1995 (3) TMI 86 - HC - Income Tax

Summary

Issues:
1. Quashing of order under sections 276C and 277 of the Income-tax Act
2. Application for discharge under section 245(2) of the Criminal Procedure Code
3. Interpretation of the Amnesty Scheme in relation to disclosure of true income

Analysis:
The judgment involves the quashing of an order under sections 276C and 277 of the Income-tax Act, where the petitioners sought to challenge the order dated March 4, 1991, passed by the Additional Sessions Judge and the complaint filed by the Income-tax Officer. The petitioners, partners of a firm, argued that the order forming the basis of the complaint had been set aside, and a new return was filed under an amnesty scheme. The main contention was that the Department could not prosecute them for an offense under the Income-tax Act after introducing a scheme that allowed voluntary disclosure of true income without prosecution. The court noted the absence of the text of the Amnesty Scheme and directed that the crucial point regarding the scheme's applicability be determined by the Magistrate. The revisional order and the Magistrate's order were set aside, and the matter was remanded for consideration based on the presence or absence of the Amnesty Scheme.

The petitioners had previously applied for discharge under section 245(2) of the Criminal Procedure Code before the Judicial Magistrate, which was granted based on the setting aside of the Income-tax Officer's order. However, the Income-tax Department filed a revision against this order, leading to the revisional authority setting aside the Magistrate's decision. The High Court, in its judgment, emphasized the need for the Income-tax Department to produce the text of the amnesty scheme for proper consideration by the Magistrate. The court directed the parties to appear before the trial court on a specified date for further proceedings.

The interpretation of the Amnesty Scheme in relation to the disclosure of true income was a crucial aspect of the case. The petitioners argued that the scheme absolved them not only of penalty but also of prosecution for concealing income. The court acknowledged the importance of the Amnesty Scheme in determining the petitioners' liability and ordered that the Magistrate decide on the matter after reviewing the scheme and hearing arguments from both parties. The court emphasized that the determination of whether an offense was committed would depend on the presence or absence of the Amnesty Scheme in the records. The petitioners were given the option to not appear before the trial Magistrate but were required to ensure their lawyer's presence and compliance with the proceedings in their absence.