The CBI filed an SLP against the Delhi High Court's order acquitting both accused — A1 (Arun Kumar Gurjar, Joint Commissioner of Income Tax) and A2 (Baljeet Singh, Income Tax Inspector) — of charges under Section 120B IPC r/w Section 7 of the Prevention of Corruption Act, 1988. The High Court had found no conspiracy proved and no demand of bribe established. The Trial Court had convicted both on the basis of a trap laid by the CBI on 29.12.2010, during which A2 was caught accepting Rs.2 lakhs in a phenolphthalein-powdered envelope, recovered from his coat pocket, with his hands and clothing testing positive in the Sodium Carbonate solution.
The Supreme Court partly allowed the appeal. It upheld the High Court's acquittal of A1, noting that no demand was ever made by A1 directly to PW1, nor was A2's demand made in A1's presence, and the SLP against A1's acquittal had already been dismissed earlier. As against A2, however, the Court set aside the acquittal and restored the Trial Court's conviction under Section 7 of the PC Act. The Court found the demand by A2 on 27.12.2010 clearly established through PW1's testimony and complaint, fully corroborated by PW22 (TLO), and sufficiently corroborated by independent witnesses PW10 and PW18 on the pre-trap proceedings, the recovery of the envelope, and the positive phenolphthalein test. A2's conduct on being challenged — remaining mum, attempting to escape, and turning pale — was held to be relevant conduct pointing to guilt under Section 8 of the Indian Evidence Act, 1872, relying on Himachal Pradesh Administration v. Shri Om Prakash and Neeraj Dutta v. State (Govt. of NCT of Delhi).
The Court distinguished A. Srinivasulu v. State represented by the Inspector of Police, Dashrath Singh Chauhan v. Central Bureau of Investigation, and Bhagat Ram v. State of Rajasthan, holding that those decisions were confined to their own facts and that where a separate charge of demand and acceptance under Section 7 PC Act is framed independently against each accused, the failure of the conspiracy charge does not automatically defeat the standalone Section 7 charge. The sentence of four years RI was modified to one year RI with a fine of Rs.1 lakh, considering A2's age, and A2 was directed to surrender within four weeks.