1989 (6) TMI 47 - HC - Income Tax

Summary

Issues:
1. Competency of the complaint filed against the petitioner for offences under sections 193 and 196, IPC.
2. Validity of the allegations regarding fabrication and manipulation of false accounts.
3. Impact of the decisions of the Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals) on the case.
4. Consideration of maintaining prosecution for offences under sections 276C(1) and 277(i) of the Act while reassessment proceedings are pending.

Analysis:

1. The petitioner challenged the competency of the complaint filed against him for offences under sections 193 and 196, IPC, on the grounds that the complaint was filed by an Income-tax Officer not superior to the one before whom the alleged offences were committed. The court held that as per section 195(1)(b) of the Code of Criminal Procedure, the complainant was incompetent to file the complaint, citing the decision in ITO v. Kerala Oil Mills [1986] 162 ITR 292 (Ker) 19861 KLT 947. The court concluded that the complaint for these specific offences was unsustainable due to lack of jurisdiction.

2. The petitioner argued that the allegations of fabrication and manipulation of false accounts were not valid, citing decisions of the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. However, the court found that these decisions did not establish the correctness of the accounts produced by the petitioner. The court emphasized that the criminal court must independently assess the evidence to determine the validity of the allegations, and the Tribunal's order did not conclusively prove the accuracy of the accounts.

3. The court considered the impact of the decisions of the Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals) on the case. It noted that while the Tribunal added an estimated amount to the disclosed income, it did not confirm the accuracy of the accounts. The Commissioner of Income-tax (Appeals) canceled the penalty based on the Tribunal's order, but this did not establish the correctness of the return of income filed by the petitioner. Therefore, the court concluded that these decisions did not negate the need for further investigation into the alleged offences.

4. The court addressed the issue of maintaining prosecution for offences under sections 276C(1) and 277(i) of the Act while reassessment proceedings were pending. Referring to the Supreme Court's decision in P. Jayappan v. S, K. Perumal, the court emphasized that the criminal court must independently assess the evidence and that the results of proceedings under the Act are not binding on the criminal court. The court directed the Magistrate to proceed with the enquiry into the other alleged offences expeditiously, while quashing the part of the complaint related to sections 193 and 196, IPC.