1993 (3) TMI 72 - HC - Income Tax

Summary

Issues:
1. Assessment of income tax and imposition of penalty under sections 276C(1) and 277 of the Income-tax Act, 1961.
2. Appeal before the Income tax Appellate Tribunal against the penalty.
3. Rejection of application for waiver of penalty under section 273A of the Act.
4. Challenge to the penalty proceedings based on the Tribunal's order.
5. Interpretation of Tribunal's findings in relation to prosecution proceedings.
6. Comparison with a previous judgment regarding quashing of prosecution proceedings.

Analysis:

1. The petitioner, an assessee to income tax, was facing a prosecution under sections 276C(1) and 277 of the Income-tax Act, 1961 for alleged non-correct posting of receipts in account books and sales of rationed articles. An amount was added to the income returned, leading to the imposition of penalty under section 271(1)(c) of the Act.

2. The petitioner appealed the penalty before the Income tax Appellate Tribunal, which allowed the appeal and set aside the penalty. The Tribunal found that the petitioner had provided explanations for the additions made, and the agreement between the petitioner and the assessing authority prevented the initiation of penalty proceedings.

3. Despite the Tribunal's decision, the Commissioner of Income-tax rejected the petitioner's application for waiver of penalty under section 273A of the Act. The Central Board of Direct Taxes also advised against waiving the penalty and suggested prosecution proceedings against the petitioner.

4. The petitioner sought relief in a writ petition based on the Tribunal's order, arguing that since the explanation provided was not proven false, the prosecution should be quashed. However, the Department challenged the Tribunal's order and was planning to approach the court under section 256(2) of the Act.

5. The court analyzed a previous judgment where the quashing of prosecution proceedings was upheld when the order of assessment forming the basis of prosecution was set aside. The court agreed with the previous decision, stating that as long as the Tribunal's decision stands, a criminal court cannot reach a contrary conclusion.

6. Considering the Tribunal's findings and the agreed nature of the assessment, the court quashed the prosecution proceedings. However, to safeguard the Revenue's interests, the quashing was without prejudice to filing a fresh complaint if the Tribunal's order was set aside in further proceedings under section 256(2) of the Act.