Calcutta High Court
Dr. Murari Mohan Mukherjee vs Kanai Lal De And Ors. on 19 February, 1988
Equivalent citations: [1988]171ITR482(CAL)
JUDGMENT P.K. Mukherjee, J.
1. The summons and the petition of complaint in Case No. C/1323 of 1982, filed by the Income-tax Officer, " B " Ward, District VIII, Calcutta, under Section 277 of the Income-tax Act, 1961, before the Chief Metropolitan Magistrate, Calcutta, has been impugned in the instant writ petition.
2. The facts of this case, in short, are as follows :
The petitioner who is a well known surgeon in plastic surgery was originally assessed by the Income-tax Officer, " B " Ward, District VIII, Calcutta, up to the assessment year 1977-78. It is the further case of the writ petitioner that up to May 20, 1982, Sri Kanailal De, respondent No. 1, was the assessing authority and from May 20, 1982, he was transferred to the post of Income-tax Officer, "B" Ward, District IV(I), Calcutta.
3. Further, it has been alleged in the writ petition that there was some misunderstanding over the use of the lift between the writ petitioner's represeniative and the concerned Income-tax Officer, being respondent No. 1 herein, in the main block of S. S. K. M. Hospital, where the petitioner was then working as surgeon in charge of the plastic surgery department, which caused annoyance to respondent No. 1, and the said respondent No. I took vengeance in the assessment case of the writ petitioner pending before him for the assessment year 1978-79 by adding Rs. 65,000 to the total income of the petitioner. These particulars have been stated an paragraphs 10A and IOB of the writ petition.
4. On appeal, for the assessment year 1978-79, the Commissioner of Income-tux (Appeals)-X, Calcutta, by his reasoned order dated August 20, 1981, and on consideration of the facts and circumstances, deleted Rs. 52,300 out of a total Rs. 65,000, made by respondent No. 1, but the Commissioner of Income-tax (Appeals), however, retained that part of the order of the Income-tax Officer, whereby on an ad hoc estimate basis only Rs. 5,000 was retained on the basis of the assessee's lawyer's concession which, however, the petitioner did not admit on account of omission and/ or alleged understatement of the operation fees, the particulars whereof would appear from paragraph 4 of the order of the Commissioner of Income-tax (Appeals). The appellate authority also considered the case of the writ petitioner that some amount of fees was taken as " professional fees ", due to the fact that the particular operation fee was not given to the petitioner by Belle Vue Clinic. When the Income-tax Officer referred to the said operation in his assessment order, the petitioner approached Belle Vue Clinic and the Administrator of Belle Vue Clinic, by his letter dated April 10, 1981, expressed their sorrow for not supplying such information in time to the petitioner due to oversight. The said letter was duly shown to the Commissioner of Income-tax (Appeals) (i.e., the appellate authority) and the appellate authority, on consideration and appreciation of the facts, retained the addition of Rs. 5,200 on account of the parties whose names are set out in paragraph 4 of the said order of the Commissioner.
5. That apart, the appellate authority took into account the relevant fact that the petitioner performed many free operations in hospitals and there were 630 operations made on " professional grounds " (even some of them are also free because of their relations with the petitioner and because of their connections in the medical line) of which only 5 cases were omitted and one case was not to his knowledge, just as the one in the Belle Vue Clinic. Further, because of tremendous preoccupation in professional and non-professional social activities right from morning till night of the writ petitioner, there might have been and/or there have been some mistakes and/or omissions in posting in his diary, or in diarising every item of work, and the writ petitioner had no motive behind it and/ or no deliberate intention to withhold the disclosure of any income. The petitioner's further case is that the great hurry in which he had to move from one place to another, for operating on the next patient, is the only cause of such unintentional omission and/or mistake and there was no motive for any crime and there could not be any because of the pre-occupation of the petitioner.
6. Being 'dissatisfied with the above order of the appellate authority, the Income-tax Officer, being respondent No. 1, had also filed an appeal before the Income-tax Appellate Tribunal. Against the said appeal, the writ petitioner also filed a cross-objection on or about January 27, 1982, along with an additional set of grounds,
7. The Income-tax Appellate Tribunal, " A " Bench, Calcutta, by order dated May 1, 1982, dismissed both the appeal of the Income-tax Officer and the cross-objection filed by the writ petitioner.
8. It appears that the Members of the Tribunal took into consideration the entire order of the appellate authority, namely, the Commissioner of Income-tax (Appeals) and agreed with the detailed reasonings given by him. The Tribunal was of the opinion that since the Commissioner of Income-tax (Appeals) deleted the additions after considering the explanation given by the assessee and since the Commissioner of Income-tax (Appeals) had thoroughly examined the entire factual aspect of the matter, there was no necessity for interference with the order of the Commissioner of Income-tax (Appeals).
9. In these circumstances, the writ petitioner was served with the summons dated April 19, 1982, in the Complaint Case No. C/1323 of 1982, purportedly under Section 277 of the Income-tax Act (State v. Dr. Morari Mohan Mnkherjee) to appear before the Chief Metropolitan Magistrate, respondent No, 4, on June 8, 1982, which has been impugned in the instant writ petition as annexure " L "
10. Along with the said summons, a petition of complaint dated March 31, 1982, filed by Sri Kanailal De, Income-tax Officer, " B " Ward, District-VIII, Calcutta, was also served upon the writ petitioner.
11. Mr. Sanjoy Bhattacharya, learned advocate appearing for the petitioner, submitted that the launching of the prosecution at the instance of the Income-tax Officer (who has been impleaded by name) who was inimically disposed towards the writ petitioner, because of the fact stated in the petition, was unwarranted and unjustified and should be struck down by issue of appropriate writ in the nature of certiorari, firstly because the alleged prosecution has been launched purportedly under Section 277 of the Income-tax Act against the writ petitioner for a collateral purpose and on extraneous reasons, as would be evident from the facts stated hereinabove.
12. In the second place, he submitted that the criminal proceedings in the purported Complaint Case No. 1323 of 1982, is an outcome of personal vendetta, grudge and ill-feeling of respondent No. 1, who has been impleaded by name, and hence the said proceeding is liable to be quashed by the writ court straightaway without facing trial before the criminal court for want of jurisdiction.
13. Thirdly, he submitted that the condition precedent for initiation of a proceeding under Section 277 read with Section 279 of the said Act not having been satisfied in the instant case at all in view of the observations of the appellate authority, i.e., the Commissioner of Income-tax (Appeals) and further, the appeal preferred by respondent No. 1 before the Tribunal having been dismissed, respondent No. 1 had no competence or jurisdiction to proceed against the writ petitioner in respect of the purported proceeding in Complaint Case No. C/1323 of 1982, by filing a petition of complaint before the learned Chief Metropolitan Magistrate on March 31, 1982.
14. Further, after placing the order of the Commissioner of Income-tax (Appeals) and the order of the Appellate Tribunal, in detail, from pages 77, 80, 82, 83, 84 and 86 of the writ petition, Mr. Sanjoy Bhattacharya submitted that in view of the order of the Commissioner of Income-tax (Appeals)-X, Calcutta, dated August 20, 1981, and the order of rejection passed by the Income-tax Tribunal dated May 1, 1982, thereby affirming the appellate order, there was no scope for lodging any complaint against the petitioner for making a deliberate false statement and as such, the condition precedent for initiating a proceeding under Section 277 of the said Act was absolutely lacking in the present case before us. Accordingly, the petition of complaint and the summons are liable to be set aside and/or quashed.
15. Lastly, Mr. Bhattacharya has placed the petition of complaint, which has been appended to the summons which is annexure " L " to the writ petition. The petition of complaint dated March 31, 1982, was filed by Kanailal De, Income-tax Officer, respondent No. 1 herein. The said complaint was filed before the passing of the order of the Tribunal on May 1, 1982, and proceeded on an incorrect assumption as stated in paragraph 9 that the assessee by making false statement in the return of income and the statement of accounts submitted on July 31, 1978, alleged to have committed an offence under Section 277, that is, on the basis of the original finding made in the assessment order, which has been modified by the appellate authority and that original finding was not in existence at all.
16. Mr. Bhattacharya has relied on a decision of the Andhra Pradesh High Court in the case of M. Murali Mohan v. State (Income-tax Officer, Nalgonda)--[1987] 168 ITR 729. In that case, the court held that when the assessment itself was set aside by the Appellate Assistant Commissioner, it could not be said that the assessment was still continuing. In the eye of law, when the assessment order itself was not in existence, the question of maintaining prosecution did not arise. Therefore, the prosecution proceedings were liable to be set aside. In my opinion, the facts of the said case are not at par with the facts of the present case and cannot help the petitioner, as the assessment, as modified by the Commissioner of Income-tax (Appeals), is still there.
17. As the Commissioner of Income-tax (Appeals) has modified certain findings of the Income-tax Officer regarding deliberate omission and failure on the part of the assessee in the appellate order, that portion may be treated as non-existent and, as such, the prosecution launched by the Income-tax Officer on the basis of the non-existent materials cannot be allowed to be continued any further.
18. At the hearing of the writ petition on January 25, 1988, this court wanted to know the attitude of the income-tax authorities and wanted to know from Mr. Nandalal Pal, learned advocate representing the income-tax authorities, as to whether the Department is still bent upon proceeding with the prosecution case against the writ petitioner, even after the disposal of the appeal, preferred by the Income-tax Officer, by the Appellate Tribunal by order dated May 1, 1982, thereby dismissing the appeal and affirming the decision of the Commissioner of Income-tax (Appeals), as stated hereinabove, and the matter was adjourned for some time.
19. In order to show that the writ petition is not maintainable to quash the criminal proceedings, Mr. Pal, however, relied on a decision of the Supreme Court in the case of P. Jayappan v. S. K. Perumal, First ITO [1984] 149 ITR 696.
20. In my opinion, the said decision has no manner of application to the facts of the present case, as in the said case, the search was conducted in the premises of the petitioner resulting in the seizure of several documents and account books which revealed suppression of purchase of chicory seeds, existence of several bank accounts, fixed deposits, investments in the names of the petitioner's wife and daughters and several bank accounts, not disclosed in the statements filed by him along with the original return for the assessment year 1977-78, in which he had disclosed an income of Rs. 13,380. On the allegation that the petitioner had deliberately filed a " false return " and had " kept false accounts " with the intention of using them as genuine evidence in the assessment proceedings, a complaint was filed against him in the Court of the Additional Chief Judicial Magistrate for taking action against him for offences punishable under section 276 (wilful attempt to evade tax) and Section 277 (false statement in verification) of the Income-tax Act, 1961, and Section 193 (punishment for false evidence) and section 196 (using evidence known to be false) of the Indian Penal Code.
21. The Supreme Court, in dismissing the writ petition, held that the pendency of the reassessment proceedings could not act as a bar to the institution of criminal proceedings for the offences punishable under Section 276C or Section 277 of the Income-tax Act, 1961, nor could the institution of the criminal proceedings, in the circumstances, amount to an abuse of the process of the court. The High Court was, therefore, right in refusing to quash the prosecution.
22. As such, in my opinion, the aforesaid decision has no manner of application to the case before us.
23. In my view, as the petition of complaint dated March 31, 1982, filed by Sri Kanailal De, Income-tax Officer, "B" Ward, District-VIII, Calcutta, filed before the Chief Metropolitan Magistrate under Section 277 of the Income-tax Act, 1961, on the basis of his findings made in the original assessment order, which was non-existent (as modified by the appellate order passed by the Commissioner of Income-tax (Appeals) X, Calcutta, dated August 20, 1981), no cognizance can be taken by the learned Chief Metropolitan Magistrate on the basis of such non-existent material and in the result the petition of complaint and the summons should be quashed accordingly.
24. Further, by lodging the complaint, the Income-tax Officer also acted without jurisdiction.
25. In the result, the summons issued by the Chief Metropolitan Magistrate, Calcutta, and the Complaint Case No. C/1323 of 1982 dated March 31, 1982, under Section 277 of the Income-tax Act (annexure " L ") to the writ petition are quashed accordingly by issue of an appropriate writ of certiorari.
26. The rule is made absolute to the extent indicated above.
27. There will be no order as to costs.