2015 (4) TMI 409 - HC - Income Tax

Criminal proceedings - prosecution - non-compliance/non-cooperation to the notices issued u/s 142(1) - discloser of foreign bank account which existed with the HSBC - Sanction / Authorization granted by the CIT - commission of offence u/s 276D, r/w Section 278E as the details of the account opening and transaction therein the foreign bank account will be specifically in the knowledge of accused who being the account holder will be having the relevant information but he failed to provide the details willfully - Held that - There is no dispute that if action as per law is required to be taken against the petitioner under the said provision for noncompliance, the said is always available with the respondent who also be entitled to receive all taxes and penalties from the petitioner as per law. In case there is non-compliance of the said notices under Section 142(1) of the Act, the requisite action in accordance with law had to be taken against the petitioner who would be entitled to contest the same in accordance with law. However, it is also a matter of fact that the criminal proceedings have been initiated by the respondent against the petitioner on the basis of the sanction issued by the department on 10th February, 2015 and in case the grounds of the sanction are read, it is evident that the reply sent by the petitioner contains the copy of the bank statement filed for the period has not been mentioned/ discussed in the same. Learned counsel for the respondent / revenue has confirmed to the Court that the statements of bank accounts have already been received for the purpose of assessing the tax, which were not furnished by the petitioner. Thus, it is apparent that while recording the statement of the complainant and passing the summoning order dated 27th February, 2015, all the facts were not available with the trial Court otherwise the Court might have asked the respondent to produce the same and to consider the replies dated 9 th February, 2015 and 11th February, 2015 before passing the summoning order or the respondent ought to have sought prayer for amendment in the sanctioning letter. The same has not happened in the present case. Under these circumstances, the order dated 27th February, 2015 passed in Criminal Complaint whereby the summoning order has been passed, is liable to be quashed on technical reason.

Summary

Issues Involved:
1. Quashing of the sanction/authorization dated 10th February 2015.
2. Quashing of the Criminal Complaint No. CC/91/14 dated 12th February 2015.
3. Quashing of the order dated 27th February 2015 passed by the Additional Chief Metropolitan Magistrate.

Detailed Analysis:

1. Quashing of the Sanction/Authorization Dated 10th February 2015:
The petitioner sought to quash the sanction/authorization granted by the Commissioner of Income Tax (Central-I), New Delhi, under Section 279(1) of the Income Tax Act for the assessment year 2006-07. The petitioner argued that the sanction was granted without considering the reply dated 9th February 2015, which included the bank statement of the foreign account. The court noted that the sanction did not discuss or reference the letters and bank statements furnished by the petitioner. The court found this to be a significant omission, as it was essential for the sanctioning authority to consider all relevant documents before granting authorization.

2. Quashing of the Criminal Complaint No. CC/91/14 Dated 12th February 2015:
The petitioner sought to quash the criminal complaint filed by the respondent under Section 276-D of the Income Tax Act. The court observed that the complaint was filed without considering the petitioner's replies dated 9th February 2015 and 11th February 2015, which contained the bank statements. The respondent admitted that the letter dated 11th February 2015 was received but was not sure about the letter dated 9th February 2015. The court found that the complaint was filed prematurely and without considering all the relevant documents, which could have influenced the decision to file the complaint.

3. Quashing of the Order Dated 27th February 2015 Passed by the Additional Chief Metropolitan Magistrate:
The petitioner sought to quash the order summoning him to the court. The court noted that the summoning order was based on incomplete information, as the respondent did not disclose the receipt of the bank statements and the petitioner's replies in the pre-summoning evidence. The court found that the trial court did not have all the facts before it when passing the summoning order. The court held that the summoning order was liable to be quashed on technical grounds.

Conclusion:
The court quashed the order dated 27th February 2015 passed in Criminal Complaint No. 100/4/15, titled "ITO Versus Shravan Gupta," on technical grounds. The court allowed the respondent to issue a fresh sanction after considering the petitioner's replies dated 9th February 2015 and 11th February 2015. The respondent was also entitled to initiate proceedings if there was a failure to comply with various notices issued under Section 142(1) of the Income Tax Act. The petitioner was entitled to contest any such proceedings in accordance with the law. The petition was accordingly disposed of.