2015 (12) TMI 202 - HC - Income Tax

Undisclosed income - the petitioner sought staying of the criminal proceedings against him on the ground that against the Assessment Order ( AO ), the petitioner had already filed an appeal, which is pending for adjudication - Held that - Proceedings once initiated in a warrant trial case, there is no provision under the Code of Criminal Procedure, 1973, except U/s 258 Cr.P.C., where the proceedings of the case can be stayed by the Magistrate suo moto or upon the application filed on behalf of the accused, however, Section 258 Cr.P.C. relates only to summons trial cases. Moreover, the application filed by the petitioner did not mention under which provision of Act it is filed. Thus, the learned Trial Court has rightly dismissed the application filed by the petitioner. From the above noted facts, it is crystal clear that the petitioner had admitted to have bank accounts outside India only after the investigation by the Income Tax Department. The said foreign account was the undisclosed account and the deposits therein relates to his undisclosed income and the same needs to be examined. Therefore, there is no illegality, infirmity or perversity in the order dated 19.02.2015 passed by the learned Trial Court that pendency of appellate proceedings has no bearing in initiation of prosecution under the Income Tax Act. Thus, finding no merit in the instant petition, the same is hereby dismissed.

Summary

Issues:
1. Stay of criminal proceedings based on pending appeal against Assessment Order.
2. Prosecution of a person above the age of 70 years.
3. Interpretation of Instruction No.5051/1991 in relation to age bar for prosecution.
4. Effect of pending appeal on criminal proceedings under the Income Tax Act.

Stay of Criminal Proceedings based on Pending Appeal:
The petitioner sought a stay of criminal proceedings against him, arguing that he had filed an appeal against the Assessment Order which was pending. The petitioner's senior counsel relied on a previous case to support the contention that no prosecution can be initiated against a person above 70 years old, citing a Circular issued by the Central Board of Direct Taxes.

Prosecution of a Person Above 70 Years:
The respondent argued that the petitioner had not reached 70 years of age at the time of the alleged offences. The respondent highlighted that the Circular mentioned that prosecution "need not normally" be initiated against persons above 70 years at the time of the offence. The respondent emphasized that the petitioner was 63 and 64 years old at the time of the alleged offences, making the age bar inapplicable.

Interpretation of Instruction No.5051/1991:
The Court noted that the previous case allowing prosecution bar based on age was not decided on merits but on a statement by the Department. The Court emphasized that the Circular did not apply to the petitioner as he was not 70 years old at the time of the alleged offences, despite the complaint being filed after he turned 70.

Effect of Pending Appeal on Criminal Proceedings:
The Court held that the outcome of the pending appeal challenging the Assessment Order would not impact the criminal complaint against the petitioner. The Court referenced previous judgments stating that the pendency of appellate proceedings does not affect the initiation of prosecution under the Income Tax Act. The Court dismissed the application seeking a stay of criminal proceedings, noting that there was no provision to stay proceedings in a warrant trial case under the Criminal Procedure Code.

In conclusion, the Court found no merit in the petitioner's arguments and dismissed the petition, affirming the Trial Court's decision to continue with the criminal proceedings.