Bombay High Court
Shastri Sales Corporation And Others vs Income-Tax Officer on 11 September, 1995
Equivalent citations: 1996CRILJ449, [1998]229ITR628(BOM)
Author: R.M. Lodha
Bench: R.M. Lodha
JUDGMENT R.M. Lodha, J.
1. By this criminal revision application filed under section 397, Criminal Procedure Code, read with section 482 of the Criminal Procedure Code, 1973, the applicants are seeking to challenge the correctness of the order dated March 1, 1995, passed by the Chief Judicial Magistrate, Nagpur, and it is further prayed that proceedings in Criminal Case No. 916 of 1988 pending in the court of the Chief Judicial Magistrate, Nagpur, be quashed and set aside.
2. The facts giving rise to this criminal revision application are not disputed. Petitioner No. 1, Shastri Sales Corporation, Maskasath Itwari, Nagpur, is a partnership firm, and petitioner No. 2, Himmatlal, S/o. Udhavji Chandarana, and petitioner No. 3, Smt. Jasmatiben, W/o. Jitendra Chandarana, are the partners of the said firm. Petitioner No. 1, Shastri Sales Corporation (for short "assessee") is also an income-tax assessee and for the assessment years 1983-84 and 1984-85, the assessing authority found that the assessee has concealed the particulars of its income and has furnished inaccurate particulars. For the assessment year 1983-84, it was found by the assessing authority that the assessee has concealed particulars of its income to the extent of Rs. 5,608 and for the assessment year 1984-85 it was found that the assessee has concealed income to the extent of Rs. 21,091. Consequently, the assessing authority initiated proceedings under section 271(1)(c) of the Income-tax Act, 1961 (for short "the I.T. Act"), and for the concealment of income in the assessment year 1983-84, by the other dated March 29, 1988 (annexure "B"), the Income-tax Officer, Circle III(1), Nagpur, passed an order under section 271(1)(c) of the Income-tax Act, and imposed minimum penalty of 100 per cent. of the tax sought to be evaded on the concealed income. Similarly, by the order dated March 28, 1988 (annexure "B-1"), the said Income-tax Officer passed an order under section 271(1)(c) for the concealment of income in the assessment year 1984-85 and imposed the minimum penalty of 100 per cent. of the tax sought to be evaded on the concealed income. The assessee challenged both the orders (annexure "B" and annexure "B-1"), passed by the Income-tax Officer, Circle III(1), Nagpur, under section 271(1)(c) of the Income-tax Act, before the Deputy Commissioner of Income-tax (Appeals), Nagpur. During the pendency of the appeals filed by the assessee before the Deputy Commissioner challenging the orders passed under section 271(1)(c) of the Income-tax Act, the assessing authority also made a complaint on December 30, 1988, against the assessee-firm and its partners under sections 276C,277 and 278, Income-tax Act, based on the same facts which resulted in the penalty order under section 271(1)(c), Income-tax Act (annexures "B" and "B-1"), praying that the accused persons be proceeded against for the offences under sections 276C, 277 read with section 278 of the Income-tax Act and after trial be convicted and sentenced according to law. The Chief Judicial Magistrate issued process to the present applicants, i.e., the assessee-firm and its partners. Subsequently, the Deputy Commissioner of Income-tax (Appeals) allowed both the appeals filed by the assessee on May 31, 1989, and set aside the penalty orders passed on March 29, 1988, and March 28, 1988, for the assessment years 1983-84 and 1984-85, respectively. It may be noted that when the Deputy Commissioner of Income-tax (Appeals) allowed the appeals filed by the assessee against the penalty orders and set aside the penalty orders (annexures "B" and "B-1"), the applicant made an application for their discharge before the C.J.M., Nagpur, on December 18, 1989. The application for discharge was contested by the Department and in the reply it was urged that the common order issued by the Deputy Commissioner of Income-tax (Appeals) are under challenge before the Income-tax Appellate Tribunal. In this view of the matter the C.J.M. kept the application for discharge pending. The Department challenged the orders passed by the Deputy Commissioners of Income-tax (Appeals), Nagpur, passed on May 31, 1989, before the Income-tax Appellate Tribunal and the Tribunal after hearing the representative for the Revenue and counsel for the assessee dismissed the appeals filed by the Department by the common order dated September 23, 1992. Dissatisfied with the common order passed by the Income-tax Appellate Tribunal, rejecting the appeals filed by the Department, an application under section 256(1) of the Income-tax Act was filed by the Department before the Income-tax Appellate Tribunal for referring the questions of law arising from the said order to the High Court. However, the Income-tax Appellate Tribunal did not find any merit in that application and held that the order was concluded on facts and no question of law arose from the said order warranting reference to the High Court. It is not disputed by counsel for the Revenue before me that the orders passed by the Income-tax Appellate Tribunal on September 23, 1992, whereby it maintained the order passed by the Deputy Commissioner of Income-tax (Appeals) setting aside the penalty orders dated March 28, 1988, and March 29, 1988, have attained finality. After the penalty order passed by the concerned Income-tax Officer on March 29, 1988, and March 28, 1988, stood set aside finally up to the Income-tax Appellate Tribunal, the assessee and its partners who were accused persons in the complaint filed before the Chief Judicial Magistrate, Nagpur, prayed for their discharge on the basis of the final order passed by the Income-tax Appellate Tribunal, Nagpur Bench, Nagpur, quashing the orders of penalty passed by the concerned Income-tax Officer. The said application for discharge filed by the accused-petitioners had been dismissed by the Chief Judicial Magistrate, Nagpur, by its order dated March 1, 1995, giving rise to the present Criminal Revision Application No. 88 of 1995 under section 397 read with section 482, Criminal Procedure Code.
3. Mr. Charde, learned counsel appearing on behalf of the petitioners, strenuously urged that the foundation of the complaint filed by the respondent under sections 276C and 277 read with section 278 of the Income-tax Act against the accused petitioners in the Court of the Chief Judicial Magistrate, Nagpur, was the penalty orders passed by the Income-tax Officer under section 271(1)(c) and since the said orders passed by the Income-tax Officer under section 271(1)(c) have been set aside by the Deputy Commissioner of Income-tax (Appeals), Nagpur, and this was confirmed by the Income-tax Appellate Tribunal, the foundation of the complaint ceased to survive and not only, therefore, the accused persons were entitled to discharge, but the entire criminal proceedings and the complaint were liable to be quashed and set aside. In support of his contention, learned counsel relied upon Premier Breweries Ltd. v. Deputy CIT [1994] 207 ITR 871 (Ker), Mohamed I. Unjawala v. Asst. CIT [1995] 213 ITR 190 (Mad), Banwarilal Satyanarain v. State of Bihar [1989] 179 ITR 387 (Patna), Parkash Chand v. ITO [1982] 134 ITR 8 (P & H) and Kanshi Ram Wadhwa v. ITO [1984] 145 ITR 109 (P & H).
4. On the other hand Mr. Dawle, learned counsel for the Revenue, appearing on behalf of the respondent-complainant submitted that the penalty proceedings under section 271(1)(c) of the Income-tax Act, and the prosecution of the assessee under sections 276C and 277 read with section 278 of the Income-tax Act are distinct and separate and even if the penalty proceeding under section 271(1)(c) were quashed by the Deputy Commissioner of Income-tax (Appeals) and confirmed by the Income-tax Appellate Tribunal and though the question of quashing of penalty proceedings under section 271(1)(c) against the petitioners has attained finality yet, there is no prohibition in prosecuting the complaint filed by the respondent complainant under sections 276C and 277 read with section 278 of the Income-tax Act. In support of his contention, learned counsel for the respondent-complainant relied upon the decision of the Delhi High Court in Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO [1986] 158 ITR 496.
5. Learned counsel for the respondent-complainant has not disputed the correctness of the contentions of learned counsel for the accused petitioners that the penalty orders passed by the concerned Income-tax Officer against the accused petitioners under section 271(1)(c) of the Income-tax Act, for the assessment years 1983-84 and 1984-85 came to be quashed and set aside by the Deputy Commissioner of Income-tax (Appeals) on May 31, 1989, and as a matter of fact prior thereto, the respondent-complainant lodged the complaint against the accused-petitioners for the offence punishable under sections 276C and 277 read with section 278 of the Income-tax Act. There is also no dispute that the common orders passed by the Deputy Commissioner of Income-tax (Appeals) on May 31, 1989, quashing the penalty orders under section 271(1)(c) has been maintained by the Income-tax Appellate Tribunal, Nagpur Bench, Nagpur, and an application filed by the Department under section 256(1) of the Income-tax Act, for making a reference to the High Court on the questions of law also came to be rejected by the Income-tax Appellate Tribunal by its order dated March 22, 1993, observing that the order passed by the Income-tax Appellate Tribunal dated September 23, 1992, did not involve any question of law and was concluded on facts. It also appears on record as observed that after the Deputy Commissioner of Income-tax (Appeals) allowed the appeals filed by the assessee setting aside the orders passed by the Income-tax Officers under section 271(1)(c) the assessee and its partners made an application for discharge. This application filed by the accused persons on December 18, 1989, for discharge came to be contested by the respondent-complainant before the Chief Judicial Magistrate, Nagpur, filing the reply that though the Deputy Commissioner of Income-tax (Appeals) allowed the appeals filed by the assessee setting aside the orders under section 271(1)(c), yet the Department has preferred an appeal before the Income-tax Appellate Tribunal against the orders passed by the Deputy Commissioner of Income-tax (Appeals) and since the matter is pending adjudication before the Income-tax Appellate Tribunal, the question of concealment of income is sub-judice and, therefore, the accused persons cannot be discharged on the basis of the orders passed by the Deputy Commissioner of Income-tax (Appeals). However, after the submission of the application on December 18, 1989, as observed above, the appeals pending before the Income-tax Appellate Tribunal came to be decided and the common order passed by the Deputy Commissioner of Income-tax (Appeals) was maintained and thus the penalty orders passed by the Income-tax Officer and quashed by the Deputy Commissioner of Income-tax (Appeals) attained finality on rejection of the appeals filed by the Department against the orders of the Deputy Commissioner of Income-tax (Appeals).
6. In the aforesaid background and admitted facts, the legal position may be surveyed.
7. In Parkash Chand v. ITO [1982] 134 ITR 8, the Punjab and Haryana High Court while dealing with a similar question observed thus :
"that where the Income-tax Appellate Tribunal ultimately examined the material and arrived at the finding that there was no proof that the assessee has concealed the income and has furnished inaccurate particulars and cancelled the penalty, the criminal proceedings against the assessee could not continue and were liable to be quashed".
8. The aforesaid view was followed by the Punjab and Haryana High Court in Kanshi Ram Wadhwa v. ITO [1984] 145 ITR 109 as well and M. M. Punchhi J. as he then was, held that (headnote) :
"Where the imposition of penalty has faltered there was no case to launch a criminal prosecution against the assessee."
9. It was thus held that when there was no case for sustenance of penalty, it equally would not be a case for criminal prosecution. Consequently, the criminal complaint filed against the assessee in that case was quashed.
10. In Banwarilal Satyanarain v. State of Bihar [1989] 179 ITR 387, the Patna High court also followed the view of the Punjab and Haryana High Court and held that where, in the penalty proceedings, the final fact-finding authority under the Income-tax Act, who has expert knowledge of the subject, has deleted penalty in its entirety after having been satisfied that the assessee has furnished good and sufficient reasons for failure to deduct and/or pay the tax within time, the prosecution thereafter of the assessee would not be justified (page 398) :
"A question now arises whether, in a penalty proceeding, where an authority under the Act who has expert knowledge of the subject has recorded a finding that the assessee had furnished good and sufficient reasons for failure to deduct and/or pay the tax, within time, and dropped the penalty proceeding or deleted the same, as the case may be, it can be said that he is still liable to be prosecuted under section 276B of the Act ? Can a criminal court, in spite of a finding by the statutory authority under the Act that the assessee furnished good and sufficient reasons for not deducting and paying the tax within time, take a different view and hold that the failure on the part of the assessee was without reasonable cause or excuse ? My answer to the question posed by me is emphatically in the negative. Keeping in mind the language of section 276B, vis-a-vis sections 201 and 221, I am clearly of the view that the process of a criminal court should not be allowed to be abused in cases where an assessee has succeeded in proving good and sufficient reasons for his failure before an authority under the Act in a penalty proceeding. Of course, the penalty proceeding must be dropped or penalty must be deleted on the merits and not on any technical ground. In a case where the penalty proceeding is dropped or penalty imposed is deleted not on the merits but for any technical reason, e.g., that the authority who had initiated the penalty proceeding had no jurisdiction initiate the proceeding, the same will not affect the prosecution.
In the case in hand, during the pendency of the criminal prosecution, the penalty imposed by the Income-tax Officer and partly approved by the Appellate Assistant Commissioner has been deleted in its entirety by the Commissioner of Income-tax on the merits, after having been satisfied that good and sufficient reasons were furnished by the assessee for not deducting and paying the tax within time. Learned counsel appearing on behalf of the petitioners has placed reliance upon a decision of the Supreme Court in Uttam Chand v. ITO [1982] 133 ITR 909. In that case, an assessee-firm was granted registration by the Income-tax Officer and one of the partners of the firm was one Janak Rani. The said Janak Rani, one of the alleged partners, asserted before the Income-tax Officer that the assessee-firm was not a genuine firm and that she was not its partner. She also denied her signature on the partnership deed. The Income-tax Officer accepted the assertion of the said Janak Rani and held that the firm was not a genuine one and, accordingly, he cancelled the registration of the firm and the cancellation was affirmed by the Appellate Assistant Commissioner in appeal, but on further appeal being taken, the Income-tax Appellate Tribunal set aside the orders of the Income-tax Officer and the Appellate Assistant Commissioner, referred to above, and held that the firm was a genuine one. In the meantime, the Revenue filed a complaint case against the partners of the assessee-firm for their prosecution under section 277 of the Act. After the order of the Tribunal, the accused persons moved the learned Magistrate for discharging them from the criminal case which prayer was rejected, whereafter the matter was taken to the High Court of Punjab and Haryana for quashing the prosecution in the exercise of the inherent powers of the court under section 482 of the Code. The High Court refused to quash the prosecution on the ground that a criminal court is to independently go into the allegation mentioned in the complaint on the basis of evidence to be adduced before it by the Revenue as prosecutor and it is open to the accused persons to take any defence to prove their case. Thereafter, when the matter was taken to the Supreme Court, at the time of grant of special leave to prefer appeal, the appeal was allowed and the criminal prosecution of the accused persons was quashed. The order of the Supreme Court runs thus (page 910) :
'Heard counsel, special leave granted. In view of the finding recorded by the Income-tax Appellate Tribunal that it was clear on the appraisal of the entire material on the record that Shrimati Janak Rani was a partner of the assessee-firm and that the firm was a genuine firm, we do not see how the assessee can be prosecuted for filing false return. We, accordingly, allow the appeal and quash the prosecution. There will be no order as to costs.' From a bare perusal of the aforesaid judgment of the Supreme Court and the judgment of the Punjab and Haryana High Court which has been also reported in the very same volume of Income Tax Reports at page 911 (Volume 133), it would be clear that the apex court has laid down the law that in cases where an authority under the Act having expert knowledge, after considering the entire materials on the record, has come to a conclusion in favour of the assessee, he cannot be prosecuted under the provisions of the Act for the same default. In my view, if, in such circumstances, an assessee cannot be prosecuted, his prosecution which has already been launched prior to the ultimate order by the statutory authority under the provisions of the Act by which the penalty was deleted on merits, cannot continue further and the same has got to be discontinued from that stage."
11. The Kerala High Court in the case of Premier Breweries Ltd. v. Deputy CIT [1994] 207 ITR 871, also held that where the Income-tax Appellate Tribunal has accepted the explanation furnished by the assessee and the penalty proceedings have been quashed, continuation of criminal proceedings would only be waste of time for the criminal court and prosecution deserves to be quashed. The Kerala High Court thus held (page 872) :
"There is no dispute that in the penalty proceedings the Income-tax Appellate Tribunal accepted the explanation and quashed the order imposing penalty on the aforesaid count. But standing counsel for the Revenue contended that since the assessment became final by treating the aforesaid claim as baseless, prosecution could be sustained notwithstanding the finding made by the Income-tax Appellate Tribunal in penalty proceedings.
Learned counsel for the petitioners cited the decision of the Punjab and Haryana High Court in Parkash Chand v. ITO [1982] 134 ITR 8. It was a similar case in which prosecution proceedings were initiated against an assessee for filing false returns. But pending the criminal proceedings, the Income-tax Appellate Tribunal examined the materials in penalty proceedings and arrived at a finding in favour of the assessee. In view of that finding the High Court quashed the prosecution proceedings. Bains J. relied on the decision of the Supreme Court in Uttam Chand v. ITO [1982] 133 ITR 909. That is a case where the Income-tax Appellate Tribunal set aside an order passed by the Income-tax Officer cancelling the registration of a firm. On its basis the assessee sought to have the prosecution proceedings quashed. The Supreme Court accepted the contention and quashed the proceedings. In Kanshi Ram Wadhwa v. ITO [1984] 145 ITR 109 (P & H), M. M. Punchhi J. (as he then was), quashed a similar prosecution proceeding on the premise that with the annulment of the penalty proceedings there was no case to launch a criminal prosecution against an assessee. The learned judge repelling the contention that the criminal court has to arrive at an independent finding de hors the annulment of the penalty proceedings, pointed out that 'the court's time is precious and is not meant to be employed for proceedings which are directionless'."
12. A similar view has been expressed by the Madras High Court in the case of Mohamed I. Unjawala v. Asst. CIT [1995] 213 ITR 190 and after taking into consideration a large number of decisions, the Madras High Court observed that where the Tribunal has quashed and set aside the penalty proceedings, the findings of fact recorded by the Tribunal had to be accepted by the criminal court and on that basis the prosecution was liable to be quashed and the complaint filed against the assessee should not be allowed to be proceeded with further.
13. Thus, there is consensus amongst High Courts that where the penalty proceedings have been quashed and the final fact-finding authority under the Income-tax Act has accepted the contention of the assessee that the discrepancy in income was a bona fide mistake or there was a reasonable and sufficient explanation for not showing the said income in the return, there is no justification in proceeding with the complaint and prosecution cannot be allowed to be continued after the penalty proceedings have been finally quashed. The reason is obvious that the basis and foundation of the complaint under sections 276C and 277 read with section 278 of the Income-tax Act is the concealment of the income and/or furnishing of inaccurate particulars of income by the assessee and that also resulted in the penalty orders under section 271(1)(c). When the penalty order for concealment is itself quashed by the appellate authority under the Act or the Income-tax Appellate Tribunal and the said order has attained finality, the question of proceeding further with prosecution before the criminal court would not be justified. Moreover, the criminal court has to bestow due regard to the result of proceedings under the Income-tax Act since it has a material bearing on the question in issue before the criminal court. The Income-tax Appellate Tribunal under the Income-tax Act is the final authority on facts and unless the said finding of fact suffers from any error of law or gives rise to any question of law, the said finding of fact recorded by the Income-tax Appellate Tribunal is unassailable. There is no dispute in the present case that the common orders passed by the Income-tax Appellate Tribunal on September 23, 1992, have attained finality and are not pending in reference before the High Court. In the orders passed by the Income-tax Appellate Tribunal, while disposing of the appeals, the Tribunal has held that the Department has failed to prove that the assessee has concealed the particulars of income or has furnished inaccurate particulars. The said finding recorded by the Income-tax Appellate Tribunal having attained finality, the very basis of the complaint filed by the Department on December 30, 1988, vanishes and cannot survive.
14. It is true that the penalty proceedings under section 271(1)(c) and the prosecution under sections 276C and 277 read with section 278 of the Income-tax Act are distinct and separate and may co-exist. It is also true that there is no question of double jeopardy in such cases and the existence of one proceeding or the other proceeding is no bar to any of them, inasmuch as an assessee can be levied penalty as well as prosecuted for concealment of income and/or furnishing of inaccurate particulars. However, when the final authority under the Income-tax Act, itself does not find any justification in the penalty order for the alleged concealment of income or furnishing of inaccurate particulars by the assessee or the Tribunal holds that the Department has failed to establish in the penalty proceedings that the assessee concealed the income or furnished inaccurate particulars, prosecution of an assessee cannot be permitted on the self same facts. At this stage, the judgment of the Delhi High Court cited by learned counsel for the Revenue may be examined. Learned counsel for the respondent-complainant has strongly relied upon the following observations made in the case of Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO [1986] 158 ITR 496 (Delhi) (page 500) :
"The provisions with regard to criminal prosecutions in cases of economic offences or violations of income-tax law are of recent growth and their desirability and/or necessity was felt because of rampant attitude a defiance displayed by some affluent sections of the society. The pernicious effect on the economy of the country that evasions and violations were playing naturally called for sterner measures. These prosecutions have thus been made permissible in spite of the already existing provisions with regard to levy of penalties by the income-tax authorities. The Legislature's wisdom, therefore, to open up prosecutions and dire consequences has a sound basis and cannot be doubted. There is no question of double jeopardy in such cases. The scope and purport of penalty proceedings and prosecutions are separate and independent. The existence of the one or the other is no bar to any of them. They are co-extensive. An assessee can be levied penalty as well as punished by prosecution."
15. The aforesaid observations are well founded, but the question is when the penalty orders have been quashed by the final authority under the Income-tax Act whether, on the self same facts contained in the complaint, the assessee could be prosecuted. The Delhi High Court itself has considered this question in Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO [1986] 158 ITR 496 and observed thus (page 501) :
"However, the question arises in cases where penalties have been quashed on the same facts and circumstances and the gravamen of the criminal charge is the same which was under purview in penalty proceedings. Can a finding given on those very facts by specialised bodies who have the technical expertise of the particular branch of law and are accustomed to administer the same everyday should be entirely ignored ? It is more in the context of the present cases, where the primary consideration is whether the petitioners had without reasonable cause failed to effect the deposits of tax deducted at source with the Government. The corresponding provisions under section 201(1) of the Income-tax Act are rather somewhat stringent when they speak of 'without good and sufficient reasons'. Section 276B, however, speak of 'without reasonable cause or excuse'. A cause may appear to be 'reasonable', though still may not be 'good and sufficient'. Sufficiency goes farther than mere reasonableness. The distinction is of course thin. The Legislature has rather, apart from sufficient cause, now enjoined that it should also be good cause for not depositing the money where defaults have occurred. The standard of proof and explanation and the onus to be discharged by the assessee is much higher and heavy. In a criminal case, however, the dictates of law just demand the requirement of reasonable cause, i.e., what appeals ex facie to reason, which is much milder.
Moreover, penalty proceedings under the income-tax law are primarily quasi-criminal in nature. During their course, the rigour of the criminal law that a prosecution case must entirely stand on its own legs and not on the weakness of the defence version does not essentially operate with that infallibility. However, the onus on the prosecution in criminal matters is far rigorous and must be proved beyond reasonable doubt. The defence version to be satisfactory and plausible in criminal trial is much lighter and is just weighed in the realm of preponderance of probability. In case, therefore, in any penalty proceedings under the income-tax law, an assessee has been able to establish 'good and sufficient reason' for the default before the Commissioner, and then before the Tribunal, can it not be said that qua the criminal trial at least on the same facts and circumstances, 'reasonable cause' should be treated to exist ? I am making these observations in the context of those provisions, where the provisions of law both under the penalty provisions and prosecution are similar.
The observations of the learned trial court in the present case that there was no clear finding by the Commissioner of Income-tax that there was sufficient and good cause with the assessee not to effect deposits is plainly not borne out. Rather, a perusal of that order brings out that he was satisfied that there existed sufficient and good cause with the assessee. The two reasons which prevailed with him were the financial stringency of the assessee and that the interest payments were not in cash but merely notional by way of credit entries in their accounts.
From the side of the complainant in the present cases, it has been urged that the balance-sheet of the company showed that the current liabilities were reduced by about Rs. 3.6 lakhs as compared to the preceding year. From this circumstance, it was urged that the company was not lacking in funds and if it could eliminate part of those liabilities, it could have as well paid the dues of the Revenue. However, the reduction of those liabilities were at different stages in the year and do not essentially reflect the state of affairs at the time when deposits were to be effected with the Revenue. In any case, the entire conspectus of facts and circumstances were before the Commissioner and the Appellate Tribunal and if they have after consideration come to the view that good and sufficient reason existed with the assessee not to make deposits with the Revenue within time, that finding cannot be lightly ignored and even though strictly may not be res judicata, is a valuable piece of evidence and overwhelming circumstance and a consideration which must weigh with the criminal court while assessing the reasonable cause prevailing with the assessee."
16. Thus, it is apparent that the facts stated in the Sequoia Construction Co. P. Ltd.'s case [1986] 158 ITR 496 (Delhi), and relied upon by learned counsel for the Revenue, do not help the prosecution and rather support the contentions raised by learned counsel for the petitioners.
17. The gravamen of the charge in the complaint filed by the complainant-respondent is the concealment of income and/or furnishing of inaccurate particulars by the assessee for the assessment years 1983-84 and 1984-85 and on the self-same facts penalty orders were passed by the Income-tax Officer on March 29, 1988, and March 28, 1988, respectively. The said orders of penalty passed by the concerned Income-tax Officer under section 271(1)(c) of the Income-tax Act have been quashed by the Deputy Commissioner of Income-tax (Appeals) by its common order dated May 31, 1989, and the said order has been confirmed by the Income-tax Appellate Tribunal by its common order dated September 23, 1992. In my view, therefore, there is absolutely no justification for continuing with the prosecution of the accused petitioners pursuant to the complaint filed by the respondent-complainant on December 30, 1988. The Income-tax Appellate Tribunal has already held in its order dated September 23, 1992, that the Department has failed to prove that the assessee has concealed the particulars of any income or furnished inaccurate particulars for the assessment years 1983-84 and 1984-85 and the penalty orders were not justified. Though at the time of the filing of the complaint it cannot be said that the said complaint was misconceived because the orders under section 271(1)(c) had not attained finality, but now since the matter has attained finality at the stage of the Income-tax Appellate Tribunal and it has been held that accused-petitioners were not guilty of concealment of income and/or furnishing of inaccurate particulars of income and there was no justification in imposing penalty on them, further proceedings on the complaint cannot be permitted and the applicants have become eligible for discharge.
18. In the result, this criminal revision application is allowed and the order passed by the Chief Judicial Magistrate, Nagpur, dated March 1, 1995, is quashed and set aside. The applicants are discharged and further proceedings in Criminal Complaint Case No. 916 of 1988 pending in the court of Chief Judicial Magistrate, Nagpur, are dropped. Rule is made absolute in the aforesaid terms.