Delhi District Court
Income Tax Office vs Skylabs Technologies on 26 April, 2024
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IN THE COURT OF MAYANK MITTAL
ADDL. CHIEF METROPOLITAN MAGISTRATE (Spl. Acts)
CENTRAL, TIS HAZARI COURTS, DELHI
CC No. : 10158-2019
CNR No. : DLCT02-022687-2019
Date of Institution : 20.09.2019
Name of the complainant : Income Tax Office
its registered office Through Ms. Laxmi Barthwal,
ITO, Ward -54(1),
New Delhi.
Name of accused : 1. M/s Skylabs Technologies,
her parentage and residence 2. Sh. Santosh Kumar Pandey,
S/o Mr. R. N. Pandey,
Partner of M/s Skylabs Technologies,
At T-29, 3rd floor, Okhla Phase-II,
New Delhi-110020.
Also at :
O-11/B, Third Floor,
Lajpat Nagar-II, New Delhi-110024.
Also at :
3rd floor, Masjid Moth,
South Extn., New Delhi-110049.
Offence complained of : U/s. 276-CC of The Income Tax Act,
1961.
Date of Reservation : 24.04.2024
Date of Judgment : 26.04.2024
Plea of accused : Pleaded not guilty
Final Judgment : Acquitted
Brief facts and reasons for decision of the case:-
1.That The complainant is Income Tax Officer, Ward-54(1), New Delhi, having jurisdiction over the case of M/s. Skylabs Technologies under the Income Tax laws. That the present complaint is being filed by complainant as she is authorized to institute criminal complaint under section 276CC for the A.Y. 2013-14 against accused under the Income Tax ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 2 of 11 laws. The present complaint is being filed for prosecution u/s 276CC of the Income Tax Act for the A.Y. 2013-14 by the complainant in discharge of her official duties in terms of Sanction/Authorisation dated 20.03.2019 accorded u/s 279(1) of Income Tax Act, 1961 by Sh. Prashant Bhushan, Pr. Commissioner of Income Tax, Central-18, New Delhi. The original Sanction duly signed by Sh. Prashant Bhushan, Pr. Commissioner of Income Tax, Central-18, New Delhi dated 20.03.2019 is annexed herewith and marked as Annexure A. List of Witnesses is annexed as Annexure B. That Section 139 of Income Tax Act provides that the accused herein was required to furnish a return of income for the A.Y. 2013-14 by the due date, however, the accused deliberately failed to furnish the return of income by the due date. That a proposal has been launched by the Income Tax Officer which has been duly forwarded by Joint Commissioner of Income Tax on 09.03.2018. A copy of proposal is annexed herewith and marked as Annexure C. That a show cause notices was issued to the accused on 09.03.2018 &12.03.2018, to show cause as to why prosecution u/s 276CC of the IT Act should not be launched against it. Copies of Show Cause Notices dated 09.03.2018 &12.03.2018 are annexed herewith and marked as Annexure D (Colly). That in response to the Show cause, Sh. Deepak Sharma, CA and Director (Operations) submitted their replies for Mr. Santosh Kumar Pandey Prop. M/s Skylabs Technologies on 08.03.2018 &15.03.2018. Copies of response dated 08.03.2018 &15.03.2018 is annexed herewith and marked as Annexure E (Colly). That another Show Cause Notice u/s 276CC of the IT Act was issued to the accused on 14.02.2019. A copy of Show Cause Notice dated 14.02.2019 is annexed herewith and marked as Annexure F. That in response to the same, the AR of the accused submitted his reply on 20.02.2019, stating that M/s Skylabs ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 3 of 11 Technologies is a sole proprietorship concern and they have been filling the return of income under the PAN AMSPP0828K of the proprietorship concern by clubbing the income of M/s Skylabs Technologies under the PAN ABVFS4262] throughout the previous years. A copy of response dated 20.02.2019 is annexed herewith and marked as Annexure G. That considering the overall facts and circumstances of the case, the Ld. Sanctioning Authority vides sanction dated 20.03.2019accorded sanction to prosecute the accused for the offence punishable u/s 276CC for A.Y. 2013- 2014. That since accused has willfully and deliberately tried to avoid the filing of return of income and filed the return of income belatedly, a case is made out against him. That the present complaint is to convict and punish the accused u/s, 276-CC of Income Tax Act.
2. Notice of accusation u/s 251 Cr.P.C was framed against the accused no.1 & 2 on 16.12.2020 to which they pleaded not guilty and claimed trial.
3. The complainant examined Ms. Laxmi Barthwal, as CW1 to substantiate the allegations levelled against the accused. She stated that she was posted as ITO in Ward-54(1), New Delhi. That the accused no.1 was required to file return of income for assessment year 2013-2014, but it was not filed and accused no.1 & 2 having turnover from the services reported in Service Tax return amounting to Rs.2,31,45,401/-, from TDS return Professional or Technical fees amounting to Rs.77,10,083/- and from TDR return payment to contractor amounting to Rs.22,12,323/-, therefore, they were required to file ITR for the assessment year 2013-2014. That notices dt.09.03.2018, 12.03.2018 & 14.02.2019 were issued to the assessee as to why they had not filed ITR, copy of the same are Ex.CW1/A to Ex.CW1/C respectively. In response to the notices issued by the department, accused ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 4 of 11 had filed response dt.15.03.2018, 20.02.2019, same are Ex.CW1/D & Ex.CW1/E respectively. That on the basis of notices and reply, assessee had failed to give any reasonable cause as to why the return of income for assesssment year 2013-14 was not filed and on the basis of the same, submission of proposal was sent to the PCIT, Delhi-18 on 09.03.2018. Same is now Ex.CW1/F. That after submission of the proposal, a notice under Section 279 of The IT Act for launching prosecution was issued on 09.03.2018 to the accused by the then PCIT-18, New Delhi. That another notice dated 12.03.2018 was again issued by the then PCIT-18, New Delhi namely Sh. Jayant Mishra and the accused responded to the said notice vide his reply dated 15.03.2018. Thereafter, another notice dated 14.02.2019 was issued by the then PCIT-18 namely Sh. Prashant Bhushan and she can identify his signature which is at point A on already Ex. CW 1/C. That the said notice was responded by the accused through its reply dated 20.02.2019 and after considering the entire material as placed before PCIT- 18, New Delhi the PCIT-18, New Delhi passed the sanction / authorization under Section 279(1) of The IT Act for filing complaint under Section 276CC read with Section 278B of The IT Act for institution of criminal complaint against the accused M/s. Skylabs Technologies and its partner namely Sh. Santosh Kumar Pandey. That she can identify the signature of Sh. Prashant Bhushan at point A and B and the original sanction is now exhibited as Ex. CW 1/G. That thereafter, she filed the present complaint, which is now exhibited as Ex. CW 1/H bearing his signature at point A. That the accused committed a willful default and did not file the return of income by the due date for the Assessment Year 2013-2014. 3.1 During her cross examination, she stated that she has not been involved in the sanctioning process after the submissions of proposal. She ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 5 of 11 voluntarily stated that the proposal was not submitted by her and it was submitted by her Predecessor Ms. Vandana Ajay Sharma.
To a specific question, she stated that she cannot answer whether she obtains the PAN records of the accused firm before proceeding for the sanction and the proposal was made by her Predecessor.
4. Upon conclusion of CE, statement of accused u/s 313 Cr.P.C recorded on 11.10.2023. Accused submitted that he wish to lead DE.
5. Accused examined DW1 Deepak Sharma in his defence, he stated that he is a Chartered Accountant and he is working as Director (Operation) in the company called Skylabs Solutions India Private Limited. That he is aware of Skylabs Technologies because its proprietor Mr. Santosh Kumar Pandey is a founder of Skylab Solution India Private Limited and the proprietorship Skylabs Technologies was active till 31.03.2015. That he prepared the replies to the show cause notices received from the complainant department. That there is a PAN Card in the name of Skylabs Technologies bearing PAN No.ABVFS4262J and he is not aware who applied for this PAN Number. That the PAN Number of the proprietor Sh. Santosh Kumar Pandey is AMSPP0828K. That the PAN Number ABVFS4262J was mentioned on some of the invoices sent by Skylabs Technologies to its client and the clients therefore deposited TDS on the said invoices against PAN No. ABVFS4262J. That the bank account of Skylabs Technologies was maintained at ICICI Bank, Green Park Branch. That PAN Number AMSPP0828K was linked with the said account. That the business of the accused was being done through the PAN No. AMSPP0828K and returns have been filed against all the income of Skylabs Technologies against this PAN. That there is no income of Skylabs ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 6 of 11 Technologies against which return has not been filed. That inadvertently the other PAN Number has been issued to Skylabs Technologies and Skylabs Technologies has always been the proprietorship concern of Santosh Kumar Pandey and has never been a partnership firm. That the PAN Number ABVFS4262J has been erroneously issued by treating Skylabs Technologies as a partnership firm. That all the income received by Skylabs Technologies against the invoices for which TDS have been deposited, has been reflected in the returns filed on the PAN Number of Santosh Kumar Pandey. That all the income of Skylabs Technologies is the income of Santosh Kumar Pandey and if Skylabs Technologies was a partnership firm, some of income would have gone to the other alleged partner, however, that is not the case. That Skylabs Technologies or its proprietor have not gained any monetary benefits as a result of filing returns against PAN No.AMSPP0828K and not against PAN No.AMVFS4262J.
5.1 During his cross examination, he stated that he was looking after the financials of accused, again said, he was looking after the financials of M/s. Skylabs Solutions India Private Limited. That he filed the reply to the show cause notice issued to M/s. Skylabs Technologies, being the Director (Operation) of M/s. Skylab Solution India Private Limited, again said, he was already authorized by Sh. Santosh Kumar Pandey to respond to the show cause notice issued M/s. Skylabs Technologies. That a proprietorship firm can not have more than one PAN.
5.2 To a specific question, he replied that Sh. Santosh Kumar Pandey was not aware that this particular PAN was issued. It was brought to his knowledge only in February 2018 when he had looked for reasons relating to income tax demand against his personal PAN. During this period, he had also updated detail of authorized person, mobile number and e-mail in Sh.
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Santosh Kumar Pandey's ITD database which had details of his account officer who had already left the company in 2014. As he had updated the detail, immediately within two days, they were approached by ITO Ms. Vandana Sharma and explained about the case of Skylabs Technologies. He had met Ms. Vandana Sharma and submitted his response which was his first submission. That he had not specifically written to them but mentioned in his submissions to guide us to deal with this matter of wrong issuance of second PAN. That the PAN is not issued by the Jurisdictional Assessing Officer and Ms. Vandana Sharma was the Jurisdictional Assessing Officer. That the Jurisdictional Assessing Officer and even the Appellate Authority has no jurisdiction to issue a new PAN/modified PAN or even an order of cancellation/revoking the PAN. That the invoices having the PAN ABVFS4262J were issued by the Accounting Staff of the accused. He voluntarily stated that Sh. Santosh Kumar Pandey is technocrat and has also been dependent on his Accounting and Finance Staff. That none of these invoices were signed by him. That the payment against the said invoices was received in the M/s. Skylabs Technologies.
5.3 To a specific question, he stated that there was no action taken against the Accounting Staff or any other person for issuance of invoices on the alleged wrong PAN and as the Accounting Staff had already left by then and also the CA Firm who had audited accounts for those years was no more associated with us. Again said, with the company. That he is associated with the M/s Skylabs Solution India Private Limited from June 2017. That he does not have any personal knowledge about the fact as stated by him that the invoices were issued with the wrong PAN by the Accounting Staff. He voluntarily stated that he has checked few invoices and found that they did mention the different PAN. That no written communication was made to ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 8 of 11 the previous CA Firm to find out the reason of issuance of second PAN. That the show cause notice Ex.CW1/C clearly mentioned that the same has been issued for non filing of return of income for the A.Y. 2013-14 and they have responded to the same after having knowledge that the show cause notice has been issued for the A.Y. 2013-14. They have not taken any step to cancel the second PAN till date as they are not aware about the procedure of cancellation of PAN, especially after issuance of show cause notice. That the show cause notice in the present case was issued only for non filing the return of income and not for issuance of second PAN/wrongly obtained/ issued PAN. That he is conniving with Mr. Santosh Kumar Pandey or that he has been facilitator in getting/obtaining the other PAN. That the other PAN was being misused by Sh. Santosh Kumar Pandey for obtaining undue benefit on the basis of the said PAN. That no return of income has been filed for the PAN ABVFS4262J. He denied that being the CA, he knows the procedure of obtaining and cancellation of the PAN. He further denied that no step to get the other PAN cancelled was taken deliberately.
6. I have heard the arguments and perused the record.
7. It is submitted by Ld. SPP that the prosecution has proved its version beyond reasonable doubt by examining CW1 Ms. Laxmi Barthwal (the then ITO-ward 54(1)) who has proved notices Ex CW1/A to Ex CW1/C sent to the accused on 09.03.2018, 12.03.2018 and 14.02.2019 respectively as to why accused No.1 and 2 have not filed ITR. CW1 has also proved the reply of accused ExCW1/D and ExCW1/E. It is submitted that CW1 has also proved the sanction passed by PCIT-18 ExCW1/G. It is submitted that the accused is liable to be punished for non filing of ITR & punished accordingly.
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8. Ld. Counsel for accused persons has vehemently opposed the submissions of Ld. SPP and has submitted that the accused persons are required to be acquitted. It is submitted that accused no.1 is a proprietorship concern of which accused no. 2 is a proprietor. It is submitted accused no.2 has its PAN AMSPP0828K and all taxes due on both accused no.1 and accused no.2 have been paid when Accused no.2 has filed its return of income through his PAN AMSPP0828K. It is submitted that previous accountant of accused no.2 has applied & obtained another PAN on the name of Proprietorship firm, wherein it is mistakenly mentioned that accused no.1 is a Partnership firm. It is submitted that by another mistake, the employees of accused no.2 have mistakenly mentioned PAN of the proprietorship firm as a result of which, the office of complainant got information regarding the use of PAN ABYFS4262J. It is submitted that as on date there is nо outstanding tax demand by the complainant against either accused no.2 or against accused no.1 proprietorship concern. It is submitted that for the prosecution of the accused u/s 276 CC of the IT Act, the complainant is required to show that the there is outstanding tax amount of more than Rs 3000/- against the accused, however admittedly no such outstanding has been alleged by the complainant. It is vehemently submitted that the present complaint and sanction for prosecution is for non filing of Return of Income u/s 276CC of Income Tax Act and for not for having two PANs. It is submitted that the accused is required to be acquitted by operation of Proviso (ii) (b) to section 276CC of the IT Act 1966.
9. Ld SPP in rebuttal arguments has submitted that as per show cause notice dated 14.02.2019 ExCW1/C issued to the accused persons, a notice u/s 142 IT Act has been issued to the accused persons and the said proviso ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 10 of 11
(ii) (b) to section 276CC of Income Tax Act does not apply to section 142 of the Income Tax Act as its operation is limited only to section 139 of the Income Tax Act. On enquiry, Ld SPP has fairly conceded that no notice u/s 142 of Income Tax Act has been placed on record. It is submitted that the issuance of notice u/s 142 of Income Tax Act has been admitted by the accused persons in their reply dated 20.02.2019 ExCW1/E to show cause notice dt.14.02.2019 ExCW1/C. It is further submitted that the contentions advanced by Ld. counsel for accused are not material and trust worthy as accused no.2 has not yet applied for cancellation of second PAN nor the status of accused no.1 has been rectified from Partnership to Proprietorship. It is submitted that not applying for cancellation of subsequent PAN allegedly got issued by mistake as well as not filing the proof of the fact that accused no.1 is a proprietorship concern during DE, shows the ill intention of the accused and the fact that the second PAN has been purposely obtained for some illegal reasons best known to the accused.
10. From the perusal of record and consideration of arguments advanced on behalf of both the sides, it is noticed that accused has got issued two PANs and the second PAN is still active, which has not yet been cancelled by the department and yet not the accused has applied for the cancellation of the same. Further there is also no doubt that through notice ExCW1/C mentions the issuance of notice u/s142 of Income Tax Act by the department to the accused, however, same has neither been proved by filing a copy of same and exhibiting the same, nor the witness from the department has stated in his examination in chief. In view of the same, the court shall be proceeding ahead on the consideration as if notice u/s 142 of Income Tax Act has not been issued by the complainant to the accused. It is ITO Vs. M/s Skylabs Technologies CC No. 10158/2019 11 of 11 admitted case of the complainant that no assessment has been done by the department in the present case till date. As a result of which the complainant is not able to state or show to the court how much amount of tax is outstanding. The amount of tax which is outstanding is important and material to be stated by the complainant as proviso (ii) (b) to section 276CC of Income Tax Act provides that no prosecution is to be initiated u/s 276CC of Income Tax Act for failure to furnish in due time the return of income u/s 139(1) of Income Tax Act if the tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid and any tax deducted at source does not exceed three thousand rupees.
11. As a result of not filing and proving the assessment order against the accused persons (qua PANABYFS4262J or PAN AMSPP0828K), the complainant has not able to state and prove that the amount of outstanding tax against the accused persons is more than Rs.3000/- and case seem to be covered by proviso (ii) (b) to section 276CC of Income Tax Act. Accordingly, the accused no.1 & 2 are acquitted for the offence u/s 276CC of Income Tax Act.
12. Accused is at liberty to collect the copy of judgment.
Announced in Open Court on 26th April, 2024 MAYANK MITTAL ACMM(Special Acts), CENTRAL TIS HAZARI COURTS DELHI ITO Vs. M/s Skylabs Technologies CC No. 10158/2019