The High Court
Case Details
-1- IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (Cr.) No. 205 of 2001 … M/s Bhalotia Engineering Works Ltd. & Others -V e r s u s- ... … Petitioners The State of Jharkhand & Others … Respondents … CORAM: - HON’BLE MR. JUSTICE PRASHANT KUMAR. For the Petitioners
Legal Reasoning
… : - Mr. Biren Poddar, Advocate. Mrs. Darshana Poddar, Adv. Mr. Mahendra Chowdhary, Adv. Mr. Piyush Poddar, Advocate. For the Respondent No. 2:- Mr. J.C. to Deepak Roshan, Adv. … 04/22.03.2013 This writ application has been filed for quashing the entire criminal proceeding pending in the court of Special Judge, Economic Offences, Jamshedpur in connection with C/1 Case No. 147 of 1992 registered under Sections 276 (C) and 277 of the Income Tax Act, 1961. 2. It appears that a complaint filed by Income Tax Department against the petitioners alleging therein that the petitioners filed income tax return for the Assessment Year 1986-87 showing income of the firm as Rs. 2,78,600/-. Assessing Authority, after scrutinizing the matter, has found that petitioners had not disclosed their income with regard to two additions i.e. unexplained expenditure Rs. 2,54,469/- and commission on sales of Rs. 38,200/-. Accordingly, Assessing Authority asked the petitioners to pay tax on the said amount. Against that assessment order, petitioners filed an appeal before the C.I.T. (Appeals), Jamshedpur. In the said appeal, the aforesaid assessment -2- order set aside and the case was remitted back to the Assessing Authority. Thereafter, re-assessment made and the Assessing Authority found that petitioners have not given the account with respect to two additions i.e. Unexplained expenditure under Section 69 to the tune of Rs. 10,499/- and commission on sales of Rs. 38,200/-. Accordingly, petitioners paid tax on the said additional amount. Thereafter, the Assessing Authority initiated a penalty proceedings under Section 271 (1)(C) of the Income Tax Act with respect to aforesaid two additions and gave notice to the petitioners. After considering the show cause filed by the petitioners, the Assessing Authority levied penalty vide order dated 23.07.1990 of Rs. 30,000/-. Against the said order of penalty, petitioners filed an appeal before the C.I.T. (Appeals), Jamshedpur. It appears that during pendency of aforesaid appeal before the C.I.T. (Appeals), Jamshedpur, the Assessing Authority filed the present complaint before the Special Judge, Economic Offences, alleging therein that petitioners concealed the aforesaid two additions with a view to evade payment of income tax. Accordingly, on the basis of the said complaint, cognizance taken. 3. Learned counsel for the petitioners submits that during pendency of the complaint case in the court below, petitioners' filed appeal before C.I.T. (Appeal), Jamshedpur, which was dismissed vide order dated 31.03.1992 -3- (Annexure-3). Against that order, petitioners filed appeal before the Income Tax Appellate Tribunal, Patna Bench, Patna vide I.T.A. No. 623 (Pat) of 1992. The said appeal was disposed of by order dated 06.12.1994, whereby the order passed by Assessing Authority under Section 271 (1) (C) of the I.T. Act and the appellate order passed by C.I.T. has been set aside holding that petitioners had not concealed any fact from the Assessing Authority. Sri Poddar further submits that since the Income Tax Tribunal has set aside the order of penalty passed by Assessing Authority as well as by the Appellate authority, the prosecution launched against the petitioners under Sections 276 (C) & 277 of the Income Tax Act is liable to be quashed automatically. In support of the said contention, he relied upon the Judgment of Hon'ble Supreme Court in the case of K.C. Builders and Another Vs. Assistant Commissioner of Income Tax reported in (2004) 2 SCC 731. 4. Learned counsel appearing for the Income Tax Department submits that the cognizance has already been taken against the petitioners and thereafter the court below has also rejected his discharge petition. Under the said circumstance, this writ application is not maintainable. However, after going through the order of Income Tax Appellate Tribunal, learned counsel for the Income Tax -4- Department has not disputed the order of penalty has already been set aside. 5. Having heard the submissions, I have gone through the record of the case. From perusal of Annexure-4 to the writ application, it manifest that petitioners have filed an appeal against the order passed by C.I.T. Jamshedpur dated 31.03.1992 in Appeal No. 168/JSR/90-91. It appears that the said appeal filed before C.I.T. (Appeal), Jamshedpur by the petitioners against the order of imposition of penalty under Section 271 (1)(C) of the I.T. Act. It further reveals from Annexure-4 that both the aforesaid orders have been set aside by the Income Tax Appellate Tribunal, Patna Bench, Patna on coming to the conclusion that petitioners have not concealed any fact from the Assessing Authority. The Tribunal further held that if petitioners had claimed certain exemption from the Income Tax, the dis-allowance of the said exemption does not amount concealment. It has been held by their Lordships of Supreme Court in aforesaid K.C. Builders and Another (Supra) that if Income Tax Appellate Tribunal cancelled the penalty levied under Section 271(1) (C) of the I.T. Act, the prosecution launched against the assessee under Section 276-C of the I.T. Act is liable to be quashed automatically, because it is settled law that the levy of penalty and prosecution under Section 276-C of the I.T. Act are simultaneous. In the instant case, as noticed -5- above, the penalty levied against the petitioners had already been set aside by Income Tax Appellate Tribunal vide order contained in Annexure-4 on coming to the conclusion that petitioners have not concealed any fact from the Income Tax Department with a view to evade tax. Under the said circumstance, in view of the aforesaid decision of the Hon'ble Supreme Court, the prosecution launched against the petitioners under Sections 276 (C) & 277 of the I.T. Act, cannot proceed. 6. The contention raised by learned counsel for the respondents that the cognizance has been taken and discharge petition has been rejected, appears to be misconceived, because in view of the judgment of Supreme Court once the penalty order is set aside by the appellate authority, then the prosecution is liable to be quashed automatically. 7. Considering the aforesaid facts and circumstances, I allow this application and quash the entire criminal proceedings against the petitioners in connection with C/1 Case No. 147 of 1992, pending in the court of learned Special Judge, Economic Offences, Jamshedpur. sunil/ (Prashant Kumar, J.)