Income Tax Appellate Tribunal - Nagpur
Income Tax Officer , Ward -1(5), Nagpur vs Smt.Preeti Deepak Sanghani, Nagpur on 12 July, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
NAGPUR BENCH, NAGPUR
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND
SHRI K.M. ROY, ACCOUNTANT, MEMBER
MA No. 05/NAG/2024
(Arising out of ITA No. 394/NAG/2024
(Assessment Year : 2010-11)
Income Tax Officer, Ward-1(5),
Nagpur ................ Appellant
v/s
Smt. Preeti Deepak Sanghani,
203, Amar Palace, Opp. Yashwant Stadium,
................ Respondent
Dhantoli, Nagpur.
AND
MA No. 06/NAG/2024
(Arising out of ITA No. 395/NAG/2019
(Assessment Year : 2011-12)
Income Tax Officer, Ward-1(5),
Nagpur ................ Appellant
v/s
Smt. Preeti Deepak Sanghani,
203, Amar Palace, Opp. Yashwant Stadium,
Dhantoli, Nagpur. ................ Respondent
AND
MA No. 07/NAG/2024
(Arising out of ITA No. 396/NAG/2019
(Assessment Year : 2012-13)
Income Tax Officer, Ward-1(5), ................ Appellant
ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani
MA NO.05, 06 & 07/NAG/2024
(ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019)
Nagpur
v/s
Smt. Preeti Deepak Sanghani,
203, Amar Palace, Opp. Yashwant Stadium,
................ Respondent
Dhantoli, Nagpur.
Assessee by : Shri Kapil Hirani, Advocate
Revenue by : Shri Abhay Y. Marathe, Sr. DR
Date of Hearing - 12/07/2024 Date of Order - 12/07/2024
ORDER
PER BENCH The present miscellaneous application No. 05/NAG/2024 is arising out of ITA No. 394/NAG/2019, Miscellaneous Application No. 06/NAG/2024 is arising out of ITA No. 395/NAG/2019, and Miscellaneous Application No. 07/NAG/2024 is arising out of ITA No. 396/NAG/2019 wherein the appeals filed by the revenue were dismissed on the ground of low tax effect vide order dated 31-08-2023..
2. The department has submitted as follows:
"1. In this case, the return of income was not filed by the assessee for the A.Y. 2010-11, 2011-12 and 2012-13. In this case information was received that the assessee has made huge deposits and withdrawal (mostly in cash) in the bank account held by the assessee with ICICI Bank, Ramdaspeth Branch, Nagpur. Details are given as under:
Asstt. Year Cash deposit in Bank A/c Credit in Bank A/c 2010-11 Rs. 13,76,000/- Rs.44,91,000/-
2011-12 Rs. 26,74,500/- Rs. 82,35,361/-
2012-13 Rs. 6,37,689/- Rs. 6,44,224/-
4 Reassessment proceedings: In this case, based on information received, the proceedings u/s. 147 were initiated and notice u/s. 148 was issued on 21.03.2016.
During the assessment proceedings the amount of Rs. 44,91,000/-, 82,35,361/-
Page | 2 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) and 6,44,224/- was treated as unexplained cash credits u/s 68 of the IT Act 1961 and added to the total income of the assessee vide order u/s 144 rws 147 of the I.T Act. Prosecution u/s 276C(2) of the Income Tax act, 1961 is launched/filed vide complaint No.4502 dated 20/12/2018.
5. Appellate Order of Ld. CIT(A) in respect of 147 order: Aggrieved by the order, the assessee was in appeal before CIT(A), Nagpur against the addition made of Rs. 44,91,000/-, 82,35,361/- and 6,44,224/-. Vide appellate order CIT(A) - 1/180/2016-17 dated 27.09.2019, the Id. CIT(Appeal)-1, Nagpur had partly allowed the appeal of the assessee. The Ld.CIT(A) has relied upon the decision of ITAT, Rajkot in the case of Madhuben Ashokbhai Chhatra Vs. ITO-1(3), Rajkot and two others. Keeping in view, the judgements of the Hon'ble Jurisdictional ITAT decision in the case of Sanjay Kumar Garg Vs ACIT (2012) 144 TTK 77 (ITAT Delhi), the Ld.CIT(A) established commission income by applying 0.20% net commission on the total turnover as against 1% as established by the AO in the said case and directed to delete the addition of Rs. 44,91,000/- made by the AO. Therefore, the department preferred an appeal before ITAT.
6. Appeal before the Hon'ble ITAT, Nagpur: The department had filed appeal bearing ITA No. 394/Nag/2019, ITA No. 395/Nag/2019 and ITA No. 396/Nag/2019 before the Hon'ble ITAT inter alia on the ground of:
a. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in deleting the addition of Rs. 44,91,000/- , Rs.82,35,661/- and 6,44,224/- made by the assessing officer as unexplained credits by ignoring the fact that no explanation was given by the assessee regarding sources of cash deposits.
b. The decision of the learned CIT (Appeals) deleting the addition of Rs. 44,91,000/-, 82,35,361/- and 6,44,224/- is bad in law in as much as it is evident from Sab para 5.5 of the Appellate Order that learned CIT (Appeals) chose to delete the addition, despite being not satisfied with the enquiries conducted by the Assessing Officer during assessment proceedings, ignoring the trite law that being fact finding authority the learned CIT (Appeals) ought to have got the required enquiries made to her full satisfaction. c. The decision of the learned CIT (Appeals) deleting the addition of Rs. 44,91,000/-, 82,35,361/- and 6,44,224/- is perverse on facts and bad in law as the decision is based on assessment by the Assessing Officer for A Y 2010-11 in the case of Late Deven Malviya and res- judicata is not applicable to income tax proceedings.
7. Vide appellate order dated 31/08/2023 in ITA NO. ITA No. 394/Nag/2019, the hon'ble ITAT, Nagpur Bench has dismissed the departmental appeal solely on the ground that the tax effect involved in the case is below prescribed limit of Rs. 50 lakhs. The hon'ble ITAT has dismissed the appeal without looking into any of the grounds of appeal or merits of the case.
Page | 3 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019)
8. As per the Instruction F.NO. 279/Misc. 142/2007-ITJ (Pt) dated 20.08.2018, the paragraph 10 of circular no. 3 of 2018 dated 11.07.2018 is amended. The clause (f) of the amended paragraph 10 reads as under:
"10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limit specified in para 3 above or there is no tax effect:
(f) Cases where prosecution has been filed by the Department and is pending in the Court"
9. In this case prosecution u/s 276C(2) of the Income Tax act, 1961 was launched / filed vide complaint No.4502 dated 20/12/2018. The order dated 31/08/2023 in ITA NO. ITA No. 394/Nag/2019 has a cascading effect in so far as the CJM, Nagpur has discharged the accused assessee and disposed off the complaint No. 4502 dated 20/12/2018 stating as under:
"Hon'ble ITAT has decided the issue in favour of the accused by deleting all the additions made in the assessment orders for all the above years and deleted the demand."
10. In view of the same, it is requested that the judgment and order dated 31.08.2023 passed by the Hon'ble ITAT, Nagpur bench in ITA No. 394, 395 & 396/Nag/2019 dated 31/08/2023 for AY 2010-11 in the case of Smt. Preeti Deepak Sanghani, Nagpur [PAN: BFCPS9110P], may kindly be rectified within the meaning of section 254(2) of the of the Income-tax Act, 1961 and decided on merits. It is therefore, prayed that the Hon'ble ITAT be pleased to restore the proceedings and adjudicate upon the same on merits only so that an application can be moved to restore the complaint u/s 276C(2) of the Income Tax act, 1961 before the CJM, Nagpur.
11. The department has not preferred appeal under section 260A of the Income- tax Act, 1961 in this case and it is prayed that the Hon'ble, ITAT, rectify its order in the light of above.
PRAYER : It is therefore, most humbly prayed that the Hon'ble ITAT be pleased to call for the record and proceeding in ITA No. 394, 395 & 396/Nag/2019 dated 31/08/2023 decided by the ITAT, Nagpur Bench, Nagpur vide its order dated 31.08.2023 and restore and rectify the same u/s 254(2) of the Income-tax Act, 1961 by adjudicating upon the grounds raised before it on merits"
3. We find that the complaint u/s 276(2) of the I.T. Act, 1961, was submitted before the Hon'ble Chief Judicial Magistrate, Nagpur, on 20 th December, 2018. The complaint is reproduced below.
Page | 4 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) "COMPLAINT U/S 276C (2) OF INCOME ТАХ АСТ, 1061 The Complainant above named most humbly and respectfully begs to submit, as under :-
1) That, the complainant is presently working on the post of Income Tax Officer Ward 1 (5), having its office at Room No. 502, 5th Floor, MECL Building, Seminary Hills, Nagpur. The complainant is filing the instant complaint discharging towards his official duty. The complainant is, duly authorized and entitled to file the instant complaint, as per the provisions of Income Tax Act, 1961. The complainant is Assessing Officer as defined in the provisions of Income Tax Act. The complainant is duty bound to lodge the prosecution in pursuance of the sanction granted by Principal Commissioner of Income Tax and as per provisions of Law.
2) The complainant respectfully submits that, the Parliament has enacted the Income Tax Act, 1961 to regulate the taxes on income received by the assessee. Income Tax Act provides various definition and also provided the manner in which the tax is to be assessed by assessee. The Income Tax Act further provides for penal consequences for breach of provisions mentioned in the Income Tax Act.
3) It is respectfully submitted that, the Act defines the Assessee. The Section 139 of Income Tax Act provides for filing of return of income. Every assessee is supposed to file the return of income in pursuance of the provisions of Section 139. The Act further provides that, assessee is supposed to file the correct and true return of income, disclosing the income received from various sources. It is respectfully submitted that, the assessee is duty bound to disclose the correct income received from various sources. It is the assessee who is supposed to make self-assessment of taxes and accordingly make the payment of taxes to the Department. Needless to mention that the tax received from the assessee is public money. The Officer appointed under the Income Tax Act, is duty bound to see that, the provisions of the Income Tax Act have been implemented in its true prospective.
4) As far as the facts of the case are concerned; it is pertinent to point out that, Section 276C(2) provides penal consequences for the person wilfully attempt to evade tax etc. The provision of Section 276C(2) is reproduced, as under:-
Wilful attempt to evade tax etc. 276C (1) - If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable imposable on him 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 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. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest 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 with rigorous imprisonment for a term which shall not be less than three months but Page | 5 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) which may extend to [two] years and shall, in the discretion of the court, also be liable to fine.
Explanation- For the purposes of this section a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person-
(i) Has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or
(ii) Makes or causes to be made any false entry or statement in such books of account or other documents; or
(iii) Wilfully units or causes to be omitted any relevant entry or statement in such books of account or other documents; or Causes any other circumstance to exist which will have the effect of enabling such person to evade tax, penalty or interest chargeable or imposable under this Act or the payment thereof.].
5) The accused is an assessee and files the regular return of income, however, for the assessment year in question the accused has not filed the return of income. It is respectfully submitted that, the information has been received by the Department that, the accused has received the huge deposits and made withdrawals in cash from her Bank accounts. Therefore, the case of the accused was reopened after recording reasons for the same. Approval U/S 151 (2) of Income Tax Act was accordingly received vide order dated 17/03/2016. It is submitted that, the Notice was issued U/S 148 which was served upon the accused on 29/03/2016 for assessment. It is submitted that, during the assessment proceedings the accused was asked to file the return of income of the relevant assessment year; however, the accused has not filed any return of income as per the Notice. The Notice was initially issued U/S 142 of Income Tax Act dated 10/06/2016 asking the accused to attend the assessment proceeding on 23/06/2016. It is submitted that, on behalf of accused her husband Deepak Sanghani attended the proceeding and prayed for the adjournment. It is submitted that, the adjournment was granted and time of 15 days was granted to the husband of accused. Though some adjournments were granted to the accused, the accused has failed to furnish the return of income. Therefore, again the show cause Notice was issued U/S 144 of Income Tax Act on 14/09/2016. The accused was provided with details of deposits and withdrawal from her Bank Accounts and was accordingly asked to explain with regular books of accounts. However, the accused has utterly failed to explain the transactions which are reflecting in the Bank accounts of the accused.
6) It is submitted that, there are two Bank accounts of the accused; one with ICICI Bank, Ramdaspeth, Nagpur bearing Account No.624205011785, which is a current account; another account in the same Bank bearing Account No.624201531434, which is Saving account. It is submitted that, the following are transactions which are reflecting in the said accounts which are given in tabular form as under:-
Sr.No Assessment Cash deposit Total Cash Total
year deposit withdrawal Withdrawal
1 2010-11 13,76,000 44,91,000 24,15,000 44,50,000
Page | 6
ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani
MA NO.05, 06 & 07/NAG/2024
(ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) 2 2011-12 26,74,500 82,35,361 77,78,800 81,30,000 3 2012-13 6,37,689/- 6,44,224/- 3,28,700/- 6,44,224 From the aforesaid entries in the Bank accounts would show that, huge cash has been withdrawn against the huge deposits of the amount, which is the regular course of transaction as far as the accused accounts are concerned.
7) It is submitted that, the investigation in the matter of accused was done by the investigating officer and as well as through assessment proceeding. During the investigation done by the investigating wing the statement of the accused and her husband were recorded. The accused has stated that, her accounts are operated and managed by her husband. It is stated by the accused's husband Mr. Deepak that Account No. 624205011785 was opened for investment in the various schemes of Shri Deven Malvia. Shri Deepak also stated that due to the unnatural death of Deven Malvia, now it is not possible for him to produce documentary evidence to prove the Bank transaction were made in favour of Deven Malvia and his clients. It is submitted that, said Deepak Sanghani has stated that, he derived the income from share brokerage and other sources. During the assessment proceeding the accused was asked to explain the business relations with M/s Pioneer Investment, M/s Vibrant Projects, M/s Vibrant Equities and Commodities, M/s Velocity Capital, M/s Meena Agrawal, Shri Mahesh Gosewade, Raju Kotapilwar, Sneha Kotpilwar and others along with their ledger accounts and documentary evidence. However, the accused has not produced the same.
8) It is submitted that, there are several transactions reflecting in the accounts of the accused. In order to explain the said transactions the accused was given ample opportunity to produce documentary evidence. The accused was supposed to explain the said transactions with the help of books of accounts, vouchers, bills, ledger etc; however, the accused has not submitted the single documentary evidence to explain the transactions which are reflecting in the Bank accounts. The accused is duty bound to explain the transaction, however, the accused has failed to discharge her own burden of explaining the transactions; hence, the said transactions are liable to be taxed U/S 68 & 69 of Income Tax Act. Accordingly, in assessment proceeding the income of the assessee is assessed and tax demand is raised. The same are assessed as under:
Sr.No Assessment Income Demand raised includes Tax and year assessed interest
1. 2010-11 44,91,000/- 23,14,310/-
2. 2011-12 82,35,360/- 40,17,340/-
3. 2012-13 6,44,220/- 96,140/-
9) It is submitted that, for the aforesaid 3 financial year, the demand was raised by the Income Tax Officer Ward 1 (5), Nagpur by passing order U/S 144 of Income Tax Act. However, till date the accused has failed to make the payment of taxes.
10) The show cause notice came to be issued by the Principal Commissioner of Income Tax, Nagpur dated 05/10/2018 seeking explanation as to why the prosecution U/S 276C (2) shall not be filed against the accused for evasion of taxes for the Assessment Year 2010- 11, 2011-12 & 2012-13. The accused has tendered the explanation vide her letter dated 17/10/2018. In her explanation dated 17/10/2018, she has stated that, accused could not attend the hearing because of Page | 7 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) death of Shri Ramesh Sanghani, who was suffering from illness and who is father- in- law of the accused. The accused has further stated that, the transaction could not be explained due to the suicide of Mr. Malvia, who was dealing in shares and utilized by Bank accounts of the accused for his share transaction. The accused has further stated that, she has no technical knowledge about the shares or securities transaction and she is only housewife and does not have any source of income.
11) The Principal Commissioner of Income Tax, Nagpur-1 examined the case and granted sanction vide order dated 04/12/2018 by usurping the power U/S 279 (1) of Income Tax Act. The Principal Commissioner of Income Tax has observed that, no prudent person will allow any other person to operate her Bank account at her will and it is further observed that, entire transaction with Bank must have been done by the accused with her full knowledge. The accused was granted number of opportunities to explain this transaction; however, the accused has preferred not to avail such opportunity and has failed to discharge her own burden. The transaction reflecting in the Bank accounts of the accused is not supported with any documentary evidence. The Principal Commissioner of Income Tax observed that, the accused has not given any valid reason to justify non-payment of income tax. The Principal Commissioner of Income Tax, Nagpur granted sanction for prosecuting the accused.
12) It is pertinent to note that, a bare perusal of the aforesaid facts it is crystal clear that, the accused has come with a very lame excuse and it is very difficult to believe the version of the accused that her transaction have been operated by one Mr. Malvia, for his own share transaction. The Bank accounts are been operated only by the signature of the accused. It means that accused has given her signatures for withdrawal and the huge cash amount has been withdrawn. The accused has not given any explanation about the said Malvia's share transaction more so there is no documentary evidence to that regard. The version of the accused cannot be believed by any prudent person. The accused has failed to explain as to how the huge amount has been deposited in her account and why such huge amount has been withdrawn in cash. Considering this vital fact it is very much clear that, the accused has committed a crime punishable in Law by evading the taxes. The public money which has been evaded by the accused and has been used for personal use.
13) The accused was granted several opportunities to explain her transactions; however, the accused has failed to give any documentary evidence to that regard. The accused has given such explanation which is totally unbelievable. Considering the facts of the case and considering the presumption laid down U/S 278E; it is clear that there is a presumption of culpable mental state in respect of the default been made by the accused. At this juncture it is necessary to reproduce the provisions of Section 278E of the Income Tax Act, which reads as under:-
278E (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state with respect to the act charged as an offence in that prosecution.
Explanation In this sub-section, "Culpable mental state", include intention, motive or knowledge of a fact or belief in, or reason to believe, a fact.
Page | 8 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) (2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.
Bare perusal of the aforesaid section would clearly demonstrate the culpable mental state of the accused. In the facts of the case the accused is liable for punishment under Law.
14) It is submitted that, the complainant is duly authorized and competent to file the instant complaint, considering the income of the accused. Hence, the complainant is competent to file the instant complaint.
15) This Hon'ble Court is having jurisdiction as per the provisions of the Act. The provisions of Income Tax Act lay down the powers of this Hon'ble Court to adjudicate upon such complaint.
16) That, the cause of action is in favour of the complainant. The irreparable loss will be caused to the Govt. exchequer if the public money is not deposited to the Govt. exchequer.
17) This Hon'ble Court has territorial jurisdiction to try the instant complaint. The accused resides within the territorial limits of this Hon'ble Court. The offence is committed within the territorial limits of this Hon'ble Court. The complainant who is assessing officer of accused having its office at Room No.502, 5th Floor, MECL Building, Seminary Hills, Nagpur. All these factors show that, this Hon'ble Court is having territorial jurisdiction. The assessment has been done at Nagpur. Hence, this Hon'ble Court has jurisdiction.
Hence, this Complaint.
PRAYER :- It is therefore, most humbly and respectfully prayed that this Hon'ble Court may be pleased to;
A) To punish the accused for an offence punishable U/S 276C (2) of the Income Act; in the interest of justice and fair play.
B) Allow the Complaint.
C) Grant any other relief as this Hon'ble Court may deem fit in the facts and circumstances of the case.
NAGPUR DT.20/12/2018 C/F COMPLAINANT
4. We deem it expedient to consider the circular dated 20th August, 2018, which reads as follows:
"F No 279/Misc. 142/2007-ITJ (Pt) Government of India Ministry of Finance Department of Revenue Central Board Direct Taxes New Delhi the 20th August, 2018 Page | 9 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) To, All the Principal Chief Commissioners of Income Tax Subject: Amendment to para 10 of the Circular No. 3 of 2018 dated 11.07.2018- reg:
Madam/Sir.
Kindly refer to the above.
2. The monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court have been revised by Board's Circular No. 3 of 2018 dated 11.07.2018.
3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No. 3 of 2018 dated 11.07.2018 is hereby amended as under:
10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect:
(a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or
(b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or
(c) Where Revenue Audit objection in the case has been accepted by the Department, or
(d) Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/ undisclosed foreign bank account.
(e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI).
(f) Cases where prosecution has been filed by the Department and is pending in the Court."
4. The said modification shall come into effect from the date of issue of this letter.
5. The same may be brought to the knowledge of all officers working in your region.
Page | 10 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019)
6. This issues with the approval of the Hon'ble Finance Minister.
(Neetika Bansal) Director (ITJ), CBDT, New Delhi.
5. It is manifest and crystal clear that the case is covered under para 10(f) of the Circular. The revenue should have pointed out the pendency of adjudication proceedings before the adjudication at the Bench. The SR.DR fairly accepted the fault on the part of revenue. Normally fresh evidences are not admissible. But since it is a matter on record. We admit the same. The Ld. AR placed that the prosecution proceedings have subsequently been quashed and the accused was discharged u/s 245 of Cr.P.C. vide CJM Nagpur's order dated 7/11/2023. Hence, he pleaded that all the three MA's be dismissed. But we are not convinced by his arguments. We refer to Paras 10 to 12 of the order which run as follows:-
"10] Further, record shows that Income Tax Officer has filed appeal before the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur against the order dated 27.09.2019 of ld. Commissioner of Income Tax (Appeal)-1, Nagpur. The said appeal was dismissed on account of low tax effect. Moreover, accused has filed order giving effect to order of under section 250 r/w 143(3) dated 07.11.2019 issued by Income Tax Office, Ward-1(5), Nagpur. It shows that the order dated 27.09.2019 passed by the ld. Commissioner of Income Tax 2023 (Appeal)-1, Nagpur was confirmed. As per the said order, demand-
-raised includes Tax and Interest from the accused by the Assessing Officer for all 3 Assessment Years were deleted.
11] I have placed reliance in the case of;
i. K.C.Builders and Another vs. Asst. Commissioner of Income Tax reported in 2004(2) SCC 731, wherein, it has held that "where taking the view that there was concealment of income, penalties were imposed under S.271(1)(c) by the assessing authority and prosecution was laid under S.276-C but later the penalties were cancelled by ITAT on the ground that there was no concealment, held, the quashing of the prosecution was automatic."
ii. G.L. Didwania and another ..Vs.. Income Tax Officer and Another reported in 1995 Supp(2) Supreme Court Cases 724, wherein, it has held Page | 11 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019) that the whole question was whether the appellant made a false statement regarding the income which according to the assessing authority had escaped assessment. So far as this issue was concerned the finding of the Appellate Tribunal was conclusive and hence the prosecution cannot be sustained. Accordingly the criminal proceedings were liable to be quashed.
iii. Indian Plywood Manufacturing Co.Ltd. And others ..Vs.. P.S. Dave and Another reported in [2007] 291 ITR 430 (Bom), wherein, it has held that the levy of penalties under section 271(1)(c) of the Income Tax Act, 1961 and prosecution under section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under section 276C is automatic.
12] The facts in the present complaint and in the appeal before the Commissioner of the Income Tax (Appeals) and the Hon'ble Income Tax Appellate Tribunal are the same. Hon'ble ITAT has decided the issues in favour of the accused by deleting all the additions made in the assessment orders for all the above years and deleted the tax demands. Therefore, in view of the ratio given in the judgment of Hon'ble Apex Court, once accused is exonerated, by the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur, criminal prosecution on the same grounds and facts is not tenable) Hence, I pass the following order :-
ORDER
1. Accused is discharged u/s. 245 of Cr.P.C.
2. Bail Bond stands cancelled.
3. Case is disposed of.
It appears that ITAT has decided the matter only on low tax effect and not on merit. Even as discussed above, such dismissal constituted a mistake apparent from record. Hence, it becomes all the more necessary to adjudicate the matter on merit as it may have some repercussion on further prosecution proceedings, if any. Hence all the three miscellaneous applications are allowed and consequently the matter is recalled for fresh hearing. The registry is directed to re-fix the date appropriately, by issuing notices to both the parties.
Page | 12 ITO Ward-1(5) Nagpur vs. Preeti Deepak Sanghani MA NO.05, 06 & 07/NAG/2024 (ARISING OUT OF ITA Nos. 394, 395 & 396/Nag./2019)
6. In the result, the all the three MAs filed by the department are allowed.
Order pronounced in the open Court on 12/07/2024.
Sd/-- Sd/-
K.M. ROY V. DURGA RAO
ACCOUNTANT MEMBER JUDICIAL MEMBER
NAGPUR, DATED: 12/07/2024
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The PCIT / CIT (Judicial);
(4) The DR, ITAT, Nagpur; and
(5) Guard file.
True Copy
By Order
Rajesh V. Jalit
Private Secretary (On contract)
Sr. Private Secretary
ITAT, Nagpur
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