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2022 (6) TMI 88 - HC - Income TaxAssessment u/s 153A - pendency of re-assessment proceedings - Offence punishable u/s 276 CC - unaccounted receipt of money by the petitioner towards remuneration for directing movies - Whether assessment order was barred by limitation? - HELD THAT - ITAT after considering the submission of the counsel appearing for the parties concluded that We are of the opinion that assessments made by the AO for all these five assessment years, uniformly on 24.09.2008 are bad in law for the reason that direction of the AO for special audit was served on the assessee on 25.01.2008 which must be considered for the purpose of computing the limitation of time making assessment. In that case, direction of the Assessing Officer was subsequent to the expiry of the due date for making assessment. Further without prejudice, even with the date 25.01.2008, considered by the Assessing Officer as the date of service of direction and not on 28.01.2008 as considered by the CIT (A) is taken into account, still the assessments were not made in the period specified under Section 153 B of the Act. Therefore, it was held that the assessments for the five assessment years on 24.09.2008 are bad in law. Essentially, the Income Tax Appellate Tribunal disposed the appeals only on the ground of limitation and not on merits. It is further observed that other grounds relating to merits become an academic exercise, meaning that other issues raised in the complaint, especially the allegations raised in the complaints with regard to non filing of return of income, non payment of advance tax, non payment of the tax demanded, suppression of true and correct income by not filing return of income had not been considered by the Income Tax Appellate Tribunal. When the matter was not decided on merits, but only on technical ground of limitation, this Court is of the considered view, on the basis of the principles settled in Radheshyam Kejriwal Vs. State of West Bengal and another 2011 (2) TMI 154 - SUPREME COURT that petitioner cannot seek to quash the proceedings in E.O.C.C.Nos.101, 102, 103, 104, 105 of 2015 on the ground that Income Tax Appellate Tribunal had set aside the assessment orders. As seen from the complaint allegation that despite, giving notice, statutory notice as detailed in the complaint, petitioner has not filed return, paid advance tax and tax demanded, suppressed the real and true income by not filing the return in time. These issues have to be necessarily tried before the Court. The assessment order relating to the assessment year 2009-2010 was not challenged before the Income Tax Appellate Tribunal. In this case also there is allegation of non filing of return of income for the assessment year 2009- 2010, concealment of true and correct income by not filing return of income, non payment of income despite issuance of notice. These violations are liable to be prosecuted for the offences under Section 276 C (1), 276 C (2), 276 CC and 277 of the Income Tax Act, 1961. When it comes to quashing a criminal proceedings, it is very well settled that uncontroverted averments in the complaint without any addition or subtraction should be looked into to examine whether an offence can be made out are not. If that yardstick is applied in this case, this Court is of the considered view that respondent/complainant made out prima-facie case to proceed against the petitioner for the offences alleged in the complaint. Section 278 (e) of the Income Tax Act, 1961, empowers the Court to presume culpable mental state of the accused, unless, the accused shows that he had no such mental state with respect to the act charged as an offence in the prosecution. In this view of the matter, this Court finds that petitioner shall necessarily face the trial. Criminal Original Petitions dismissed.
Issues Involved:
1. Premature filing of the complaint. 2. Setting aside of assessment orders by the Income Tax Appellate Tribunal. 3. Liability to pay tax, penalty, or interest. 4. Prosecution under Section 276 C (1) and Section 276 C (2) of the Income Tax Act. 5. Prosecution under Section 276 CC of the Income Tax Act. 6. Filing of false statement or verification. Detailed Analysis: 1. Premature Filing of the Complaint: The petitioner argued that the complaints were premature as the proceedings before the department were yet to conclude. The court, however, noted that there is no provision in law that bars the initiation of prosecution until reassessment proceedings are completed. The judgment cited in 1984 AIR 1693 P.Jayappan Vs. S.K.Perumal supports that pendency of reassessment proceedings does not act as a bar to the institution of criminal proceedings. 2. Setting Aside of Assessment Orders by the Income Tax Appellate Tribunal: The petitioner contended that the assessment orders were declared null and void by the Income Tax Appellate Tribunal, and thus, the prosecution should not continue. However, the court observed that the Tribunal's decision was based on the technical ground of limitation and not on the merits of the case. The court cited (2011) 3 SCC 581 Radheshyam Kejriwal Vs. State of West Bengal, which states that adjudication proceedings and criminal prosecution can be launched simultaneously and are independent of each other. Therefore, the setting aside of assessment orders on technical grounds does not preclude criminal prosecution. 3. Liability to Pay Tax, Penalty, or Interest: The petitioner argued that since the Income Tax Appellate Tribunal declared that no tax, penalty, or interest was chargeable, prosecution under Section 276 C (1) and Section 276 C (2) of the Income Tax Act cannot be sustained. The court, however, emphasized that the Tribunal's decision was not on the merits but on the limitation period, and thus, the prosecution could continue. 4. Prosecution under Section 276 C (1) and Section 276 C (2) of the Income Tax Act: The court found that the allegations of non-filing of returns, non-payment of advance tax, and suppression of true income were serious and warranted trial. The court referred to the principle that the standard of proof in criminal cases is higher than in adjudication proceedings, and thus, the petitioner must face trial to address these allegations. 5. Prosecution under Section 276 CC of the Income Tax Act: The petitioner claimed that no prosecution under Section 276 CC could be initiated as the tax payable was less than Rs. 3000. The court, however, noted that the allegations included non-filing of returns and non-payment of taxes for multiple assessment years, which needed to be examined during the trial. 6. Filing of False Statement or Verification: The petitioner argued that there was no false statement or verification as no returns were filed. The court, however, pointed out that the allegations of non-filing of returns and suppression of income were sufficient to proceed with the prosecution under Section 277 of the Income Tax Act. Conclusion: The court concluded that the complaints were not premature and that the setting aside of assessment orders on technical grounds did not bar criminal prosecution. The allegations of non-filing of returns, non-payment of taxes, and suppression of income were serious and warranted trial. The petitions to quash the proceedings were dismissed, and the petitioner was required to face trial for the alleged offences under Sections 276 C (1), 276 C (2), 276 CC, and 277 of the Income Tax Act, 1961.
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