2004 (4) TMI 39 - HC - Income Tax

The petitioner has filed the instant petition under section 482 of the Code of Criminal Procedure for quashing of the complaint filed against her by the Assistant Commissioner of Income-tax u/s 276CC for not furnishing her return of income within the statutory period. The petitioner seek quashing of the aforesaid complaint on the ground that once the order of penalty itself has been set aside, then continuation of the criminal proceedings in such a case is an abuse of the process of court and the same is liable to be quashed Held that the petition is allowed and the complaint filed against the petitioner under section 276CC of the Act and all the consequential proceedings are hereby quashed.

Summary

Issues:
1. Quashing of complaint under section 482 of the Code of Criminal Procedure for not furnishing return of income for assessment year 1983-84.
2. Applicability of penalty under section 271(1)(a) of the Income-tax Act, 1961.
3. Appeal process and deletion of penalty by the Income-tax Appellate Tribunal.
4. Filing of complaint under section 276CC of the Act during pendency of appellate proceedings.
5. Legal position regarding quashing of criminal proceedings after deletion of penalties.

Analysis:
1. The petitioner filed a petition under section 482 of the Code of Criminal Procedure seeking to quash a complaint filed by the Assistant Commissioner of Income-tax under section 276CC of the Income-tax Act for not furnishing the return of income for the assessment year 1983-84 within the statutory period. The petitioner argued that continuation of criminal proceedings after the penalty was set aside amounts to an abuse of the court's process.

2. The assessing authority imposed a penalty under section 271(1)(a) of the Act for certain additions made for the assessment year 1983-84. The petitioner appealed against this penalty, and the Income-tax Appellate Tribunal allowed the appeal, deleting the penalty. Subsequently, the Commissioner of Income-tax filed an application for reference to the High Court, which was dismissed by the Tribunal.

3. The Tribunal's order deleting the penalty was based on the finding that there was no concealment of income. The petitioner relied on Supreme Court decisions stating that once penalties are deleted due to lack of concealment, the criminal proceedings under section 276C of the Act cannot be sustained. The Tribunal's conclusive finding on no concealment renders the prosecution devoid of jurisdiction.

4. During the appellate proceedings, the respondent filed a complaint against the petitioner under section 276CC for not furnishing the return of income. The petitioner argued that the complaint should be quashed since the penalty had been deleted, and the criminal proceedings were no longer tenable.

5. The court allowed the petition, quashing the complaint and all consequential proceedings. It held that once penalties are deleted based on appellate findings, the assessing authority must correct its order accordingly. Continuing criminal prosecution after the Tribunal's decision would be an idle formality, as the prosecution becomes devoid of jurisdiction in the absence of concealment of income. The legal position supported the quashing of the complaint in such circumstances.