2002 (8) TMI 24 - HC - Income Tax

Offences - Prosecution - In the instant case, it is the admitted case of the parties that the Income-tax Appellate Tribunal has waived the penalty. The Revenue filed an application for making reference to this court. - I am of the considered opinion that the courts below have rightly allowed the application of the assessee as the asses see cannot be held guilty under sections 276C and 277 of the Act, in view of the findings recorded by the Income-tax Appellate Tribunal. Therefore, this petition is dismissed.

Summary

Issues:
Complaint under sections 276C and 277 of the Income-tax Act, 1961 for alleged concealment of income. Challenge against penalty imposition. Discrepancy in income declaration and revised return. Discharge of accused in criminal proceedings. Jurisdiction of the Income-tax Tribunal in relation to criminal proceedings.

Analysis:
The case involved a complaint under sections 276C and 277 of the Income-tax Act, 1961, against the respondent for not showing Rs. 1 lakh in her income tax return. The respondent filed a revised return after claiming that the amount was wrongly credited by a third party. The assessment was reopened, and a penalty was imposed, which was later reduced by the Income-tax Commissioner. The respondent appealed the penalty imposition, and the Income-tax Tribunal accepted her appeal, setting aside the penalty. The petitioner challenged the dropping of proceedings by the magistrate, arguing that criminal proceedings should not be dropped after framing charges. However, the court cited Section 245 of the Code of Criminal Procedure, stating that an accused can be discharged if no case is made out against them. The court emphasized that if concealment of income is not proven and penalties are deleted by the Income-tax Tribunal, criminal proceedings cannot continue.

The court referred to previous judgments like Procolor v. Chief Judicial Magistrate and ITO v. Taran Taran Steel Sales, which supported the principle that if the basis for the complaint no longer exists, the proceedings should be quashed. The court highlighted that the Income-tax Appellate Tribunal's decision to waive the penalty was crucial in determining the outcome of the criminal proceedings. The court noted that the Tribunal's decision on penalty deletion was final, leading to the dismissal of the petition challenging the dropping of proceedings. The court concluded that the lower courts correctly allowed the application of the assessee, as the findings of the Income-tax Appellate Tribunal indicated that the respondent could not be held guilty under sections 276C and 277 of the Act. Therefore, the petition was dismissed, upholding the decision to drop the criminal proceedings.