Case Law Details

Case Name : State of Kerala Vs Mathew (M.M) & ANR. (Supreme Court of India)
Appeal Number : 1978 AIR 1571, 1979 SCR (1) 264, 1978 SCC (4)65
Date of Judgement/Order : 18/08/1978
Related Assessment Year :

ACT: Proof of account books of business in criminal trials, ingredients to be proved, explained-Presumption in favour of
acts of public servants charged with bringing home economic and other crimes-Kerala General Sales Tax Act, 1963, Sections 46(1)(a), 46(1)(c) and 46(2)(c).

Judgment analysis

During the course of a surprise raid by the Intelligence Wing of the Sales Tax Authorities for verification of accounts of the respondents pertaining to their sales tax returns submitted by them on the 1 8th of each of the months of February, ‘March and April 1969, respondent No. 1 produced certain books of accounts viz. current note books, bill books, stock register of the sales and purchases and purchase bills in current use relating to the “Kallupalam Lad’s Jawellery Mart” business and placed the same in a room adjacent to the firm’s show room for inspection. While examining these account books, the inspecting party noticed some other account papers in the form of diarysize account books, ledger size account books, exercise account books lying on that very table. Finding that a number of transactions of sales and purchase of the
jewellery entered in the second set of account books noticed by them, revealing a large turnover for the months of January, February and March 1969, these account books were seized. On the basis of the result of the aforesaid inspection three complaints were under sections 46(1)(a) (for submission of untrue returns), 46(1)(c) (for failure to keep true and complete accounts) and 46(2) (c) (for fraudulent evasion of tax) of the Kerala General Sales Tax  Act, 1963 and the rules made thereunder. on a consideration of the evidence adduced in the case, the Trial Court acquit   ted the respondents under s. 46(2) (c) but convicted them under section 46(1)(a) and 46(1)(c) of the Act and imposed a fine of Rs. 600/- and Rs. 500/- respectively on each of the respondents under the aforesaid two counts. On appeal the Additional Sessions Judge, set aside the conviction and acquitted the respondents of the charges under Sections  46(1)(a) and 46(1)(c) of the Act as well. The State’s appeal before the Kerala High Court failed and hence the appeal by special leave.  Dismissing the appeals the Court,

HELD: 1. Courts of law have to judge evidence before them by applying the well recognised test of basic human probabilities. Some of the observations made by the Sessions Judge especially the one to the effect that ‘the evidence of officers constituting the inspecting party is highly interested because they want that the accused are convicted’ cannot be accepted as it runs counter to the well recognised principle that prima facie public servants must be presumed to act honestly, conscientiously and their evidence has to be assessed on its intrinsic worth and cannot be discarded merely on the ground that being public servants they are interested in the success of their case. [268 A-C] 265.

2. The observations of the High Court to the effect that ‘the mere fact that two sets of accounts which are conflicting are being maintained, it cannot be taken that the accounts books evidencing less turn-over or profits are false. lt may well be that the secret accounts are false and the other accounts are true. It is not unusual to find business men keeping two sets of accounts one the correct one and the other. showing exaggerated turnover and profits, the purpose of the latter being only to attract investments in dealing with the business”, cannot be accepted as statement of law. [268 C-D]

3. Strong suspicions, strange coincidences and grave doubts cannot take the place of legal proof. [269 B] (a) In the instant case, there is absolutely no legal evidence on the record to prove the secret books of account, the seizure of which was effected by or under the order of the Inspecting Assistant Commissioner were recovered from a place which formed part of the business premises of the respondents or. was in their exclusive possession and control. [268 E-F]

(b) The prosecution could have established that the secret books of account related to the business transections carried on by the respondents and none else in a variety of ways viz. (1) by adducing satisfactory proof to the effect that the place from which the secret books of account were seized formed part of the place of business of the respondents or was in their exclusive possession and control, (2) that the secret books of account were maintained by or under the orders of the respondents, (3) that the said books of account were in the handwriting of either of the respondents or their account, our clerk or some other person employed by them. The third method indwelled above could have been adopted by following one or more of the ordinary modes provided in the Evidence Act for proving the handwriting i.e. (i) by calling the accountant or clerk or some other employee of the respondents who is supposed to have posted the entries in the account books, (ii) by calling a person in whose presence the account books were written, (iii) by calling a handwriting expert to
testify that the entries in the secret books of account tallied with the admitted specimen writing of the respondents or any of their employees, (iv) by calling a person acquainted with the handwriting of the person by whom the secret books of account were supposed to have been written, (v) by having the comparison done in Court of the P secret books of account with some admitted writing as provided in section 73 of the Evidence Act, (vi) by proof of an admission made by any one of tho respondents that the secret books of account related to the business transactions carried on by their firm or that any one of them had written the same, (vi) by adducing other unimpeachable circumstantial evidence. No attempt or step seems to have been made or taken in that behalf by the prosecution [269

(c) The connection of the respondents with the entries in the secret books of account could also have been established by producing some of the customers whose names are admittedly to be found in the secret books of account to testify that the deals evidenced by the entries were transacted by them with the Kallupalam Lad’s Jewellery Mart of which the respondents were the proprietors. As the prosecution has failed to resort to any of these methods the respondents have to thank themselves for the result of the prosecutions upon which it seems to have launched without seeking expert legal assistance. [269 G-H, 270 A] 266

Girdharilal Gupta and Anr. v. D. N. Mehta, collector of Customs and Anr., [1971] 3 S.C.R. 748 distinguished.

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