Delhi District Court
Sh. Amit Chaturvedi vs State on 17 April, 2014
IN THE COURT OF SH. NARINDER KUMAR
ADDITIONAL SESSIONS JUDGE (CENTRAL): DELHI
Crl. Rev. No.25/14
1. Sh. Amit Chaturvedi
R/o 98, Eastern Avenue,
Sainik Farm, New Delhi.
2. Sh. Sanjay Chaturvedi
R/o 98, Eastern Avenue,
Sainik Farm, New Delhi. ......Petitioner
Versus
1. State,
Through Public Prosecutor,
Prosecution Branch, Tis Hazari Courts,
Delhi.
2. Smt. Sujata Maitra,
DCIT, Central Circle11,
New Delhi. ..... Respondents
Date of institution : 29.03.2014
Date of Judgment : 17.04.2014
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J U D G M E N T
The petitioners herein are respondents before the trial court in CC No. 148/4/2009 (date of institution 02/04/2007), u/s 276 - C (1), 276C (2), 276 D, 277 read with section 278 B of Income Tax Act, pending for precharge evidence.
2. Vide impugned order, learned Trial Court has dismissed application dt. 17/12/2013 filed on behalf of the accused persons and also imposed cost of Rs. One lac on each applicant - accused no. 1, 2 and 3.
3. Learned counsel for the petitioners has referred to the order dt. 02/08/2013 passed by ITAT, then to the representation dt. 26/08/2013 and then to the order passed by Dy. Commissioner of Income Tax allowing credit of prepaid taxes and showing the balance income as "nil". The contention of the learned counsel for petitioners is that consequent upon setting aside of order passed by the Income Tax Authorities, when the balance income has been shown as "nil", petitioners cannot be prosecuted any further. In support of his contention, learned counsel has referred to provisions of Section 279 (1A) of Income Tax Act and decisions in "Equipment Service Centre & Ors. VS. Union of India & Ors", 1995 Income Tax Reports, 192; Thanjai Murasu And Others Vs. Income Tax Officer, 2001 Income Tax Report, 465; Janta Sheet Grih Vs. State of Bihar, reported in [ 1998 ] 99 Taxman 109 ( Patna ).
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Learned Counsel for the petitioners has submitted that in view of the order passed by Learned Appellate Tribunal, provision of Section 279 (1A ) are attracted and the proceedings pending before the Trial Court deserve to be quashed.
On the point of imposition of cost, Learned Counsel for the petitioner has submitted that no such cost should have been imposed even if the trial Court was not inclined to allow the prayer made in the application. Therefore, the prayer is that order regarding imposition of cost deserves to be setaside.
4. On the other hand, Learned Counsel for the respondent has submitted that provisions of Section 279 ( 1A ) are not applicable to the present case where the petitioners are accused of commission of offence under Section 276 C (1) and C (2), 276D as well.
Ld. Counsel for the complainantrespondent has also referred to decision in Natha Singh Chhabra alias S. Natha Singh Vs. State of Bihar, reported in [ 1998 ] 234 ITR 0875 to contend that the lessening of the quantum of assessment by the appellate Court in the assessment order does not in any way take away the broad principle of prosecution against the assessee who had admittedly suppressed his accounts for the purpose of evading tax.
Learned Counsel for respondentcomplainant has submitted that there is no provision in law which provides that a prosecution for the offence under Section 276C or Section 277 of the Income Tax Act cannot be launched until 3 reassessment proceedings initiated against the assessee are completed. In support of his contention, Learned Counsel has referred to decision in P. Jayappan v. S. K. Perumal, First IncomeTax Officer, Tuticorn, ( 1984 ) 149 Income Tax Reports, 696; Assistant Commissioner of Income Tax v S. P. Bansal [2000] 243 ITR 0406.
Learned Counsel for the complainantrespondent has submitted that when the complaint case is pending for crossexamination of complainant by way of precharge evidence and earlier similar application filed by the petitioner was dismissed, this application was not maintainable.
On the nonmaintainability of the application, Learned Counsel for the complainantrespondent referred to decision in "Hema Mohnot Vs. State by Chief Commissioner (Admn.) & Commissioner of Income Tax, decided by Hon'ble Madras High Court on 21.01.2013; Helios And Matheson Information Technology Limited & Others Vs. Rajeev Sawhney And Another, ( 2012 ) 1 Supreme Court Cases 699.
As to what is to be taken into consideration on the point of charge, Learned Counsel has referred to decision in Amit Kapoor Vs. Ramesh Chander And Another ( 2012 ) 9 Supreme Court Cases 460.
On the point of cost, Learned Counsel for the respondent has submitted that since the proceedings before the trial Court have been delayed by the 4 petitioner, Learned Trial Court has rightly imposed cost on the petitioners. So, Learned Counsel for the respondent has urged for dismissal of the revision petition.
5. Trial Court record reveals that in the application, it was alleged that order dt. 02/08/2013 was passed in favour of the applicants by Income Tax Appellate Tribunal and on its basis representation dt. 26/08/2013 was submitted to the Dy. Commissioner of Income Tax. On representation, an order was passed by the concerned authority allowing credit or prepaid taxes and the balance income was observed to be nil. The applicants accordingly alleged that no cause of action survived against them and they deserved to be discharged.
6. While dismissing the aforesaid application vide impunged order, learned Trial Court has observed that in the order dt. 02/08/2013, there is no observation that the information given in the Income Tax Return was correct or accurate; that it is a matter of trial if there was no willful act on the part of the applicants in filing Income Tax Return showing the income of Rs. 2,20,000/ instead of Rs. 2 lacs approximately; that the Dy. Commissioner of Income Tax clearly observed in the order dt. 07/02/2014, that the assesses furnished inadequate particulars.
7. On the point of maintainability of the application, although it was not specified as to under which provision of law it was being filed, but it purports to have been filed under Section 245 (2) Cr.PC. Record reveals that earlier also 5 an application under Section 245 (2) Cr.PC came to be filed by the accused when the matter was still pending with Income Tax Appellate Tribunal. However, the point raised vide the present application was not raised in the previous application. This Court finds that learned Trial Court could keep the present application pending since the complaint was pending for cross examination of the witnesses of the complainant, by way of precharge evidence, so as to provide an opportunity to both the sides to put forth their arguments on all the points including the one raised in the application.
Earlier, the Assessing Officer while assessing the income made the following two additions to the income of the assessee company : "Business income returned by the assessee Rs.2,20,008/ Add : Additions on account of expenses disallowed and difference of GP discussed above in para 2 Rs.71,10,531/ Rs.73,30,759/ Less : Depreciation loss available as per the records ( for set off ) Rs. 35,50,47/ Total Taxable Income Rs.37,80,284/ In pursuance of the order passed by the Income Tax Appellate Tribunal, Deputy Commissioner of Income Tax has recomputed the income of the assessee as under : 6 "Business income as declared by the Assessee : Rs.2,20,008/ Add : ( after appeal effect ) i. As discussed in para 3 (a) Rs.6,29,818/ ii. As discussed in para 4 Rs.13,71,751/ Rs.20,01,569/ Total Taxable Income Rs.22,21,577/ Total depreciation available for set off Rs.35,50,475/, Depreciation set off against the current year : Rs.22,21,577/ Balance Income : NIL After the passing of the order by the Appellate Tribunal, would reveal addition of Rs.6,29,818/ was found to have been rightly made taking into account the GP rate i.e. 13.05%.
8. Fact remains that the Appellate Tribunal has not setaside all the additions made by the Assessing Officer and the order came to be passed on the basis of material made available and orders passed on the revenue side.
9. As per order dated 02.08.2013, passed by Income Tax Appellate Tribunal, the appeal filed by the appellant company was partly allowed, but at the same time, the assessing officer was directed to rework out the income of the assessee while disallowing 5% of the expenses including the purchases and other expenses, considered while working out the gross profit rate. The assessing officer was also directed to verify the GP rate i.e. whether it was 7 13.05% or 12.97%.
In Equipments Service Center's Case ( Supra ), appellate order was dated 24.03.1992 whereas the complaint had been filed on 28.03.1992. Therefore, the case is distinguishable on its facts, as herein Appellate order has been passed subsequently and a case is pending before the Trial Court for precharge evidence.
In Thanjai Murasu's Case ( Supra ) the assessment order was set aside by the Commissioner of Income Tax and as such it was prayed that the proceedings against the accused deserved to be terminated. Here is not a case of setting aside of assessment order in entirety.
Section 279 (1A) of the Act provides that a person shall not be proceeded against for an offence under Section 276C or Section 277 in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him under clause (iii) of subSection (1) of Section 271 has been reduced or waived by an order under Section 273A.
10. Accusation levelled against the accusedpetitioners and their companions is that they created circumstances to willfully evade tax, penalty or interest, chargeable and imposable under the Act; laid false verification in the return; and willfully evaded payment of tax, punishable under Section 276 C (1) & (2), 276 D and Section 277 read with Section 278 B of the Act. 8
11. It is significant to note that while disposingof the appeal, the Tribunal also took into account the conduct of the assessee in nonappearance before the Assessing Officer and observed that the same would result in rejection of books of accounts of the assessee and estimation of profit and further that the assessee himself had not objected to the rejection of books of accounts.
It is settled law that evidence led in proceedings on revenue side is not to be considered by the Court conducting criminal proceedings.
Even otherwise, having regard to the decision in Natha Singh Chhabra ( Supra ), simply because of the lessening of the quantum of assessment by the appellate Court in the assessment order, it cannot be said that criminal proceedings need to be stayed forthwith.
Herein is a case, where precharge evidence is still being recorded by the Trial Court. Only after the precharge evidence is concluded and parties are provided an opportunity of being heard, that the Trial Court would be able to find out if the assessee, while assessing the income had suppressed real income. In this regard, evidence to be recorded in criminal proceedings, and not the evidence recorded on revenue side, is to be taken into consideration.
It is pertinent to mention here that learned counsel for the parties have referred to various authorities and raised the above noted points which were not referred to/raised before the Trial Court. So, the Trial Court had no 9 opportunity to discuss or deal with the same while passing the impugned order, the reason being that the case was not yet ripe for consideration on the point of charge.
12. Accordingly, this Court finds that learned Trial Magistrate erred while disposing of the application taking into consideration only the impact of the order passed by Appellant Tribunal, while actually the impact of the order should have been considered only after recording of precharge evidence was complete.
As a result of the above discussion, this revision petition is disposed of with directions to the Trial Court to conclude precharge evidence at the earliest, then provide opportunity to the parties to address argument on the point of charge and consider all the relevant points including the one raised vide the instant application and the authorities cited by learned counsel for both the parties, many of which were not referred to before that Court while arguing the application.
Consequently, impugned order passed by the Trial Court dismissing the application is hereby set aside.
As regard imposition of cost, in view of the above directions, when the point raised is to be considered afresh, at the time of charge, the order regarding imposition of cost is also hereby set aside. 10
13. Trial Court record be returned back. File of revision petition be consigned to Record Room.
14. Parties are directed to appear before the Trial Court on 26.04.2014.
Announced in Open Court
on 17.04.2014 (Narinder Kumar )
Additional Sessions Judge(Central)
Delhi
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