HC upholds special court order discharging DKS from income-tax evasion case

In a relief to former Minister D.K. Shivakumar, the High Court of Karnataka on Monday upheld a Special Court’s 2019 order discharging him from a case concerning alleged evasion of income tax of around ₹13 crore. The case was initiated against him based on financial transactions that he had scribbled on a sheet of paper that he tore during search conducted at a resort on the outskirts of the city during August, 2017.

Justice John Michael Cunha passed the order while dismissing the revision petitions filed by the Income-Tax Department challenging the February 28, 2019 order of the Special Court set up to exclusively to deal with criminal cases against MPs and MLAs in Karnataka.

The Special Court had discharged him on a technical reason stating that the I-T officer, who had authorised the search, had no jurisdiction for estimating the undisclosed income of Mr. Shivakumar and for launching the prosecution by filing the complaint.

However, the Special Court had said that the I-T Department is at liberty to launch prosecution afresh against Mr. Shivakumar after estimating the undisclosed income by the jurisdictional assessing officer on the basis of materials produced by the authorised officer for search and such other materials that are available with him, if necessary.

The department had alleged that evasion of tax by Mr. Shivakumar was to the tune of ₹3.1 crore for the assessment year 2015-16, ₹2.56 crore for the year 2016-17, and ₹7.08 crore for the year 2017-18.

The Special Court had held that Sunil Gautham, Deputy Director, I-T Investigations, who was the authorised officer to conduct the searches, had no jurisdiction to estimate the undisclosed income, interest and penalty payable by the accused.

Pointing out that the officer who had conducted the search should have produced all the materials before the jurisdictional assessing officer within a specified period, the Special Court had said that the records did not disclose production of such materials as per the provisions of the Income-Tax Act.

On the allegation against Mr. Shivakumar that he destroyed evidence by tearing the sheet of paper during raid, the Special Court saidno case was made by the I-T Department under Section 201 of the Indian Penal Code as the alleged obliterated or destroyed piece of paper by the accused was produced by the Department in the complaint and contents of the paper were used against him.

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