Income tax assessee may not be holding property in his name, says SC

The Supreme Court has said that merely because a person is an income tax assessee is not sufficient to hold that a property in his name actually belongs to him.

"The property in the name of an income tax assessee itself cannot be a ground to hold that it actually belongs to such an assessee," said a bench of Justice Chandramauli Kumar Prasad and Justice M.Y.Eqbal in their judgment on Monday.

"In case this proposition is accepted, in our opinion, it will lead to disastrous consequences. It will give opportunity to the corrupt public servants to amass property in the name of known persons, pay income tax on their behalf and then be out from the mischief of law," said Justice Prasad speaking for the bench.

The court ruling came while upholding the decision of the special court rejecting discharge pleas of two former DMK ministers in Tamil Nadu - K.Ponmudi and N.Suresh Rajan - accused of amassing assets by corrupt means in the name of their relatives and friends. Ponmudi was minister for higher education and Suresh Rajan was minister for tourism.

The Madras High Court had reversed the trial court decision.

While passing the order, the apex court said the fact that the accused other than the two ministers have been assessed to income tax and paid it cannot be relied upon to discharge the accused persons particularly in view of the allegation made by the prosecution that there was no separate income to amass such huge properties.

Setting aside the discharge order, the court said, "While passing the impugned orders, the (high) court has not sifted the materials for the purpose of finding out whether or not there is sufficient ground for proceeding against the accused but whether that would warrant a conviction."

"We are of the opinion that this was not the stage where the court should have appraised the evidence and discharged the accused as if it was passing an order of acquittal," said the apex court.

"Further, defect in investigation itself cannot be a ground for discharge. In our opinion, the order impugned suffers from grave error and calls for rectification."