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2023 (10) TMI 628 - HC - Income TaxProsecution proceeding u/s 276CC - not filing returns of income without giving any reasonable cause and noncompliance of the notices of the AO - HELD THAT - As the amount in question has already been set at rest in view of different orders passed by the Appellate Authority as well as the Tribunal, as has been noted in the argument, thus as relying on K.C. Builders and Another case 2004 (1) TMI 7 - SUPREME COURT the case of the petitioner is fully covered as there is no penalty or assessment against the petitioner in view of the subsequent orders passed by the competent authority in the said statute. There is no doubt that the penal provision is required to be dealt with as it is, and the Court is not required to shift the language of penal provision, however, in the case in hand, the facts are otherwise. Criminal proceedings quashed.
Issues Involved:
1. Quashing of criminal proceedings u/s 276CC of the Income Tax Act. 2. Compliance with notices u/s 153A of the Income Tax Act. 3. Validity of prosecution under the Income Tax Act after appellate orders. Summary: Issue 1: Quashing of criminal proceedings u/s 276CC of the Income Tax Act The petitioner sought to quash the criminal proceedings arising out of Complaint Case No. 09 of 2012, including the order taking cognizance dated 04.06.2012, passed by the Special Judge, Economic Offences, Ranchi. The cognizance was taken u/s 276CC of the Income Tax Act, 1961. Issue 2: Compliance with notices u/s 153A of the Income Tax ActA search u/s 132 of the Income Tax Act was conducted, and incriminating documents were seized. Notices u/s 153A for filing returns for Assessment Years 2005-06 to 2010-11 were issued and served on 15.02.2011, but there was no compliance. Despite extensions, the petitioner failed to file returns, leading to a show-cause notice u/s 276 of the Income Tax Act on 19.07.2011. The petitioner claimed inability to furnish returns due to non-receipt of seized documents from the Director General of Central Excise Intelligence, Jamshedpur. However, it was confirmed that the documents were already collected by the authorized representative of M/s Mongia Steel Ltd. Issue 3: Validity of prosecution under the Income Tax Act after appellate ordersThe petitioner argued that subsequent appellate orders nullified the grounds for prosecution. The assessment orders for various years were challenged, and the ITAT remanded the matters, resulting in substantial refunds and reduced demands. The petitioner contended that continuing prosecution would amount to an abuse of process, especially when similar cases were quashed by the court. The court noted that the penalties and assessments against the petitioner were set aside by appellate authorities, making the prosecution u/s 276CC unsustainable. The Supreme Court's judgment in K.C. Builders v. Assistant Commissioner of Income Tax was cited, establishing that quashing of prosecution is automatic when penalties are canceled. The court also referred to the proviso to section 276CC, which exempts genuine assessees from prosecution if tax dues do not exceed Rs. 3,000 after adjustments. Consequently, the court quashed the entire criminal proceedings arising out of Complaint Case No. 09 of 2012, including the order taking cognizance dated 04.06.2012, and disposed of the petition accordingly.
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