1992 (9) TMI 75 - HC - Income Tax

Issues Involved:
1. Validity of prosecution under section 277 and other sections of the Income-tax Act.
2. Compliance with section 195 of the Criminal Procedure Code for prosecution under sections 177 and 193 of the Indian Penal Code.
3. Applicability of section 279(1A) of the Income-tax Act.
4. Limitation under section 468 of the Code of Criminal Procedure.

Detailed Analysis:

1. Validity of Prosecution under Section 277 and Other Sections of the Income-tax Act:
The prosecution of Naubat Rai and Vinod Kumar under sections 277 and 278 of the Income-tax Act, read with sections 193, 177, and 109 of the Indian Penal Code, was challenged. The Income-tax Officer had found that Naubat Rai was concealing income by falsely claiming rental income from a building allegedly let out to his son, Vinod Kumar, who was purportedly running a hotel. The Income-tax Officer assessed the income from the hotel business and imposed penalties, which were later reduced by appellate authorities but not waived or reduced under section 273A by the Commissioner. The court upheld the prosecution, stating that section 279(1A) did not apply as the penalties were not reduced or waived by the Commissioner under section 273A.

2. Compliance with Section 195 of the Criminal Procedure Code:
The petitioners argued that the prosecution under sections 177 and 193 of the Indian Penal Code was invalid due to non-compliance with section 195 of the Criminal Procedure Code. The court rejected this argument, noting that the complaint was filed by the Income-tax Officer with the authorization of the Commissioner of Income-tax, a public servant, thus complying with section 195(1)(a). Additionally, section 136 of the Income-tax Act deems proceedings before an income-tax authority as judicial proceedings, allowing the Income-tax Officer to file the complaint.

3. Applicability of Section 279(1A) of the Income-tax Act:
The petitioners contended that they could not be prosecuted under section 277 and other sections of the Act because the penalties were canceled or remitted. The court examined section 279(1A) and concluded that it only applies if the penalty is reduced or waived by an order under section 273A by the Commissioner. Since the penalties were canceled by the Appellate Assistant Commissioner and remitted by the Income-tax Appellate Tribunal, not by the Commissioner under section 273A, section 279(1A) did not bar the prosecution.

4. Limitation under Section 468 of the Code of Criminal Procedure:
The petitioners raised the issue of limitation under section 468 of the Code of Criminal Procedure for offenses under sections 177 and 193 of the Indian Penal Code. The court declined to address this issue as it was not raised before the lower courts and the trial was at an advanced stage. The petitioners were allowed to raise this point before the trial court.

Conclusion:
The petitions were dismissed, and the court directed the trial court to proceed with the trial in accordance with the law. The court found no merit in the arguments against the validity of the prosecution under section 277 and other sections of the Income-tax Act, compliance with section 195 of the Criminal Procedure Code, and the applicability of section 279(1A) of the Income-tax Act. The issue of limitation under section 468 of the Code of Criminal Procedure was left open for the trial court to decide.

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