Date:03/12/2006 URL: http://www.thehindu.com/2006/12/03/stories/2006120315840100.htm

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High Court upholds order against Jayalalithaa in income tax case

Special Correspondent

Economic offences court had refused to discharge her and Sasikala

CHENNAI : The Madras High Court on Saturday upheld an economic offences court order declining to discharge former Chief Minister Jayalalithaa and her friend N.Sasikala in income tax cases.

Their separate writ petitions, challenging the validity of Section 278E of the Income Tax Act, were also dismissed.

The criminal revision petitions challenged the June 2006 order of the Additional Chief Metropolitan Magistrate (Economic Offences), dismissing their discharge pleas. The Magistrate had directed the accused to be present in the court on August 25, 2006.

Dismissing the petitions, Justice Prabha Sridevan said: "A perusal of the impugned orders will show that the learned Magistrate has considered all the materials and has correctly held that the accused will have to prove their case at the time of trial... It is not open to the Magistrate to conduct a mini-trial at this stage and to conclude that no case is made out. There is nothing in the impugned order to indicate that the learned Magistrate has accepted, word for word, the case of the prosecution, and acted as a post office."

The impugned order was the only order the Magistrate could have passed. He had considered all the submissions made by both the sides, framed questions for consideration, dealt with each of them and come to the conclusion that the questions raised by the petitioners must be "tested, substantiated and adjudicated at the time of trial."

Ruling that it was difficult to hold that the Magistrate had conducted himself unreasonably or injudiciously, she said at the prima facie stage the court would have to presume the culpable mental state of the accused. Therefore, the materials placed by the prosecution would, if not rebutted, prove the case against the accused. Till date no returns had been filed by the accused.

Act challenged

In their writ petitions, Ms. Jayalalithaa and Ms. Sasikala challenged Section 278E of the IT Act, which permits presumption of culpable mental state of the accused, thereby shifting the onus of proof from the prosecution to the accused.

Rejecting their grounds, Mrs. Justice Sridevan said the prosecution must prove that the assessee had failed to furnish the returns in due time which, under the law, he\she was bound to do. As for the presumption of the existence of the culpable mental state, this did not mean that the court accepted it as an irrefutable fact.

She said all that the law required from the assessees was to prove that there were circumstances, which prevented them from discharging the statutory duty. If there were compelling reasons, it was always open to the assessees to prove them in accordance with the law. If they proved that, then the prosecution failed.