1986 (11) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Wilful attempt to evade tax.
2. Making false statements in verification under the Income-tax Act.
3. Fabrication and use of false evidence in income-tax proceedings.
4. Abetment of the above offenses by the accountant.
5. Jurisdiction and authority of the Settlement Commission under Chapter XIX-A of the Income-tax Act.
6. Effect of the Settlement Commission's interim order on ongoing prosecution.

Issue-wise Detailed Analysis:

1. Wilful Attempt to Evade Tax:
The petitioner, Dr. Geeta Gupta, was accused of making a wilful attempt to evade tax for the assessment year 1980-81. The complaint alleged that she knowingly filed false income statements and fabricated evidence to reduce her tax liability.

2. Making False Statements in Verification Under the Income-tax Act:
Dr. Geeta Gupta was also charged under sections 276-C, 277, and 278 of the Income-tax Act, 1961, and sections 193 and 196 of the IPC for making false statements in her income verification. The allegations included delivering accounts and statements she knew to be false.

3. Fabrication and Use of False Evidence in Income-tax Proceedings:
The complaint further accused Dr. Geeta Gupta of fabricating false evidence to be used in income-tax proceedings and using this evidence fraudulently during the judicial assessment process.

4. Abetment of the Above Offenses by the Accountant:
The accountant, Atma Singh, was alleged to have abetted Dr. Geeta Gupta in committing the above offenses. Both were summoned by the ACMM, Delhi, who took cognizance of the complaint.

5. Jurisdiction and Authority of the Settlement Commission Under Chapter XIX-A of the Income-tax Act:
Dr. Geeta Gupta applied to the Settlement Commission under section 245C of the Income-tax Act, which allows settlement of tax cases. The Settlement Commission, after rejecting the objections raised by the Commissioner of Income-tax, allowed the application to proceed, stating that "it cannot be said that concealment of income has been established or is likely to be established."

6. Effect of the Settlement Commission's Interim Order on Ongoing Prosecution:
The petitioner sought the quashing of the complaint based on the Settlement Commission's interim order. The ACMM, however, dismissed this application, stating that the Settlement Commission's order was only prima facie and not conclusive. The court analyzed sections 245D, 245F(2), 245H, and 245-I of the Income-tax Act to determine the nature of the Settlement Commission's order. It concluded that once the Settlement Commission allows an application to proceed, it gains exclusive jurisdiction over the case, including the power to continue or halt prosecutions. The court held that the Settlement Commission's finding that no concealment was established acted as a "complete interception" for the continuance of the prosecution. Therefore, the prosecution could not continue during the period between the Settlement Commission's interim order and its final order.

Judgment:
The court set aside the impugned order dated July 23, 1986, of the ACMM, Delhi, and quashed the complaint against Dr. Geeta Gupta and the summoning order. The court appreciated the assistance of the amicus curiae, Mr. D. K. Jain, for his expertise and preparedness in the case.

Petition allowed.