2020 (4) TMI 270 - HC - Wealth-tax

Proceedings of Criminal Case under Sections 35(B) of Wealth Tax Act, 1957 - Non filing of return after long lapse of time - HELD THAT - Section 276(C) deals with an offence of willful attempt to evade tax; Section 277 deals with false statement in verification etc., and Section 278B deals with offences by company. Since Tribunal found that there was no concealment of income and order of penalty was quashed, prosecution u/s 276C would also automatically come to an end. Court held, when a criminal trial cannot proceed, it cannot be allowed to continue as that will amount to abuse of process of law. Charge of conspiracy was not proved and various offences under the provisions of IPC were also not satisfied, hence, proceedings were liable to be set aside. In the present case, firstly order of Tribunal relates to a different period of assessment. Secondly, it has not been found that Assessee was not liable to submit W.T. Return in the relevant A.Y. In my view, for the case in hand, applicant cannot take advantage of aforesaid judgement of Tribunal and it cannot be said that complaint filed in the case in hand would automatically cease after setting aside penalty imposed for the A.Ys. 1983-84 to 1988-89 since in the present case, A.Y. 1990-91 is involved.

Summary

Issues Involved:
1. Quashing of criminal proceedings under Section 482 of Cr.P.C.
2. Applicability of Tribunal’s order on penalty proceedings.
3. Relevance of Supreme Court’s judgment in K.C. Builders and Another Vs. Assistant Commissioner of Income Tax.

Detailed Analysis:

1. Quashing of criminal proceedings under Section 482 of Cr.P.C.:
The applicant sought to quash the proceedings of Criminal Case Nos. 241 of 1994, 242 of 1994, and 243 of 1994 under Section 35(B) of the Wealth Tax Act, 1957, pending in the Court of the Special Chief Judicial Magistrate, Allahabad. The applicant contended that since the penalty proceedings had been quashed, the criminal proceedings could not be maintained. However, the court noted that the offense under Section 35B of the Wealth Tax Act pertains to the willful failure to furnish the wealth tax return in due time, which is independent of the penalty proceedings.

2. Applicability of Tribunal’s order on penalty proceedings:
The applicant presented a supplementary affidavit with an order from the Income Tax Appellate Tribunal, which quashed the penalty imposed under Section 18(1)(a) of the Wealth Tax Act for the assessment years 1984-85 to 1988-89. The Tribunal found that the assessee acted on the advice of qualified CAs and did not file the wealth tax returns timely, which constituted a reasonable cause. However, the court observed that this order related to a different period (1984-85 to 1988-89), whereas the present case involved the assessment year 1990-91. Therefore, the Tribunal’s order was not applicable to the current proceedings.

3. Relevance of Supreme Court’s judgment in K.C. Builders and Another Vs. Assistant Commissioner of Income Tax:
The applicant relied on the Supreme Court’s judgment in K.C. Builders, where it was held that once penalties under Section 271(1)(c) of the Income Tax Act were canceled by the Tribunal, the prosecution under Section 276C would automatically come to an end. The court noted that the Supreme Court’s judgment dealt with the simultaneous imposition of penalty and prosecution for concealment of income. In the present case, the offense under Section 35B of the Wealth Tax Act was for non-filing of the wealth tax return, which is distinct from the concealment of income. Therefore, the Supreme Court’s judgment in K.C. Builders was not directly applicable.

Conclusion:
The court concluded that the applicant could not take advantage of the Tribunal’s order or the Supreme Court’s judgment in K.C. Builders, as they pertained to different periods and different offenses. The application to quash the criminal proceedings lacked merit and was accordingly dismissed.