Delhi District Court
Ito vs . M/S. Hotel Rajdoot Pvt. Ltd. & Anr. on 26 March, 2011
IN THE COURT OF SH. AJAY GUPTA, ACMM(SPL. ACTS),
CENTRAL, DELHI
CASE NO. 76/09
U/S.26 OF THE EXPENDITURE TAX ACT, 1987 R/W SECTION
278B OF INCOME TAX ACT, 1961
ITO VS. M/s. HOTEL RAJDOOT PVT. LTD. & ANR.
ORDER ON CHARGE
26.03.11
Present : Sh. Brijesh Garg, Ld. Standing counsel for the
complainant.
Sh. Praveen Sharma, Ld. counsel for accused no. 1 and
4 alongwith AR for accused no. 1.
1.Arguments on charge heard as advanced by the counsel for the complainant and counsel for the accused.
2. Brief facts as stated in the complaint are that accused no. 1 is a company and accused no. 2 to 4 are its Directors. The Directors no. 2 and 3 have expired during pendency of the present complaint. In the present complaint it has been alleged by the complainant that at the relevant time the accused no. 1 was covered under the provisions of Section 26 of Expenditure Tax Act, 1987 (hereinafter referred to as "the Act") and Section 278B of IT Act, 1961. It is stated in the complaint that as per provisions of Section 26 of the Act accused persons were liable to file its return CC No. 76/09 16 under the Expenditure Tax Act within the stipulated time which they have failed for the assessment year 199293. Thus, they are liable to the penalties provided u/s 26 of the Act. After filing the present complaint all the accused persons were summoned to face trial.
3. In pre charge evidence the complainant examined only one witness Sh. G.L. Khurana. This witness has well supported the allegations made by the complainant. This witness was cross examined at length, however this court does not find any material contradiction in his evidence.
4. During the course of arguments ld. Defence counsel submitted that complainant had floated KVSS in the year 1998 for settlement of the disputes regarding the payment of taxes. He further submitted that accused persons had availed the benefit of that scheme and deposited entire arrears of tax alongwith penalties and filed the return. Ld. Counsel submitted that since accused persons have availed the aforesaid scheme, therefore, they are entitled to the benefits of this scheme. Ld. Defence Counsel further submitted that once the accused persons have complied with the CC No. 76/09 26 requirement u/s 26 of the Act, they have got an immunity from prosecution in this regard. In support of his submission, ld. counsel for accused has relied upon the case titled as Hira Lal Hari Lal Bhagwati Vs. CBI JT 2003(4) SC 381.
5. While on the other hand ld. Counsel for complainant submitted that the accused persons cannot be given immunity from prosecution under KVSS, 1998. He submits that present complaint was filed in the year 1992/1993 and KVSS was floated in the year 1998. He submits that prosecution against the accused persons was already going on at the time of launching this scheme. He submits that this scheme was launched to give benefits to the tax defaulters against whom no prosecution was pending. Ld. Counsel for complainant further submitted that it was contemplated in the KVSS, 1998 that complainant shall not launch any prosecution against the person who pays the tax under this scheme. Thus, he submitted that immunity was from the future prosecution. He has referred to the immunity clause which reads as under:
Immunity from prosecution and imposition of penalty.
"The designated authority shall, subject to the conditions provided in section 90, grant immunity from instituting any proceeding for prosecution for any offence under any direct tax enactment or CC No. 76/09 36 indirect tax enactment, or from the imposition of penalty under any of such enactments, in respect of matters covered in the declaration under section 88."
6. Ld. counsel for complainant further submitted that even otherwise the KVSS, 1998 scheme is not applicable in the cases where prosecution has already been launched for the concealment of any direct tax. Ld. Counsel for complainant has referred to the inapplicability clause which reads as under: DIRECT TAX ENACTMENTS
a) in a case where prosecution for concealment has been instituted on or before the date of filing of the declaration under section 88 under any direct tax enactment in respect of any assessment year, to any tax arrear in respect of such assessment year under such direct tax enactment or in respect of a person who has been convicted for concealment on or before the date of filing the declaration. In support of his contentions, Ld. Counsel for complainant has relied upon the judgment titled as CBI Vs. Sashi Balasubramaniyam (2007) 289 ITR 8 (SC).
7. I have perused the record as well as considered the relevant provisions of KVSS, 1998 and the judgment relied upon by the ld. Counsel for parties. It is prima facie clear from the submissions of CC No. 76/09 46 ld. defence counsel that accused persons have committed default by not filing the return under the provision of the Act within time. It is also prima facie clear from these submissions that accused persons were liable to file return for the year 199293 which they deposited alongwith penalty under KVSS, 1998. It is also clear from the aforesaid clauses of KVSS scheme that it gives immunity to the persons against whom prosecution was not launched and immunity was not provided to the persons against whom prosecution was already going on. Nothing has been brought on record on behalf of accused to show that under KVSS, 1998, there was any promise on behalf of complainant that after receiving the tax and penalty the complainant shall withdraw the prosecution already pending. Moreover, it is clear from the above discussed inapplicability clause that the case which falls under the category of concealment of direct taxes were not covered under KVSS, 1998. Thus, this court is of the considered opinion that prima facie case is made out u/s 26 of Expenditure Tax Act r/w Section 278 of IT Act against the accused.
8. Thus, in view of aforesaid facts and circumstances it is most respectfully observed that the judgment cited by the ld. Counsel for CC No. 76/09 56 accused is not applicable in view of the peculiar facts and circumstances of the present case.
Let charges be framed against the accused. The charge is to be framed separately as the default is also alleged for different years. Therefore, separate order for each complaint case and separate charge is to be framed in each case.
At this stage charge framed separately. Charge has been accepted by the AR for accused no. 1 as well as Sh. Praveen Sharma, Ld. counsel for accused no. 4 on behalf of accused no. 4 as accused no. 4 is an old aged person of about 95 years and he is permanently exempted through him.
ANNOUNCED IN THE OPEN (AJAY GUPTA)
COURT 26 March 2011.
th
ACMM(SPL.ACTS), CENTRAL/
DELHI.
CC No. 76/09 66