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Man sent to jail for issuing bounced cheques


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In a significant legal development, a businessman in Gandhinagar has been handed a one-year prison sentence for issuing bounced cheques to the income tax department. The individual in question, Mehulkumar Barot, who resides in Chandkheda, had been ordered to pay Rs 2.34 crore by the tax department, representing his dues after the assessment for the fiscal year 2013-14.

In an attempt to settle his outstanding debt, Barot issued five cheques totaling Rs 20 lakh in 2019. However, two cheques worth Rs 5 lakh each were unable to be honored due to insufficient funds in his bank account. As a result, the tax recovery officer from the income tax department filed a case against Barot under Section 138 of the Negotiable Instruments Act.

During the court proceedings, the department’s special prosecutor, Yusuf Shaikh, presented evidence to demonstrate that the complaint against Barot was authorized and supported by various communications and notices. Barot, on the other hand, argued in his defense that the officer lacked the authority to initiate prosecution, as the assessment for 2013-14 was not permissible at a belated stage. He also claimed that he had been coerced into issuing the cheques and contested the lack of concrete evidence regarding the receipt of the department’s notice.

Despite Barot’s arguments, the court ruled in favor of the income tax department. Barot was found guilty for the dishonored cheques and sentenced to one year in prison. Additionally, the court ordered him to compensate the department with an amount equal to the value of the bounced cheques. Failure to comply with the compensation order would result in an extended prison term of three months.

Under the Negotiable Instruments Act of 1881, issuing a cheque without sufficient funds in the payer’s account is considered a criminal offense. Legal consequences can ensue for the payer if a cheque bounces due to insufficient funds. The payee, who receives the cheque, has the choice to pursue legal action against the payer or grant them the opportunity to remedy the situation by re-issuing the cheque within a designated period, usually three months. Payers can face imprisonment for up to two years for issuing a bounced cheque.

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