge that the assessee is guilty of nondisclosure of facts. We are also of the view that the revenue could
not be permitted to blow hot and cold at the same time.
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35. We are clearly of the view that the revenue in view of its
counter­affidavit before the High Court that it was not relying
upon the non­disclosure of facts by the assessee could not have
been permitted to orally urge the same.  Even otherwise we find
that the assessee had fully and truly disclosed all material facts
necessary for its assessment and, therefore, the revenue cannot
take benefit of the extended period of limitation of 6 years.  We
answer Question No.2 accordingly.
Question No.3
36. It is urged before this Court by the revenue that in terms of
second proviso to Section 147 of the Act read with Section 149(1)
(c) of the Act, the limitation period would be 16 years since the
assessee has derived income from a foreign entity.  We may make
specific   reference   to   the   second   proviso   and   explanation   2(d)
which reads as follows:­
           Provided further that nothing contained in the first
proviso shall apply in a case where any income in relation to
any asset (including financial interest in any entity) located
outside India, chargeable to tax, has escaped assessment for
any assessment year:
       xxx                  xxx             xxx
Explanation 2.—For the purposes of this section, the
following shall also be deemed to be cases where income
chargeable to tax has escaped assessment, namely :—
            xxx                xxx             xxx
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                 (d)   where a person is found to have any asset
(including financial interest in any entity) located outside
India.
            xxx                xxx             xxx
37. On behalf of the assessee it has been urged that no income
was derived from the foreign entity and a loan cannot be termed
to be an asset or an income and it is submitted that the notice
cannot be said to have been issued under the second proviso.
38. In this regard we may make reference to the notice dated
31.03.2015.  The notice is conspicuously silent with regard to the
second proviso.   It does not rely upon the second proviso and
basically relies on the provision of Section 148 of the Act.  The
reasons communicated to the assessee on 04.08.2015 mention
‘reason to believe’ and non­disclosure of material facts by the
assessee.   There is no case set up in relation to the second
proviso either in the notice or even in the reasons supplied on
04.08.2015 with regard to the notice.  It is only while rejecting
the objections of the assessee that reference has been made to
the second proviso in the order of disposal of objections dated
23.11.2015.
39. The   High   Court   relied   upon   the   judgment   in  Mohinder
Singh  Gill  &   Anr.   vs.   The  Chief   Election   Commissioner,
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New   Delhi       &   Ors.6
  and   came   to   the   conclusion   that   the
revenue cannot rely upon the second proviso because the notice
was silent in this regard.  However, the High Court held that the
assessee was guilty of non­disclosure of material facts.  We have
already held that in our view the assessee was not guilty of nondisclosure of material facts.  The revenue has not challenged the
judgment of the High Court in so far as this finding against it is
concerned but the revenue is entitled to defend the petition even
on a ground which may have been decided against it by the High
Court. 
40. On behalf of the revenue it is urged that mere non­naming
of the second proviso in the notice does not help the assessee. It
has been urged that even if the source of power to issue notice
has   been   wrongly   mentioned,   but   all   relevant   facts   were
mentioned, then the notice can be said to be a notice under the
provision   which   empowers   the   revenue   to   issue   such   notice.
There can be no quarrel with this proposition of law. However,
the noticee or the assesee should not be prejudiced or be taken
by surprise. The uncontroverted fact is that in the notice dated
31.03.2015 there is no mention of any foreign entity.   There is
only   mention   of   the   Section   148.     Even   after   the   assessee
6 (1978) 2 SCR 272
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specifically asked for reasons, the revenue only relied upon facts
to show that there was reason to believe that income has escaped
assessment and this escapement was due to the non­disclosure
of material facts. There is nothing in the reasons to indicate that
the revenue was intending to apply the extended period of 16
years. It is only after the assessee filed its reply to the reasons
given, that in the order of rejection for the first time reference was
made to the second proviso by the revenue.
41. In our view this is not a fair or proper procedure.  If not in
the first notice, at least at the time of furnishing the reasons the
assessee should have been informed that the revenue relied upon
the second proviso.  The assessee must be put to notice of all the
provisions on which the revenue relies upon.   At the risk of
repetition, we reiterate that we are not going into the merits of
the case but in case the revenue had issued a notice to the
assessee   stating   that   it   relies   upon   the   second   proviso,   the
assessee   would   have   had   a   chance   to   show   that   it   was   not
deriving any income from any foreign asset or financial interest in
any foreign entity, or that the asset did not belong to it or any
other ground which may be available.   The assessee cannot be
deprived of this chance while replying to the notice. 
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42. Therefore, even if we do not fall back on the reason given by
the High Court that the revenue cannot take a fresh ground, we
are   clearly   of   the   view   that   the   notice   and   reasons   given
thereafter do not conform to the principles of natural justice and
the assessee did not get a proper and adequate opportunity to
reply to the allegations which are now being relied upon by the
revenue.
43. If the revenue is to rely upon the second proviso and wanted
to urge that the limitation of 16 years would apply, then in our
opinion in the notice or at least in the reasons in support of the
notice, the assessee should have been put to notice that the
revenue relies upon the second proviso.  The assessee could not
be taken by surprise at the stage of rejection of its objections or
at the stage of proceedings before the High Court that the notice
is to be treated as a notice invoking provisions of the second
proviso of Section 147 of the Act.   Accordingly, we answer the
third question by holding that the notice issued to the assessee
and   the   supporting   reasons   did   not   invoke   provisions   of   the
second proviso of Section 147 of the Act and therefore at this
stage the revenue cannot be permitted to take benefit of the
second proviso.
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Conclusion
44. We accordingly allow the appeal by holding that the notice
issued to the assessee shows sufficient reasons to believe on the
part of the assessing officer to reopen the assessment but since
the revenue has failed to show non­disclosure of facts the notice
having been issued after a period of 4 years is required to be
quashed.   Having held so, we make it clear that we have not
expressed   any   opinion   on   whether   on   facts   of   this   case   the
revenue   could   take   benefit   of   the   second   proviso   or   not.
Therefore, the revenue may issue fresh notice taking benefit of
the second proviso if otherwise permissible under law.  We make
it   clear   that   both   the   parties   shall   be   at   liberty   to   raise   all
contentions   with   regard   to   the   validity   of   such   notice.     All
pending application(s) shall stand(s) disposed of.
…………………………….J.
(L. Nageswara Rao)
…………………………….J.
(Deepak Gupta)
New Delhi
April 3, 2020

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2020 [4] advocatemmmohan apex court cases 1 = whether a confession of one of the accused persons who was tried earlier [due to split of the case], is admissible in evidence against the appellant ?. No

whether   a   confession   of   one   of   the   accused persons who was tried earlier [due to split of the case], is admissible in evidence against the appellant ?. No

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1120 OF  2010
RAJA @ AYYAPPAN        … APPELLANT
VERSUS
STATE OF TAMIL NADU     … RESPONDENT
J U D G M E N T
S. ABDUL NAZEER, J.
1. This criminal appeal filed under Section 19 of the Terrorist
and Disruptive Activities (Prevention) Act, 1987 (in short ‘the TADA
Act’) is directed against the judgment and order dated 04.12.2009
passed by the Presiding Judge, Designated Court No.2, Chennai, in
Calendar   Case   No.1/2007,   whereby   the   Designated   Court   has
convicted the appellant and sentenced him to undergo   rigorous
imprisonment for 2 years under Section 120­B IPC and 5 years
each under Section 120­B IPC read with Section 3(3) and 4(1) of the
2
TADA Act and under Section 120­B IPC read with Section 5 of
Explosive Substances Act, 1908 and all the sentences imposed were
ordered to be run concurrently. 
2. The case of the prosecution in brief is that during June 1988,
the absconding accused, Ilango @ Kumaran @ Ravi @ Santhosh and
Suku   @   Sukumaran   @   Kumar,   had   formed   an   organization   at
Trichy   under   the   name   ‘Tamilar   Pasarai’,   with   the   object   of
achieving separate Statehood for Tamil Nadu and to blast Central
and State Government buildings with bombs with a view to overawe
the Government established by law. The appellant herein and 13
other accused have enrolled themselves in the said organization
and they entered into a criminal conspiracy during June 1988 to
commit an illegal act and to blast the State Government building in
the   Secretariat   by   name   ‘Namakkal   Kavignar   Maligai’   and   in
furtherance of the said conspiracy, Suku and Shanmuga Sundaram
had undergone a course in electronics at Tamil Nadu Advanced
Technical Institute, Trichy, and learnt the mechanism for devising
electronic timer, to be used in the time bombs to be manufactured
by them.
3
3. The further case of the prosecution is that during September
1990, the above said Suku had brought electronic printed circuit
board, integrated circuit switches, resisters and directed Shanmuga
Sundram to device electronic timer device, to be attached to time
bomb. The appellant, along with two other accused, wrote slogans
in the paper (MO­7) hailing ‘Tamilar Pasarai’ and kept it near the
time bomb on 22.09.1990. The bomb was to be blasted by another
accused, namely, Sukku, in a jerrycan (MO­1) containing explosives
with   timer   devices   (MO­6),   near   Namakkal   Kavignar   Maligai   on
22.09.1990. The bomb was noticed before its explosion at about
6.45 a.m. by the Head Constable, G.M. Rajendran (PW­1), attached
to Armed Reserves, Madras, and the said bomb was subsequently
defused. Thereafter, information was given by PW­1 to the Assistant
Commissioner, in­charge of the Fort Police Station, who handed
over the investigation to Parthasarathy (PW­21), the then D.S.P.,
who registered the case initially under Section 4 of the Explosive
Substances Act, 1908 and under Sections 2­F(d)(1) and (2) read
with Section 13 of the Unlawful Activities (Prevention) Act, 1967.
Subsequently, during the course of investigation, the charges were
4
altered against the accused under Section 120­B IPC read with
Sections 3(3) and 4(1) of TADA Act and under Section 5 of the
Explosive Substance Act, 1908.
4. On 24.09.1990, the place of incident was searched by the
bomb disposal squad and the seized items were sent for finger print
examination. A request was also made to the Chief Controller of
Explosives for examining the explosive substance.
5. The statements of witnesses were recorded in respect of the
aforesaid offences on the basis of the information received during
investigation. The Inspector of Police C.B.C.I.D., Thanjavore, raided
the premises of one Abdul Kalam and handed over his custody to
Inspector Raman of ‘Q’ Branch.
6. On   10.05.1993,  PW­26,  the  then  Superintendent   of  Police,
SBCID, received the case file pertaining to Cr. No.1 GO/90, Fort
Station,   Chennai.     Thereafter,   he   sent   the   requisition   for   the
extension of remand of the accused Sathish @ Vadivelu and Abdul
Kalam,   on   04.06.1993   and   14.07.1993   respectively.   He   gave
requisition to the competent authority for sanction to prosecute
Abdul Kalam and Vadivelu and obtained the sanction orders. On
5
receiving   the   statement   of   the   accused,   Chandran,   he   obtained
sanction   for   prosecution   of   Chandran   under   the   TADA   Act   on
02.09.1993.
7. After completion of the investigation, the police on 03.09.1993,
filed the charge­sheet against the accused Nos. 1 to 14 and the
unknown accused, under Section 120­B read with Section 3(3), (4)
(1) of the TADA Act and Section 5 of the Explosive Substance Act
and   Section   7   read   with   Section   35(1)(A),   Section   3   read   with
Section 25(1)(B) of the Arms Act. Thereafter, the statements of the
witnesses were recorded by the Special Judge in the aforesaid case.
8. It was the further case of the prosecution that on 24.05.2007,
PW­28, Superintendent of Police, Ashok Kumar, ‘Q’ Branch, CID
Head Quarters, Chennai, came to know about the arrest of the
appellant­accused by the DSP ‘Q’ Branch Tanjavore, in connection
with the Mannarkudi P.S. Cr. No.954/94 and as the appellant was
involved in the subject case, the investigating officer was informed
to take necessary steps for the same. Accordingly, PW­26 took steps
for   the   police   custody   of   the   appellant   from   25.07.2007   to
27.07.2007.   During the police custody, the appellant voluntarily
6
wished  to  give his  confessional  statement  and as  such he  was
produced before PW­28, Superintendent of Police, on 26.07.2007
with   a   requisition,   Ex.   P­55   by   PW­27.   On   27.07.2007,   PW­28
recorded the confession of the accused, observing the formalities
under Section 15 of the TADA Act, as Ex. P­56 and P­57. PW­28
made an appendix as per the said provision and the appellant was
handed over to the DSP to be produced before the Court. All the
proceedings were sent in a sealed cover to the Chief Metropolitan
Magistrate through special messenger on 27.07.2007. 
9. Thereafter,  the  charges were  framed  against  the  appellant,
read over and explained to him. However, while questioning, the
appellant denied the charges.  The prosecution examined as many
as   28   witnesses   to   prove   the   case   against   the   accused.   The
appellant was examined under Section 313 of the Code of Criminal
Procedure, 1973.  The appellant was permitted to be examined as
DW­1. He filed the documents Ex. DW­1 to DW­7. As stated earlier,
the Designated Court has convicted the appellant in the aforesaid
terms.
7
10. Shri S. Nagamuthu, learned senior counsel appearing for the
appellant, has submitted that the Designated Court has relied on
the confession (Ex. P­57) of the appellant for his conviction. PW­28
who recorded the alleged confession, had not scrupulously followed
the   guidelines   laid   by   this   Court   in  Kartar   Singh  v.  State   of
Punjab1
.   The   confession   had   not   been   recorded   in   a   free
atmosphere. The prescribed procedure under the TADA Act and the
rules made thereunder had not been followed while recording the
confession.   It was also submitted that the confession was not
admissible in evidence as it was not voluntary. In this connection,
he has taken us through the oral evidence of the parties. It was
further submitted that the accused had retracted the confession
subsequently. Therefore, even if the confession is admissible, it is a
weak piece of evidence and the same cannot be the sole evidence for
conviction   in   the   absence   of   corroboration   from   independent
sources.     It   was   also   submitted   that   the   confession   of   the   coaccused (Ex. P­26 and P­27) are not admissible in evidence because
there was no joint trial of those two accused with the appellant. The
1 1994 (3) SCC 569
8
confession of the co­accused is not substantive piece of evidence.
The   proviso   to   Section   15(1)   of   the   TADA   Act,   introduced   by
amending   the   said   section   in   the   year   1993   which,   in   fact,
supplements Section 30 of the Evidence Act, mandates that there
should be a joint trial. Therefore, he submits that the conviction of
the appellant by the Designated Court is unsustainable in law.
11. On the other hand, Shri Jayant Muth Raj,  learned Additional
Advocate   General,   appearing   for   the   respondent­State,   has
supported the impugned judgment of the Designated Court.
12. We have carefully considered the submissions of the learned
senior counsel made at the Bar and perused the materials placed
on record.
13. The Designated Court has convicted the appellant on the basis
of the confession of the appellant made on 27.02.2007 (Ex. P­57)
and the confession statement of the two other co­accused (Ex. P­26
and P­27).
14. Therefore, the first question for consideration is whether the
appellant   has   made   the   confession   (Ex.   P­57)   voluntarily   and
truthfully.
9
15. The law of confession is embodied in Sections 24 to 30 of the
Indian Evidence Act, 1872. The confession is a form of admission
consisting of direct acknowledgment of guilt in a criminal charge. In
this connection, it is relevant to notice the observations of Privy
Council in Pakala Narayana Swami v. Emperor2 which is as under:
“…..a confession must either admit in terms of an
offence, or at any rate substantially all the fact which
constitute   the   offence.   An   admission   of   a   gravely
incriminating fact, even a conclusively incriminating
fact is not by itself a confession….”
16. It is well­settled that a confession which is not free from doubt
about its voluntariness, is not admissible in evidence. A confession
caused  by  inducement,  threat   or  promise   cannot  be  termed   as
voluntary confession.  Whether a confession is voluntary or not is
essentially a question of fact.   In  State   (NCT  of Delhi)  v.  Navjot
Sandhu3
  this   Court   has   elaborately   considered   this   aspect   as
under:
“29.  Confessions   are   considered   highly   reliable
because no rational person would make admission
against   his   interest   unless   prompted   by   his
2 1939 PC 47
3
(2005) 11 SCC 600
10
conscience to tell the truth. “Deliberate and voluntary
confessions of guilt, if clearly proved are among the
most effectual proofs in law.” (Vide Taylor’s Treatise
on the Law of Evidence, Vol. I.) However, before acting
upon a confession the court must be satisfied that it
was   freely   and   voluntarily   made.   A   confession   by
hope or promise of advantage, reward or immunity or
by force or by fear induced by violence or threats of
violence   cannot   constitute   evidence   against   the
maker of the confession. The confession should have
been made with full knowledge of the nature and
consequences   of   the   confession.  If   any   reasonable
doubt   is   entertained   by   the   court   that   these
ingredients are not satisfied, the court should eschew
the   confession   from   consideration.   So   also   the
authority recording the confession, be it a Magistrate
or some other statutory functionary at the pre­trial
stage, must address himself to the issue whether the
accused has come forward to make the confession in
an atmosphere free from fear, duress or hope of some
advantage   or   reward   induced   by   the   persons   in
authority.   Recognising   the   stark   reality   of   the
accused being enveloped in a state of fear and panic,
anxiety   and   despair   while   in   police   custody,   the
Evidence   Act   has   excluded   the   admissibility   of   a
confession made to the police officer.”
17. Section 15(1) of the TADA Act is a self­contained scheme for
recording the confession of an accused charged with an offence
under the said Act. This provision of law is a departure from the
provisions of Sections 25 to 30 of the Evidence Act. Section 15 of
the TADA Act operates independently of the Evidence Act and the
11
Criminal Procedure Code. In  Kartar  Singh  (supra) a Constitution
Bench   of   this   Court   while   upholding   the   validity   of   the   said
provision   has   issued   certain   guidelines   to   be   followed   while
recording confession.  These guidelines have been issued to ensure
that the confession obtained in the pre­indictment interrogation by
a police officer not lower in rank than a Superintendent of Police is
not tainted with any vice but is in strict conformity with the wellrecognised   and   accepted   aesthetic   principles   and   fundamental
fairness. These guidelines are:
“(1)   The   confession   should   be   recorded   in   a   free
atmosphere   in   the   same   language   in   which   the
person is examined and as narrated by him;
(2) The person from whom a confession has been
recorded under Section 15(1) of the Act, should be
produced before the Chief Metropolitan Magistrate or
the Chief Judicial Magistrate to whom the confession
is required to be sent under Rule 15(5) along with the
original statement of confession, written or recorded
on mechanical device without unreasonable delay;
(3) The Chief Metropolitan Magistrate or the Chief
Judicial Magistrate should scrupulously record the
statement, if any, made by the accused so produced
and get his signature and in case of any complaint of
torture, the person should be directed to be produced
for medical examination before a Medical Officer not
lower in rank than of an Assistant Civil Surgeon;
12
(4) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973, no police officer below
the rank of an Assistant Commissioner of Police in
the Metropolitan cities and elsewhere of a Deputy
Superintendent   of   Police   or   a   police   officer   of
equivalent   rank,   should   investigate   any   offence
punishable under this Act of 1987.
This is necessary in view of the drastic provisions
of   this   Act.   More   so   when   the   Prevention   of
Corruption   Act,   1988   under   Section   17   and   the
Immoral Traffic Prevention Act, 1956 under Section
13, authorise only a police officer of a specified rank
to investigate the offences under those specified Acts.
(5) The police officer if he is seeking the custody of
any   person   for   pre­indictment   or   pre­trial
interrogation from the judicial custody, must file an
affidavit sworn by him explaining the reason not only
for such custody but also for the delay, if any, in
seeking the police custody;
(6) In case, the person, taken for interrogation, on
receipt of the statutory warning that he is not bound
to make a confession and that if he does so, the said
statement   may   be   used   against   him   as   evidence,
asserts his right to silence, the police officer must
respect  his right  of  assertion without  making any
compulsion to give a statement of disclosure.”
18. In Jameel Ahmad v. State of Rajasthan4
this Court has held
that when an accused charged with an offence under the provisions
of   the   TADA   Act,   is   voluntarily   willing   to   make   a   confessional
4
(2003) 9 SCC 673
13
statement and if such statement is made and recorded by an officer
not   below   the   rank   of   Superintendent   of   Police   in   a   manner
provided in that section, is admissible in evidence. The findings
recorded in this case are as under:   
“35.  To sum up our findings in regard to the legal
arguments addressed in these appeals, we find:
(i) If the confessional statement is properly recorded,
satisfying the mandatory provision of Section 15 of
the TADA Act and the Rules made thereunder, and if
the same is found by the court as having been made
voluntarily and truthfully then the said confession is
sufficient to base a conviction on the maker of the
confession.
(ii) Whether such confession requires corroboration
or not, is a matter for the court considering such
confession on facts of each case.
(iii) In regard to the use of such confession as against
a co­accused, it has to be held that as a matter of
caution, a general corroboration should be sought for
but in cases where the court is satisfied that the
probative value of such confession is such that it
does not require corroboration then it may base a
conviction on the basis of such confession of the coaccused   without   corroboration.   But   this   is   an
exception   to   the   general   rule   of   requiring
corroboration when such confession is to be used
against a co­accused.
14
(iv)   The   nature   of   corroboration   required   both   in
regard to the use of confession against the maker as
also in regard to the use of the same against a coaccused   is   of   a   general   nature,   unless   the   court
comes   to   the   conclusion   that   such   corroboration
should be on material facts also because of the facts
of a particular case. The degree of corroboration so
required is that which is necessary for a prudent
man to believe in the existence of facts mentioned in
the confessional statement.
(v) The requirement of sub­rule (5) of Rule 15 of the
TADA   Rules   which   contemplates   a   confessional
statement   being   sent   to   the   Chief   Metropolitan
Magistrate or the Chief Judicial Magistrate who, in
turn, will have to send the same to the Designated
Court   is   not   mandatory   and   is   only   directory.
However,   the   court   considering   the   case   of   direct
transmission   of   the   confessional   statement   to   the
Designated   Court   should   satisfy   itself   on   facts   of
each case whether such direct transmission of the
confessional   statement   in   the   facts   of   the   case
creates any doubt as to the genuineness of the said
confessional statement.”
19. Bearing these principles in mind, let us consider as to whether
the confession of the appellant was voluntary and truthful. The
appellant was examined as DW­1. In his evidence he has stated
that he was arrested on 19.05.2007, when he was returning from
Chennai airport. He was detained for two days and was taken to
Trichi, “Q” branch office and was kept there for one day.  During
15
this period, he was allegedly tortured by the police. On 22.05.2007
he was produced before the Judicial Magistrate, Trichi, and was
remanded by the court till 25.07.2007. PW­27 made an application
requesting   for   police   custody   of   the   accused   for   five   days   and
obtained   police   custody   from   25.07.2007   to   27.07.2007.   On
25.07.2007, when the appellant was sitting in the police vehicle,
Mr. Rajendran, ‘Q’ Branch Inspector, told him that he should sign
certain   papers,   otherwise   he   would   be   killed   in   police   custody.
When he was brought before the Designated Court, on the same
day, he informed the same to the learned Judge and gave a petition
(Ex. D­1) stating that he was tortured by the police and that he had
nothing   to   do   with   the   alleged   incident.   When   he   was   again
produced   before   the   Designated   Court,   after   recording   the
confession statement, he gave a petition (Ex. D­2) stating that he
has not made any incriminating statement before PW­28.
20. On 26.07.2007, PW­29 produced the appellant before PW­28.
PW­28   during   his   cross­examination   has   stated   that   until   the
accused was produced on 26.07.2007, the accused was in police
custody.     On   26.07.2007,   though   it   has   been   recorded   that   a
16
number of questions were put to the accused and the answers were
elicited, there is no record to show that the appellant­accused was
warned as required under Section 15 of the TADA Act and Rule
15(3) of the TADA Rules. During his cross­examination PW­28 has
stated   that   he   gave   warning   to   the   accused   which   was   not
supported by any contemporary record, namely, Ex. P­56 dated
26.06.2007.   As it is seen in Ex. P­57, only two questions were
asked to the appellant and answers elicited, which do not reflect
any warning as required under the TADA Act and the TADA Rules.
The evidence of PW­28 is that he gave the same warning which he
had given on 26.07.2007.   There are no contemporary records to
show that the warning was made on 26.07.2007 or 27.07.2007. The
second question asked on 27.07.2007 (per Ex. P­57) assumes much
importance.   In   this   question   PW­28   has   only   explained   to   the
accused that he had been produced only to record his statement.
He did not explain to the accused that he had been produced to
record the confession.
21. It was contended by the learned Additional Advocate General,
appearing for the respondent, that the footnote appended to Ex. P­
17
56 would satisfy Section 15 of TADA Act and Rule 15 of TADA
Rules. It is necessary to notice here that complying with these rules
is not an empty formality or a mere technicality as these provisions
serve a statutory purpose to ensure a fair trial as guaranteed under
Article 21 of the Constitution of India. The entire proceedings on
record should reflect application of mind into various surrounding
circumstances including questions and answers elicited from the
accused.     Mere   recording   in   a   certificate   will   only   amount   to
technical   observance   of   the   rule   but   that   will   not   prove   the
voluntariness   of   the   statement.   In   law,   it   is   not   the   technical
observance of the rules but it is the real satisfaction about the
voluntariness of the confession is sine qua non.
22. It is also necessary to state here that the confession recorded
by   the   police   officer   is   undoubtedly   equated   to   a   confession
recorded by a Judicial Magistrate under Section 164 Cr.P.C. Thus,
the said confession is a substantive piece of evidence.  Therefore, all
the safeguards which are to be followed by a Magistrate should
have been followed by the police officer also. It is well­settled that
the satisfaction arrived at by the Magistrate under Section 164
18
Cr.P.C.   is,   if   doubtful,   then,   the   entire   confession   should   be
rejected.
23. In the instant case, it is evident that from out of the questions
put by PW­28 and the answers elicited and the manner in which
the accused has made the statement are all the foundations upon
which it is to be found out as to whether the statement was made
voluntarily or not. If the certificate is not supported by any of the
above inputs, then the certificate needs to be rejected. The police
officer cannot record such a certificate out of his own imagination
and the entire proceedings should reflect that the certificate was
rightly given based on the materials. In the present case, there is
nothing on record to prove the voluntariness of the statement. Ex.
D­1 and D­2 and other circumstances would go to show that the
appellant could not have made the statement voluntarily. Therefore,
the confession statement of the appellant requires to be rejected.
24. The   second   question   for   consideration   is   whether   the
statement of two other co­accused (Ex. P­26 and P­27) is admissible
in evidence.
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25. The confession statement of  the co­accused was recorded by
the Superintendent of Police (PW­20) in Crime No.160/1990. The
appellant was absconding, hence the proclamation order was issued
by the trial court and thereafter the case was split against the
appellant. A separate trial was conducted against the appellant and
the impugned judgment convicting the appellant­accused has been
passed by the Designated Court.
26. The contention of the learned Additional Advocate General,
appearing for the appellant, is that the appellant cannot take the
advantage of his own wrong to thwart the object and purpose of
Section 15 of the TADA Act.
27. Learned   senior   counsel   appearing   for   the   appellant   has
submitted that the confession statements of the two co­accused are
not at all admissible in evidence because there was no joint trial of
those two co­accused with the appellant. Therefore, Ex. P­26 and
Ex. P­27 are not admissible in evidence.
28. Section 30 of the Indian Evidence Act mandates that to make
the confession of a co­accused admissible in evidence, there has to
be a joint trial. If there is no joint trial, the confession of a co­
20
accused is not at all admissible in evidence and, therefore, the same
cannot be taken as evidence against the other co­accused.   The
Constitution Bench of this Court in  Kartar  Singh  (supra), while
considering   the   inter­play   between   Section   30   of   the   Indian
Evidence Act and Section 15 of the TADA Act held that as per
Section 15 of the TADA Act, after the amendment of the year 1993,
the confession of the co­accused, is also a substantive piece of
evidence provided that there is a joint trial.
29. In State v. Nalini and others5 Justice Quadri has held that a
confession of an accused made under Section 15 of the TADA Act is
admissible against all those tried jointly with him.  It has been held
thus:   
“688. Having excluded the application of Sections 24
to 30 of the Evidence Act to a confession recorded
under Section 15(1) of the TADA Act, a self­contained
scheme   is   incorporated   therein   for   recording   the
confession of an accused and its admissibility in his
trial   with   co­accused,   abettor   or   conspirator   for
offences   under   the   TADA   Act   or   the   Rules   made
thereunder or any other offence under any other law
which can jointly be tried with the offence with which
he is charged at the same trial. There is thus no
room to import the requirements of Section 30 of the
Evidence Act in Section 15 of the TADA Act.
5
(1999) 5 SCC 253
21
689.   Under   Section   15(1)   of   the   TADA   Act   the
position, in my view, is much stronger, for it says,
‘
“a confession made by a person before a police
officer not lower in rank than a Superintendent
of   Police   and   recorded   by   such   police   officer
either in writing or on any mechanical device like
cassettes,   tapes   or   soundtracks   from   out   of
which sounds or images can be reproduced, shall
be admissible in the trial of such person or coaccused,   abettor   or   conspirator   for   an   offence
under   this   Act   or   Rules   made   thereunder,
provided that co­accused, abettor or conspirator
is charged and tried in the same case together
with the accused.”
On the language of sub­section (1) of Section 15, a
confession   of   an   accused   is   made   admissible
evidence as against all those tried jointly with him, so
it is implicit that the same can be considered against
all those tried together. In this view of the matter
also,  Section  30 of  the  Evidence Act  need not be
invoked for consideration of confession of an accused
against a co­accused, abettor or conspirator charged
and tried in the same case along with the accused.”
30. In Jameel Ahmad (supra), this Court has reiterated the above
position as under:
“30……Therefore   we   notice   that   the   accepted
principle in law is that a confessional statement of an
accused recorded under Section 15 of the TADA Act
is a substantive piece of evidence even against his co­
22
accused provided the accused concerned are tried
together.”
31. In the instant case, no doubt, the appellant was absconding.
That is why, joint trial of the appellant with the other two accused
persons could not be held. As noticed above, Section 15 of the
TADA Act specifically provides that the confession recorded shall be
admissible in trial of a co­accused for offence committed and tried
in   the   same   case   together   with   the   accused   who   makes   the
confession. We are of the view, that if for any reason, a joint trial is
not   held,  the   confession   of  a   co­accused  cannot   be   held  to   be
admissible in evidence against another accused who would face
trial at a later point of time in the same case. We are of the further
opinion that if we are to accept the argument of the learned counsel
for the respondent­State, it is as good as re­writing the scope of
Section 15 of the TADA Act as amended in the year 1993.
32. In  Ananta   Dixit  v.  The   State6
  the Orissa High Court was
considering a similar case under Section 30 of the Evidence Act.
The   appellant,   in   this   case,   was   absconding.   The   question   for
consideration   was   whether   a   confession   of   one   of   the   accused
6 1984 Crl. L.J. 1126
23
persons who was tried earlier, is admissible in evidence against the
appellant. The Court held that the confession of the co­accused was
not admissible in evidence against the present appellant. The Court
held:
“7.   As   recorded   by   the   learned   trial   Judge,   the
accused   Narendra   Bahera,   whose   confessional
statement   had   been   relied   upon,   had   been   tried
earlier and not jointly with the appellant and the coaccused   person   Baina   Das.   A   confession   of   the
accused   may   be   admissible   and   used   not   only
against him but also against a co­accused person
tried jointly with him for the same offence. Section
30 applies to a case in which the confession is made
by accused tried at the same time with the accused
person   against   whom  the   confession   is  used.  The
confession of an accused tried previously would be
rendered   inadmissible.   Therefore,   apart   from   the
evidentiary value of the confession of a co­accused
person, the confession of Narendra Behera was not to
be   admitted   under Section   30 of   the   Evidence   Act
against   the   present   appellant   and   the   co­accused
Baina Das.”
We are in complete agreement with the view of the High Court.
33. We are of the view that since the trial of the other two accused
persons was separate, their  confession  statements  (Ex.P­26 and
P­27) are not admissible in evidence and the same cannot be taken
as evidence against the appellant.
24
34. In view of the discussion made above, the Designated Court
was   not   justified   in   convicting   the   appellant.   The   appeal   is
accordingly   allowed.   The   judgment   and   order   dated   4.12.2009
passed by the Presiding Judge, Designated Court No.2, Chennai, in
Calendar Case No.1/2007, is hereby set aside and the appellantaccused is acquitted for the offence for which he was tried. This
Court   by   order   dated   25.19.2010   had   granted   the   bail   to   the
appellant. Hence, the question of releasing him does not arise. The
bail bond executed by the appellant and the surety, if any, stands
cancelled. 
      …………………………………………J.
  (S. ABDUL NAZEER)
 
  …………………………………………J.
      (DEEPAK GUPTA)
New Delhi;
April 1, 2020.