Delhi District Court
Chintels India Ltd. And Ors vs Ito (Manoj Kumar) on 11 August, 2025
IN THE COURT OF SH. ABHISHEK GOYAL, ADDITIONAL
SESSIONS JUDGE-03, CENTRAL DISTRICT, TIS HAZARI
COURTS, DELHI
CNR No.: DLCT01-008701-2019
CRIMINAL REVISION No.: 401/2019
1. CHINTELS INDIA LTD.,
Chintels House,
A-11, Kailash Colony,
New Delhi-110048.
2. SHRI. ASHOK SOLOMON,
R/o. 44, Golf Links,
New Delhi-110003.
3. SHRI. PRASHANT SOLOMON,
R/o. 44, Golf Links,
New Delhi-110003. ... REVISIONISTS/
PETITIONERS
VERSUS
INCOME TAX OFFICE,
Shri. Manoj Kumar,
ACIT, Central, Cir-17,
ARA Centre, 3rd Floor,
Jhandewalan Extension,
New Delhi-110055. ... RESPONDENT
Date of filing : 04.07.2019
Date of institution : 05.07.2019
Date when judgment was reserved : 02.07.2025
Date when judgment is pronounced : 11.08.2025
JUDGMENT
1. The present revision petition has been filed under Sections 397 of the Code of Criminal Procedure, 1973 (hereinafter, referred to as 'Cr.P.C./Code') seeking setting aside of the order dated 18.04.2019 (hereinafter referred to as the 'impugned order'), passed by the learned Additional Chief Metropolitan Magistrate (Special Acts)/Ld. ACMM (Special Acts), Central, Tis Hazari Courts, Delhi (hereinafter referred to CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 1 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:07:10 +0530 as the 'Ld. ACMM/Ld. Trial Court'), in case bearing; 'Income Tax Office v. Chintels India Ltd. & Ors., CC No. 3775/2017', emanating in a complaint proceedings, initiated in terms of the provisions under Sections 276C(1)/277 read with Section 278B of the Income Tax Act, 1961 (hereinafter referred to as 'IT Act') by the Income Tax Office (hereinafter referred to as the 'complainant/respondent'). Pertinently, by virtue of the impugned order the Ld. Trial Court, dismissed the application moved on behalf of the revisionists under Section 245 Cr.P.C., seeking dropping of proceedings in the present case.
2. Succinctly, the genesis of the proceedings against the revisionist was the aforenoted complaint, initiated on behalf of the respondent by its Assistant Commissioner of Income Tax, Central Cir.-17, New Delhi, asserted to be duly authorized by the respondent to initiated prosecution against M/s Chintels India Ltd., Chintels House, A-11, Kailash Colony, New Delhi-110048/revisionist no. 1 (hereinafter referred to as the 'company/revisionist no. 1') and its directors/revisionist nos. 2 and 3, by virtue of sanction dated 23.02.2017, issued under Section 279(1) of the IT Act. Notably, the said complaint averred the commission of offences under Sections 276C(1)/277 read with Section 278B of the IT Act by the company and the revisionist for the Assessment Year/AY 2009-10. Notably, under the complaint it has been inter alia averred that search and seizure proceedings/operations were conducted by/on behalf of the respondent, in terms of the provisions under Section 132 of IT Act, at the business premise of revisionist no. 1 on 26.03.2010 vide authorization dated 25.03.2010. Consequently, notice under Section 153-A of the IT Act, dated 10.03.2011, was issued to CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 2 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:07:14 +0530 revisionist no. 1, seeking return of income for the AY 2009-10. Thereupon, in response to the said notice on 28.04.2011, the revisionists declared the income for the said period as Rs. 4,45,32,988/- (Rupees Four Crores Forty Five Thirty Two Thousand Nine Hundred and Eighty Eight only), which was signed by revisionist no. 3. Pertinently, the complaint further chronicles that earlier, the return of income for AY 2009-10 was filed on 30.09.2009, under Section 139(1) IT Act, duly signed and verified by revisionist no. 3. Thereupon, notice under Section 143(2) IT Act, dated 21.07.2011 was issued and served upon the revisionists, besides, notice under Section 142(1) of IT Act dated 19.08.2011, was issued on the revisionists, calling details for the purpose of completion of assessment. Markedly, the complaint further chronicles that revisionist no. 1, acting through revisionist nos. 2 and 3, claimed/asserted a software purchase to a tune of Rs. 4,24,24,550/- (Rupees Four Crores Twenty Four Lakhs Twenty Four Thousand Five Hundred and Fifty only) during AY 2008-09 from M/s. Macro Infotech Ltd. (hereinafter referred to as 'Macro/MIL') and claimed depreciation on it, which was found to be bogus claim. Correspondingly, as per the respondent, the depreciation on the said purchase was claimed as 'written down value' in the return of income filed for AY 2009-10, whereupon the instant complaint along with separate complaint for the AY 2008-09 was filed by/on behalf of the respondent. 2.1. As per the respondent, during the course of assessment proceedings for AY 2008-09, it was revealed that the revisionists claimed depreciation on the purchase of software of Rs. 4,24,24,550/- (Rupees Four Crores Twenty Four Lakhs Twenty Four Thousand Five Hundred and Fifty only) from CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 3 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:07:18 +0530 MIL/Macro, despite the fact that revisionists did not purchase any software from MIL, controlled by one, Tarun Goyal, rather, had only obtained bogus bill in respect of the said alleged purchase. Markedly, as per the respondent, search proceedings had been earlier conducted, wherein Sh. Tarun Goyal, admitted in his statement recorded on oath under Section 132(4) IT Act that he was providing accommodation entry and bogus bills to a number of persons/entities. Correspondingly, further enquiries are avowed to have revealed that MIL had no expertise in software business, besides the said entity was not even found in existence at the address, furnished. Concomitantly, revisionist no. 1 is proclaimed to have been unable to produce any evidence regarding the use of software, allegedly obtained from MIL. It is further narrated under the complaint that the revisionists were issued questionnaire along with notice under Section 142(1) IT Act, dated 19.08.2011 regarding MIL and its transactions with the revisionists for the relevant assessment year and also to prove the genuineness of the transaction made. However, it is the respondent's case that the revisionists failed to provide any satisfactory answer/failed to establish the requisite information.
As per the respondent, the revisionists claimed expenditure of Rs. 4,24,24,550/- (Rupees Four Crores Twenty Four Lakhs Twenty Four Thousand Five Hundred and Fifty only) as capital expenditure during AY 2008-09 and claimed depreciation on the opening written down value of the bogus software in AY 2009- 10, to a tune of Rs. 3,39,39,640/- (Rupees Three Crores Thirty Nine Lakhs Thirty Nine Thousand Six Hundred and Forty only), on which, depreciation of Rs. 1,35,75,856/- (Rupees One Crore Thirty Five Lakhs Seventy Five Thousand Eight Hundred and CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 4 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:07:23 +0530 Fifty Six only) was claimed at the rate of 40% (Forty percent) on the opening written down value. Ergo, it is the case of the respondent that by claiming false depreciation, the revisionists, reduced their true income to tax and willfully attempted to evade tax on the said amount. Consequently, the assessment was framed under Section 153-A read with Section 143(3) IT Act vide order dated 30.12.2011 at a total taxable income of Rs. 5,81,08,845/- (Rupees Five Crores Eighty one Lakhs Eight Thousand Eight Hundred and Forty Five only), by adding the false bogus depreciation claimed Rs. 1,35,75,856/- (Rupees One Crore Thirty Five Lakhs Seventy Five Thousand Eight Hundred and Fifty Six only). Concomitantly, it is avowed under the complaint that by virtue of the said assessment, a tax demand payable against the revisionists came to Rs. 53,75,814/- (Rupees Fifty Three Lakhs Seventy Five Thousand Eight Hundred and Fourteen only), as per the Demand Notice under Section 156 IT Act.
2.2. Further, as per the respondent, it was subsequently determined that the disallowance of depreciation to a tune of Rs.
1,35,75,856/- (Rupees One Crore Thirty Five Lakhs Seventy Five Thousand Eight Hundred and Fifty Six only) was erroneously computed, wrongly considering the rate of 40% (forty percent), instead of 60% (sixty percent) rate. Ergo, vide order dated 11.05.2016, issued under Section 154 IT Act, the disallowance on account of depreciation on software was re-worked at Rs. 1,78,18,311/- (Rupees One Crore Seventy Eight Lakhs Eighteen Thousand Three Hundred and Eleven only). Relevantly, the addition(s)/assessment order for AYs 2008-09, 2009-10, 2010-11 were challenged by the revisionists before the Commissioner of CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 5 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:07:27 +0530 Income-Tax (Appeals) (hereinafter referred to as 'CIT(A)'). However, CIT (A) vide its order dated 18.07.2012, upheld the disallowance of the depreciation claimed on the software, allegedly purchased from MIL. Undeterred, the revisionists filed a further appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'ITAT'), whereupon ITAT vide its common order dated 10.03.2016 for AYs 2008-09, 2009-10 and 2010-11, also upheld the disallowance of depreciation on software purchased by the revisionists. However, upon a further challenge before the Hon'ble High Court of Delhi, the Hon'ble High Court vide its order dated 19.07.2017, whilst, upholding the assessment order for AYs 2009-10 and 2010-11, quashed the order of ITAT for AY 2008-09. Notably, in the meanwhile, penalty u/s 271(1)(c) IT Act was levied on the revisionists pursuant to order dated 20.03.2014, for the revisionists' willfully concealing the particulars of their true income and furnishing inaccurate particulars. Subsequently, show cause notices dated 08.08.2016 were issued by/on behalf of the respondent to the revisionists, individually, which was responded by the revisionists on 23.08.2016. Markedly, under their reply(ies) the revisionists asserted that revisionist no. 1 had made genuine purchase of software and that the ledger extracts in respect of software purchase, copy of invoice, details of payment made to the suppliers of software, etc., were duly filed in the course of assessment and the disallowance of depreciation made was illegal. Successively, upon the grant of sanction under Section 279(1) IT Act on 20.09.2016, the instant proceedings came to be initiated before the Ld. Trial Court.
2.3. Markedly, upon such complaint being filed by the CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 6 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:07:31 +0530 respondent before the Ld. Trial Court, vide order dated 11.04.2017, Ld. Trial Court took cognizance of the offences, specified under the complaint and issued summons against the accused, i.e., the revisionists herein. Subsequently, an application came to be filed before the Ld. Trial Court by/on behalf of the revisionists on 16.05.2017, seeking dropping of proceedings, which was disposed of by the Ld. Trial Court vide order dated 18.04.2019/impugned order, inter alia under the following observations;
"...1. Vide this order, I shall dispose of an application filed on behalf of accused for dropping of the proceedings in the present case.
2. It is stated that the Income Tax Appellate Tribunal vide order dt. 31.03.17 was pleased to direct deletion of penalties levied. Hence, no offence survives under the Income Tax Act. Ld. Counsel for accused argued that levy of penalties and prosecution U/s 276 C are simultaneous and once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution U/s 276 C is automatic. He further argued that after filing of the application U/s 245(2) Cr.P.C., the CBDT vide its circular No. 3/2018 dt. 11.07.18 revised its monetary limits for filing of appeals by the department before ITAT, Hon'ble High Courts and SLP before the Hon'ble Supreme Court of India and as per the said circular the monetary limits also applies retrospectively to all the pending appeals. He further argued that the complainant had filed an appeal before the Hon'ble High Court of Delhi against the order passed by Hon'ble ITAT whereby it was pleased to quash the penalty imposed by CIT vide order dt. 10.08.18 in terms of the CBDT circular/notification no. 3/2018 and as per the said notification/circular, no further appeals are permissible or maintainable as per law, and hence the order passed by Hon'ble ITAT has attained finality and as such the present proceedings against the applicants are liable to be dropped.
*** *** ***
9. Heard. Perused. In order dt. 19.07.17 of Hon'ble High Court, the question involved was "whether in the facts and circumstances of the case the ITAT was correct in law in confirming the CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 7 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:07:35 +0530 addition on account of the claim of depreciation on software." This question was framed in view of the appeal filed by the accused no. 1 challenging the order dt. 10.03.16 of ITAT for the Assessment year 2009-10 & 2010-11. In the order dt. 10.03.16 ITAT had noted that there was no purchase of any hardware corresponding to the extent of purchase of the software and how the software was involved and used was not demonstrated by the accused. It further noted that some irregularities with respect to use of the software and waiver of compensation for destruction of software. ITAT for AY 2009-10 & 2010-11 confirmed the disallowance of depreciation on software.
10. Hon'ble High Court after considering the submissions of both the parties had held that as far as assessment of year 2008-09 is concerned since there was not notice to the accused U/s 143(3) of the Act before 30.09.09 and in view of CBTD circular No. 549 dt. 31.10.89, the ITAT was in error in holding that the assessment for AY 2008-09 should be treated as pending and it should have been treated as final in respect of which no scrutiny is to be started and decided the appeal with respect to AY 2008-09 in favour of the accused herein.
11. However, with respect to AY 2009-10 & 2010-11 Hon'ble High Court has held that ITAT has reexamined every shred of evidence to come to a clear conclusion that the assessee was not able to demonstrate the genuineness of the purchase of the software. It further noted the story of accused that software has been handed over to Sobha was also not substantiated by any documentary evidence or even otherwise. It finally held that the concurrent opinion of AO, CIT(A) and ITAT to the effect that purchase of software was infact a bogus transaction and accordingly not entitled to depreciation.
12. The argument of Ld. Counsel that in view of the judgment of K.C. Builders the present prosecution cannot continue is humbly rejected as in the order dt. 19.07.17 of Hon'ble High Court has categorically held that the concurrent opinion of AO, CIT(A) and ITAT to the effect that purchase of software was infact a bogus transaction and accordingly not entitled to depreciation. No such fact has been adjudicated in the judgment of K.C. Builders (supra). Moreover, in K.C. Builders it was specifically mentioned that if the acts of evasion of tax could be described as culpable then the prosecution to continue. In the present case there are CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 8 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:07:39 +0530 clear averments supported with documentary evidence of a willful attempt to evade tax and making of false statement by the accused persons and therefore, judgment of K.C. Builders is not applicable. Similarly, the judgment of I.T.O. Vs. Rajan & Co. is also not applicable.
13. In view of the above discussion, I am satisfied that the present application is misconceived as it is moved on wrong assumptions and is therefore not maintainable. Same stands dismissed ..."
(Emphasis supplied)
3. Ld. Counsel for the revisionists submitted that the impugned order was passed by the Ld. Trial Court on mere conjunctures, surmises and in contravention of the settled cannons of law, deserving to be set aside at the outset, as suffering with gross illegality. In this regard, Ld. Counsel further submitted that the impugned order was passed by the Ld. Trial Court on mere assumptions and no sound and/or cogent reasons have been delineated under the said order. As per the Ld. Counsel, the impugned order, demonstrates complete non- application of mind by the Ld. Trial Court as there is no whisper under the impugned order, qua the findings given by ITAT under its detailed order dated 31.03.2017, dismissing the penalty proceedings qua the revisionists and on the basis of which, the application for dropping of prosecution was moved by/on behalf of the revisionists before the Ld. Trial Court. Ld. Counsel further submitted that the Ld. Trial Court, ought not have dismissed the revisionists' said application for the reason that vide its own order dated 02.06.2017, Ld. Trial Court directed the respondent's counsel to clarify the finality, if any, attained by the order dated 31.03.2017 of ITAT, quashing penalty, admittedly passed before the order of cognizance in respect of the complaints filed before the Ld. Trial Court. Correspondingly, as per the Ld. Counsel for CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 9 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:07:43 +0530 the revisionist, the respondent filed a copy of order dated 19.07.2017 in respect of the appeal filed by revisionist no. 1 before the Hon'ble High Court of Delhi and which was allowed for AY 2008-09, however, upholding the assessment for AYs 2009-10 and 2010-11, and which errenously formed the basis of dismissal of the revisionists' application. Ld. Counsel for the revisionist further asserted that the Ld. Trial Court erred in distinguishing the decision of the Hon'ble Apex Court in K.C. Builders & Anr. v. The Assistant Commissioner of Income Tax, Crl. Appeal Nos. 212-213/1998, dated 28.01.2004: AIR Online 2004 SC 638, as not applicable to the facts of the present case. In this regard, it was further submitted that the manner in which the said dictate was interpreted by the Ld. Trial Court defeats the purpose of the said dictate, besides acts as grossly prejudicial to the interest of the revisionist. Correspondingly, it was submitted by the Ld. Counsel that the Ld. Trial Court even failed to give reason for not accepting the decision of the Hon'ble High Court of Delhi in the case of ITO v. Rajan & Co., (2007) 291 ITR 345 (Del.), which clearly held that once the penalty for concealment has been quashed, no prosecution lies. In this regard, Ld. Counsel strenuously asserted that it is an admitted fact that penalty proceedings, initiated against the revisionist in the instant case, were taken up under the provision of IT Act and once the same were finally dropped, the prosecution of the revisionist on the same issue cannot be permitted, which fact has not been considered by the Ld. Trial Court, while passing the impugned order.
3.1. Ld. Counsel for the revisionists further submitted that the Ld. Trial Court failed to appreciate the difference CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 10 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:07:46 +0530 between the points of addition which was disallowed on the assessment side in the case of the revisionists for the relevant year and imposition of penalty. Correspondingly, as per the Ld. Counsel, while passing the impugned order, not only were the relevant orders of ITAT and the Hon'ble High Court of Delhi, deliberately avoided, rather, as per the Ld. Counsel, the Ld. Trial Court even failed to appreciate that no useful purpose would be served by continuing revisionists' prosecution, after quashing of the penalty by the final fact-finding authority under the IT Act and more particularly, after the withdrawal of the appeal by the respondent from the Hon'ble High Court. In this regard, Ld. Counsel vehemently asserted that under the instant fact and circumstances the respondent would neither be able to examine the penalty officer who imposed the penalty for alleged concealment of income against revisionist no. 1 for the relevant year nor the penalty order passed by him be exhibited as evidence against the revisionists, making the entire prosecution infructuous. Even otherwise, as per the Ld. Counsel, the order of ITAT, dismissing/setting aside/dropping the penalty proceedings against the revisionists was passed not on mere technicalities, as otherwise contended by the Ld. Counsel for the respondent. On the contrary, Ld. Counsel for the revisionists vehemently argued that the said order was passed, after duly considering the merits of the case and the material brought forth on record. Further, as per the Ld. Counsel for the revisionists, there is a failure on the part of the respondent to withdraw prosecution launched against the petitioner after ITAT quashed the penalty imposed for alleged concealment for all the relevant years and withdrawal of the appeal filed against them before the High Court. As per the Ld. CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 11 of 31 Digitally signed by ABHISHEK GOYAL ABHISHEK Date: GOYAL 2025.08.11 15:07:50 +0530 Counsel, not only have the said facts been not considered by the Ld. Trial Court under the impugned order, though, specifically brought by way of additional points, besides, the respondent acted in utter violation of the instructions No. 5256 dated 25.10.1995 issued by the Central board of direct taxes, inter alia directing the competent authorities/officers of the respondent to bring the relevant facts and change of circumstances to the notice of the departmental prosecution counsel, who, in turn, is obligated to inform the same to the trial court of the changed circumstances. Ergo, in light of the foregoing facts and circumstances and submissions made, Ld. Counsel for the revisionists entreated that the present petition/proceedings be allowed and while setting aside the impugned order, the prosecution/proceedings against the revisionists before the Ld. Trial Court be directed to be dropped. In support of the said contentions, reliance was placed upon the decision(s) in; Uttam Chand v. ITO (1982) 133 ITR 909 (SC).
4. Per contra, Ld. SPP for the respondent submitted that the impugned order was passed by the Ld. Trial Court after due appreciation of the facts and circumstances of the present case and judicial precedents, deserving no interference by this Court. It was further submitted that all the relevant facts and circumstances were duly considered by the Ld. Trial Court, besides the impugned order was passed by the Ld. Trial Court, wary of the settled judicial precedents and the material brought forth. Ld. SPP for the respondent further submitted that no illegality/infirmity can be attributed to the impugned order, so as to subject the same to any interference by this Court under this Court's exercise of its revisional jurisdiction. In particular, Ld. CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 12 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:07:54 +0530 SPP for respondent noted that the penalty proceedings were dropped by ITAT vide its order dated 31.03.2017, merely on technical grounds and not on merits. Ergo, as per Ld. SPP, dropping of proceedings on the said ground does not arise. Correspondingly, Ld. SPP for the respondent submitted that the said order dated 31.03.2017 of ITAT could not be contested/taken to its logical conclusion by further challenge before the Hon'ble High Court of Delhi, owing to circular issued by CBDT bearing no. 3/2018 dated 11.07.2018, which was given retrospective effect. As per Ld. SPP, the said circular provides for monetary limits for filing of appeal by the respondent/department before ITAT, Hon'ble High Court and the Hon'ble Supreme Court vis-à-vis tax effect involved in such matters. Therefore, it was submitted that, though, the order of ITAT was challenged before the Hon'ble High Court, however, the same was withdrawn by virtue of the limitation imposed under the said circular. Accordingly, Ld. SPP for the respondent prayed that the instant petition deserved to be dismissed as grossly malicious and amounting to abuse of process of law. In support of the said contentions, reliance was placed upon the decision(s) in; Radheyshyam Kejriwal v. State of West Bengal & Anr., Crl. Appeal No. 1097/2003, dated 18.02.2011 (SC).
5. The arguments of Ld. Counsel for the revisionists and that of Ld. SPP for the respondent have been heard as well as the records, including the Ld. Trial Court records and the written submissions filed as well as the case laws relied upon by the parties, thoroughly perused.
6. Significantly, in order to appreciate the scope and purview of analysis of the revisionists' entreaty in the present CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 13 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:08:01 +0530 petition, it would be apposite to outrightly make a reference to the relevant provisions under law, in particular that under Section 397 Cr.P.C.1, as under;
"397. Calling for records to exercise of powers of revision - (1) The High Court or any Sessions Judge may call for and examine the record of any proceeding before any inferior Criminal Court situate within its or his local jurisdiction for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior Court, and may, when calling for such record, direct that the execution of any sentence or order be suspended, and if the accused is in confinement, that he be released on bail or on his own bond pending the examination of the record.
Explanation - All Magistrates, whether Executive or Judicial, and whether exercising original or appellate jurisdiction, shall be deemed to be inferior to the Sessions Judge for the purposes of this sub- section and of Section 398.
(2) The powers of revision conferred by sub-
section (1) shall not be exercised in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceeding..."
(Emphasis supplied)
7. Pertinently, from a perusal of the aforesaid, it is quite evident that the revisional jurisdiction of this Court can be agitated either suo motu or an application of parties, solely in the cases where there is a palpable error, non-compliance of the provision of law, decision of Trial Court being completely erroneous or where the judicial decision is exercised arbitrarily. In this regard, reliance is placed upon the decision of the Hon'ble 1 Pari materia to Section 438 of Bharatiya Nagarik Suraksha Sanhita, 2023/BNSS, which provides; "438. Calling for records to exercise powers of revision-(1) The High Court or any Sessions Judge may call for and examine the record of any proceeding before any inferior Criminal Court situate within its or his local jurisdiction for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior Court, and may, when calling, for such record, direct that the execution of any sentence or order be suspended, and if the accused is in confinement that he be released on his own bond or bail bond pending the examination of the record.***Explanation--All Magistrates, whether Executive or Judicial, and whether exercising original or appellate jurisdiction, shall be deemed to be inferior to the Sessions Judge for the purposes of this sub-section and of Section 439.***(2) The powers of revision conferred by sub-section (1) shall not be exercised in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceeding...." (Emphasis supplied).
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 14 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date: 2025.08.11 15:08:05 +0530
Supreme Court in Amit Kumar v. Ramesh Chander, (2012) 9 SCC 460, wherein the Hon'ble Court while explicating the various contours of the provision under Section 397 Cr.P.C. observed as under:
"12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error and it may not be appropriate for the court to scrutinise the orders, which upon the face of it bears a token of careful consideration and appear to be in accordance with law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes, but are merely indicative. Each case would have to be determined on its own merits.
13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much advanced stage in the proceedings under the CrPC."
(Emphasis supplied)
8. Similarly, the Hon'ble High Court of Delhi in V.K. Verma v. CBI, 2022 SCC OnLine Del 1192 , in an akin context noted as under;
"67. The revisional jurisdiction is not meant to test the waters of what might happen in the trial. The CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 15 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:08:09 +0530 Revisional Court has to consider the correctness, legality or propriety of any finding inter se an order and as to the regularity of the proceedings of the court below. While doing so, the Revisional Court does not dwell at length upon the facts and evidence of the case, rather it considers the material only to satisfy itself about the legality and propriety of the findings, sentence and order and refrains from substituting its own conclusion on an elaborate consideration of evidence. In the instant case, the Petitioner has failed to make out a case for exercise of the revisional jurisdiction since there is no patent error in the impugned order on the face of record."
(Emphasis supplied)
9. Quite evidently, it may be noted from above that the revisional jurisdiction of the higher court is quite limited and cannot be exercised in a routine manner. In fact, as aforenoted, the revisional Court can interfere only in the instances where an order of trial court was passed, unjustly and unfairly. Further, it is a settled law2 that trite law that in a case where the order of subordinate Court does not suffer from any illegality , "merely because of equitable considerations, the revisional Court has no jurisdiction to re-consider the matter and pass a different order in a routine manner." Reference in this regard is made to the decision in Taron Mohan v. State, 2021 SCC OnLine Del 312, wherein the Hon'ble High Court of Delhi expounded as under;
"9. The scope of interference in a revision petition is extremely narrow. It is well settled that Section 397 CrPC gives the High Courts or the Sessions Courts jurisdiction to consider the correctness, legality or propriety of any finding inter se an order and as to the regularity of the proceedings of any inferior court. It is also well settled that while considering the legality, propriety or correctness of a finding or a conclusion, normally the revising court does not dwell at length upon the facts and evidence of the case. A court in revision considers the material only to satisfy itself about the legality and propriety of the findings, sentence and order and refrains from 2 Juned v. State of M.P., 2023 SCC OnLine MP 4458; and Dilip Damor v. State of M.P., 2024 SCC OnLine MP
958.
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substituting its own conclusion on an elaborate consideration of evidence."
(Emphasis supplied)
10. Ergo, in the background of the foregoing, however, before proceeding further with the evaluation of the rival contentions of the parties, this Court deems it pertinent here to reproduce the relevant provisions under law/IT Act, germane for the present discourse, as under;
"271. Failure to furnish returns, comply with notices, concealment of income, etc.-(1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person-*** *** *** ***
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or
(d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits, he may direct that such person shall pay by way of penalty,-*** *** *** ***
(iii) in the cases referred to in clause (c) or clause
(d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits*** *** *** *** 276C. Wilful attempt to evade tax, etc.-(1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable, or under reports his income, under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable,-
(i) in a case where the amount sought to be evaded or tax on under-reported income exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 17 of 31
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(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and with fine...
*** *** ***
277. False statement in verification, etc.-If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable,-
(i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;
(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and with fine.
*** *** *** 278B. Offences by companies-(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub- section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-
section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. (3) Where an offence under this Act has been committed by a person, being a company, and the punishment for such offence is imprisonment and CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 18 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:08:21 +0530 fine, then, without prejudice to the provisions contained in sub-section (1) or sub-section (2), such company shall be punished with fine and every person, referred to in sub-section (1), or the director, manager, secretary or other officer of the company referred to in sub-section (2), shall be liable to be proceeded against and punished in accordance with the provisions of this Act.
Explanation-For the purposes of this section,-
(a) "company" means a body corporate, and includes-
(i) a firm; and
(ii) an association of persons or a body of individuals whether incorporated or not; and
(b) "director", in relation to-
(i) a firm, means a partner in the firm;
(ii) any association of persons or a body of individuals, means any member controlling the affairs thereof..."
(Emphasis supplied)
11. Pertinently, it is seen from a conjoint reading of the aforesaid provisions that Section 276C of IT Act envisages a prosecution in the instances where an assessee willfully attempts to evade the chargeability or imposition of tax, penalty or interest or willfully attempts to evade the payment of tax, penalty or interest, as per mandated under law. In particular, the provisions under Section 276C IT Act are meant to act as deterrent for taxpayers from engaging in any fraudulent activities, directed towards avoidance of tax paying liability. Correspondingly, it is seen from the foregoing that Section 277 IT Act provides for culpability of an individual/person, who, "...makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false...". Reference in this regard is made to the decision of the Hon'ble Punjab & Haryana High Court in Sh. R.K. Jain (Raj Kumar Jain HUF) & CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 19 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:08:24 +0530 Ors. v. Commissioner of Income-Tax & Ors., Criminal Miscellaneous No. 16294-M of 1995, dated 15.03.1996: (1996) 221 ITR 136 (P&H), wherein the Hon'ble Court, while enunciating the scope of the said provisions, noted, as under;
"...The provisions of Section 276C of the Act cover a wider field. Under Sub-section (1) of the said section any person who willfully makes any attempt in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under the Act is liable to be proceeded against. While the provisions of Section 277 of the Act render the person liable for prosecution under the Act or under any rule made thereunder or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true..."
(Emphasis supplied)
12. Here, it is further pertinent to make a reference to the provisions under Section 271(1)(c) of IT Act, germane for the present discourse, which provides for liability in the form of penalty against any person, who has concealed the particulars of his income or furnished inaccurate particulars of such income. In this regard, this Court deems it pertinent to make a reference to the decision of the Hon'ble Bombay High Court in Ventura Textiles Ltd. v. Commissioner of Income Tax, Mumbai, Income Tax Appeal No. 958/2017, dated 12.06.2020: AIR Online 2020 Bom. 853, wherein the Hon'ble Court, while cogitating on the various facets of the said provisions, remarked, as under;
"16. Since imposition of penalty is under Section 271(1)(c) of the Act, the same may be adverted to at the outset. As per this provision, if the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under the Act is satisfied that any person had concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, in addition to the tax payable by him, a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 20 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:08:28 +0530 evaded by reason of concealment of particulars of his income or furnishing of inaccurate particulars of such income.
17. The two key expressions in Section 271(1)(c) of the Act are "concealment of particulars of his income" and "furnishing inaccurate particulars of such income". These two expressions comprise of the two limbs for imposition of penalty under Section 271(1)(c) of the Act. Gujarat High Court in the case of Manu Engineering Vs. CIT, 122 ITR 306 and Delhi High Court in Virgo Marketing P. Ltd. Vs. CIT, 171 Taxmann 156 held that levy of penalty has to be clear as to the limb for which penalty is levied. If the Assessing Officer proposes to invoke the first limb, then the notice has to be appropriately marked. Similarly, if the Assessing Officer wants to invoke the second limb then the notice has also to be appropriately marked. If there is no striking off of the inapplicable portion in the notice which is in printed format, it would lead to an inference as to non- application of mind. In such a case, penalty would not be sustainable.
18. Supreme Court in Ashok Pai Vs. CIT, 292 ITR 11 observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act carry different connotations."
(Emphasis supplied)
13. Quite evidently, in the aforenoted dictate, the Hon'ble Court accentuated the importance of issuing a proper notice, by the concerned authority, articulating the ground for levy of proposed penalty, i.e., whether on the count of 'concealment of particulars of his income' or on the ground of 'furnishing inaccurate particulars of such income', failing which, it has been held that such proceedings must fail.
14. Consequently, with the foregoing understanding, this Court would now proceed with the evaluation of the merits of the present case as well as the rival contentions of the revisionists and the respondent. At the outset, this Court deems it pertinent to reiterate that Ld. Counsel for the revisionists has fervently argued CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 21 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:08:32 +0530 that once ITAT set aside the order of penalty under Section 271(1)(c) of IT Act vide order dated 31.03.2017, the prosecution of the revisionists in the instant case for the offence under Section 276C/277 IT Act, must necessarily fail. In this regard, as aforenoted, Ld. Counsel placed reliance on the decision of the Hon'ble Apex Court in K.C. Builders & Anr. v. The Assistant Commissioner of Income Tax, (Supra.), wherein the Hon'ble Court inter alia, observed as under;
"...In our opinion, the appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive finding of the Income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supercedes the order of the Assessing Officer under Section 143(3) more so when the Assessing Officer cancelled the penalty levied. In our view, once the finding of concealment and subsequent levy of penalties under Section 271(1)(c) of the Act has been struck down by the Tribunal, the Assessing Officer has no other alternative except to correct his order under Section 154 of the Act as per the directions of the Tribunal. As already noticed, the subject matter of the complaint before this Court is concealment of income arrived at on the basis of the finding of the Assessing Officer. If the Tribunal has set aside the order of concealment and penalties, there is no concealment in the eyes of law and, therefore, the prosecution cannot be proceeded with by the complainant and further proceedings will be illegal and without jurisdiction. The Assistant Commissioner of Income Tax cannot proceed with the prosecution even after the order of concealment has been set aside by the Tribunal. When the Tribunal has set aside the levy of penalty, the criminal proceedings against the appellants cannot survive for further consideration. In our view, the High Court has taken the view that the charges have been framed and the matter is in the stage of further cross-examination and, therefore, the prosecution may proceed with the trial. In our opinion, the view taken by the learned Magistrate and the High Court is fallacious. In our view, if the trial is allowed to CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 22 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:08:37 +0530 proceed further after the order of the Tribunal and the consequent cancellation of penalty, it will be an idle and empty formality to require the appellants to have the order of Tribunal exhibited as a defence document inasmuch as the passing of the order as aforementioned is unsustainable and unquestionable..."
(Emphasis supplied)
15. However, in order to properly appreciate the aforenoted contention of Ld. Counsel for the revisionists, this Court deems it pertinent to reproduce the relevant extracts from order dated 31.03.2017 of ITAT in Chintels India Ltd. v. ACIT; ITAT No. 3791/Del/2016 (AY 2008-09), ITAT No. 3792/Del/2016 (AY 2009-10) & ITAT No. 3793/Del/2016 (AY 2010-11), wherein, ITAT, while setting aside the order of penalty against the revisionists inter alia remarked as under;
"...5.2 Reverting to the facts of the present case, the AO, in the assessment orders, in the notices issued u/s 274 and in the penalty orders, has not stated the exact limb (concealment of particulars of income or furnishing of inaccurate particulars of income) under which the penalty is initiated and levied. We have very carefully considered this aspect. We have no hesitation in accepting assessee's contention that nowhere has the exact limb of penalty been specified. The Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory & Ors. (Supra) dealt with the identical issue threadbare and came to the following conclusion-*** *** *** *** 5.3. Respectfully following the law laid down by Hon'ble High Court, we are of the considered view that when the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s. 271(1)(c) of the Act is not sustainable. We are also supported in our conclusion by the Hon'ble Karnataka High Court's decision in the case of SSA Emerald Meadows (supra) against which the Department's SLP was dismissed by the Hon'ble Apex Court. In reaching this conclusion we also find support from the decision of the Hon'ble Apex Court in the case of Ashok Pai reported in 292 CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 23 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:08:42 +0530 ITR 11 (relied upon in Manjunath Cotton Ginning Factory (Supra) wherein it has been observed that concealment of income and furnishing of inaccurate particulars of income carry different meanings/connotations.
5.4 We would also like to underline the settled position of law that penalty proceedings are independent of assessment proceedings and that a mere confirmation of addition cannot be the sole ground to levy penalty. In the penalty orders, the AO has himself observed that the entire proceedings of assessments were based on a) post search enquiries
b) statement of Shri Tarun Goyal, which have been the key factors to impose the penalty u/s 271(1)(c). In the present appeals, it is undisputed that no incriminating material was unearthed during assesssee's search u/s 132 of the Act, that no independent enquiry and examination took place during assessment proceedings qua Shri Tarun Goyal and Micro Infotech Ltd, that only post search enquiries were made the basis of the entire assessment and penalty proceedings/orders, that no cross examination of Shri Tarun Goyal took place, that no effort was made to find out the status of the supplier independently, that the assessee's contention that software purchase was genuine was discounted on the basis of preponderance of probabilities and inferences, that no material was brought on record to establish that cash found its way back to the coffers of the assessee. It is apparent that no independent inquiry was made from the concerned party by issuing notices u/s 133(6)/131 and the entire foundation is laid on post search enquiries, search and seizure operation of Shri Tarun Goyal and statement of Shri Tarun Goyal. On an overall consideration of all these facts, we are inclined to agree with the Ld. AR's argument that the present case may lie in the realm of "facts not proved" but cannot fall in the realm of "facts disproved". We have gone through the orders of the co-ordinate Bench of the ITAT in the quantum proceedings confirming the additions. However, since the scales are different in penalty and quantum proceedings and penalty cannot be automatic to the confirmation of addition in the quantum proceedings, we are disinclined to agree with the contention of the department that the confirmation of the quantum by the ITAT would automatically result in confirmation of the penalty. We are of the considered opinion that mere probability can, at most, be the basis of addition but same cannot be good enough in penalty CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 24 of 31 Digitally signed by ABHISHEK GOYAL ABHISHEK Date: GOYAL 2025.08.11 15:08:46 +0530 proceedings. Further, the findings in the quantum order of the ITAT on merits do not reflect any incriminating material unearthed from the search of the assessee. This fact assumes significance because assessments were framed u/s 153A r/w S. 143(3) of the Act. Therefore, we accept the arguments of the Ld. AR and direct the AO to delete the penalties in all the three years..."
(Emphasis supplied)
16. Germane for the purposes of present discourse to refer the relevant extracts from the decision of the Hon'ble Supreme Court in Radheyshyam Kejriwal v. State of West Bengal & Anr., (Supra.), wherein the Hon'ble Court, while dealing with the dichotomy of two sets of dictates governing concurrent adjudication and criminal proceedings, explicated the law, in the following terms;
"...19. We find substance in the submission of Mr. Sharan. There may appear to be some conflict between the views in the case of Standard Charted Bank (supra) and L.R. Melwani (supra) holding that adjudication proceeding and criminal proceeding are two independent proceedings and both can go on simultaneously and finding in the adjudication proceeding is not binding on the criminal proceeding and the judgments of this Court in the case of Uttam Chand (supra), G.L. Didwania (supra) and K.C. Builders (supra) wherein this Court had taken a view that when there is categorical finding in the adjudication proceeding exonerating the person which is binding and conclusive, the prosecution cannot be allowed to stand. Judgments of this Court are not to be read as statute and when viewed from that angle there does not seem any conflict between the two sets of decisions. It will not make any difference on principle that latter judgments pertain to cases under the Income Tax Act. The ratio which can be culled out from these decisions can broadly be stated as follows:-
(i) Adjudication proceeding and criminal prosecution can be launched simultaneously;
(ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution;CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 25 of 31 Digitally signed by ABHISHEK
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(iii) Adjudication proceeding and criminal proceeding are independent in nature to each other;
(iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution;
(v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20 (2) of the Constitution or Section 300 of the Code of Criminal Procedure;
(vi) The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceeding is on technical ground and not on merit, prosecution may continue; and
(vii) In case of exoneration, however, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue underlying principle being the higher standard of proof in criminal cases.
In our opinion, therefore, the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court..."
(Emphasis supplied)
17. Understandably, it is seen from above that the law is now settled that there is no bar to the simultaneous initiation of the criminal prosecution and adjudication proceedings. However, the Hon'ble Apex Court unambiguously noted that where the party facing such concomitant proceedings is exonerated in adjudication proceeding on mere technical grounds/consideration and not on merits, criminal prosecution may continue. However, where such exoneration is premised/based on the merits, i.e., CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 26 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:08:54 +0530 where the allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue. Ergo, in light of the foregoing, when the observation of ITAT under order dated 31.03.2017 are conscientious analyzed, this Court is of the considered opinion that the penalty proceedings against the revisionists were abated/dropped on the ITAT's observation regarding non-compliance of the mandate in law. In particular, as aforenoted, ITAT, under the said order explicitly remarked that the notice issued under Section 274 IT Act, did not delineate the exact limb, i.e., 'whether concealment of particulars of income or furnishing of inaccurate particulars of income by the revisionist' , under which circumstances, the penalty was initiated and levied. In fact, ITAT, specifically remarked under the said order, "...the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s. 271(1)(c) of the Act is not sustainable..." Clearly, this Court reiterates that the finding of ITAT, setting aside the order of penalty were premised on an observation that the assessee/revisionists were not made aware of the charges levelled against them under Section 271(1)(c) of IT Act under the notice, belying the entire proceedings.
18. Indisputably, in the concluding remarks of the said order, ITAT made reference to lack of independent enquiry and examination proceedings during assessment, however, even then the conclusion of ITAT accentuated that even under such circumstances, the instant case fell in the realms of "facts not proved", in variance to "facts disproved". Ergo, under such CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 27 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:08:59 +0530 circumstances, such finding of ITAT, in the considered opinion of this Court, cannot be deemed to be determination and/or exoneration of the revisionists on the merits of the case, where the allegations were held to be not sustainable at all and the revisionists were held to be innocent by ITAT so as to abate criminal prosecution. On the other hand, this Court is in consonance with the finding of the Ld. Trial Court under the impugned order that in the order dated 19.07.2017 of the Hon'ble High Court in case bearing; Chintels India Ltd. v. Deputy Commissioner of Income Tax-Circle8; ITA 581/2016, ITA 707/2016 & ITA 731/2016, being appeals against order dated 10.03.2016 passed by ITAT for AYs 2008-09, 2009-10 and 2010-11, specifically observed and held that in so far as AYs 2009-10 and 2010-11 are concerned, concurrent opinions of AO, CIT(A) and ITAT to the effect that purchase of software was in fact a bogus transaction and accordingly not entitled to depreciation, would continue to determine the instant proceedings. Apposite at this stage to reproduce the relevant extracts from the said order of the Hon'ble High Court of Delhi as under;
"...AY 2008-09
19. The above submissions have been considered. As far as AY 2008-09 is concerned, the fact that there was no notice sent to the Assessee under Section 143(3) of the Act before the deadline, i.e., 30th September, 2009, is not in dispute. The CBDT Circular No. 549 dated 31st October, 1989 deals with such a situation. Para 5.13 thereof reads as under:
*** *** ***
22. The inevitable conclusion, therefore, in the present case, is that the ITAT was in error in holding that the assessment for AY 2008-09 should be treated as 'pending' whereas in terms of the above CBDT circular it should be treated as final in respect of which no scrutiny are to be started.
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23. Consequently as far as ITA No. 581/2016 is concerned the question framed by this Court on 27th January, 2017 is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue. The impugned order of the ITAT to the extent it negatives the plea of the Assessee is hereby set aside and the appeal is allowed.
AYs 2009-10 and 2010-11
24. Turning to the appeals for AYs 2009-2010 and 2010-11 the short question involved is whether the Assessee was able to demonstrate that it was the Assessee which, in fact, purchased the software for a value of over Rs. 4.24 crore from MIL whose address has not been able to be verified by the AO.
25. The Court finds that the ITAT has re-
examined every shred of evidence to come to clear conclusion that the Assessee was not able to demonstrate the genuineness of the purchase software. Further the story put forth by the Assessee that the software having been handed over to Sobha was also not substantiated by any documentary evidence or even otherwise. On facts, therefore, the concurrent opinions of the AO, CIT(A) and the ITAT to the effect that the purchase of the software was, in fact, a bogus transaction not entitled to depreciation cannot be said to suffer from any legal infirmity warranting interference.
26. In ITA Nos. 707/2016 & 731/2016, the question framed is answered in the negative, i.e., in favour of the Revenue and against the Assessee. These two appeals of the Assessee are accordingly dismissed..."
(Emphasis supplied)
19. Consequently, in light of the foregoing, when the facts of the present case are scrupulously analyzed in light of the aforesaid observations of the Hon'ble High Court in its order dated 19.07.2017 vis-à-vis finding of ITAT under its order dated 31.03.2017, in the considered opinion of this Court, Ld. Trial Court did not commit any illegality and/or impropriety under the impugned order, while dismissing the revisionists' application seeking dropping of proceedings/criminal prosecution under Sections 276C(1)/277 read with Section 278B of IT Act.
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 29 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:09:06 +0530
Needless to reiterate that the finding of ITAT under order dated 31.03.2017 setting aside the order of penalty qua the revisionists is not premised on the merits of the case. On the contrary, vide order dated 19.07.2017 the Hon'ble High Court decidedly remarked that in respect of AYs 2009-10 and 2010-11, ITAT re- examined every shred of evidence to come to a clear conclusion that the assessee/revisionist was not able to demonstrate the genuineness of the purchase of the software. Correspondingly, in the said order, the Hon'ble High Court concurred that the revisionists version that the software had been handed over to Sobha was also not substantiated by any documentary evidence or even otherwise and that the concurrent opinions of AO, CIT(A) and ITAT to the effect that purchase of software was in fact a bogus transaction and accordingly not entitled to depreciation. Ergo, under such circumstances, Ld. Trial Court, in the considered opinion of this Court, did not commit any irregularity/illegality in dismissing the revisionists' application under Section 245 Cr.P.C., seeking dropping of proceedings before the Ld. Trial Court.
20. Conclusively, in light of the aforesaid discussion, this Court unswervingly reiterates that the Ld. Trial Court did not commit any illegality and/or impropriety under the impugned order, while dismissing the revisionists' application/entreaty for dropping proceedings against them for the aforenoted offence, in light of the facts and circumstances, arguments addressed, documents and the material placed on record, as well as judicial dictates. Accordingly, in the considered opinion of this Court, the present revision petition deserves to be dismissed as devoid of merits and is hereby dismissed. Correspondingly, the order CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 30 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:09:10 +0530 18.04.2019, passed by Ld. ACMM (Special Acts), Central, Tis Hazari Courts, Delhi in case bearing; ' Income Tax Office v. Chintels India Ltd. & Ors., CC No. 3775/2017', emanating in a complaint proceedings, initiated in terms of the provisions under Sections 276C(1)/277 read with Section 278B of IT Act, dismissed the application moved on behalf of the revisionists, seeking dropping of proceedings in the present case, is hereby upheld/affirmed. Apposite at this stage to further note that, though, this Court holds highest regard for the decisions relied upon by Ld. Counsel for the revisionists, however, the same would not, in the considered opinion of this Court come to the aid/rescue of the case put forth by the revisionists in the manner as prayed, as the facts and circumstances of the present case are clearly, distinguishable.
21. Trial Court Record along with a copy of this order/judgment be sent to the Ld. Trial Court concerned with directions to proceed as per law.
22. Revision file be consigned to record room after due compliance. Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:
2025.08.11 15:09:17 +0530 Announced in the open Court (Abhishek Goyal) on 11.08.2025. ASJ-03, Central District, Tis Hazari Courts, Delhi CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 31 of 31