2024 (3) TMI 252 - HC - Income Tax

Offences punishable u/s 276C(1) 277 - jewellery found during search - adjudication proceedings and criminal prosecution are inter-dependend or not - petitioner submitted that the petitioner approached this Court who remanded the matter back to the Assessing Officer to carryout the reconciling of the quantum of jewellery of the petitioner to determine that the jewellery found during search in the year 2011, was part of the jewellery declared by the petitioner and thereafter, the entire penalty was deleted by allowing the reconciliation of the quantum of jewellery - HELD THAT - It is seen that the Principal Commissioner of Income Tax on suo muto re-opened the proceedings by an order dated 23.02.2021, on the basis that no reconciliation was carried out. Though the said proceeding was challenged by the petitioner before this Court in 2023 (11) TMI 239 - MADRAS HIGH COURT it was rejected by this Court. That apart, the petitioner already filed petition to discharge and the same was also dismissed by the trial Court. Now the re-assessment proceedings are pending with the AO. Therefore, the proceedings cannot be said that it attained finality. Hence, there is no exoneration of the petitioner from all the charges. Further the quantum of jewellery found during the search was not brought in the the earlier returns filed by the petitioner. Therefore, the reconciliation of jewellery has not attained finality, in view of the pendency of the proceeding u/s 263 of the Income Tax Act. The adjudication proceedings and the criminal prosecution are independent to each other and the pendency of any adjudication proceeding is not bar to proceed with the prosecution. Therefore, this Court finds no ground to quash the proceeding and the present petition cannot be sustained and liable to be dismissed.

Summary

Issues involved:
The petition to quash the complaint lodged under Sections 276C(1) & 277 of the Income Tax Act for the assessment year 2012-2013.

Judgment Summary:

Issue 1: Complaint Lodged by Respondent
The respondent lodged a complaint against the petitioner for offenses under Sections 276C(1) & 277 of the Income Tax Act for the assessment year 2012-2013. The petitioner, an income tax assessee, was part of a search and seizure operation where gold ornaments and jewelry were found. Subsequently, penalty proceedings were initiated and a penalty was levied under Section 271(1)(c) of the Income Tax Act. The petitioner challenged this penalty, and after a series of appeals, the penalty was deleted based on a reconciliation of the jewelry quantity. However, the Principal Commissioner of Income Tax reopened the proceedings, stating that no reconciliation was carried out, leading to ongoing reassessment proceedings. The Court held that the criminal prosecution can proceed independently of the adjudication proceedings, citing the Supreme Court's ruling that exoneration in adjudication proceedings does not automatically bar criminal prosecution. As the reconciliation of jewelry quantity was not finalized due to ongoing proceedings, the petition to quash the complaint was dismissed.

Conclusion:
The Court dismissed the Criminal Original Petition, stating that there were no grounds to quash the proceedings, as the criminal prosecution can continue independently of the ongoing adjudication proceedings.