2019 (5) TMI 32 - HC - Income Tax

Quashing the criminal proceedings - offences punishable under Sections 353 and 204 of IPC - complaint is for trying to destroy the evidence and obstructing public authorities to discharge their duties - survey action u/s 133A - for enquiry regarding Bogus exemption u/s 10(38) by investigation team - complaint that petitioner having been swallowed purported sheet of page No.107 of the folder numbered A-3/AOSI/133A in the presence of Income Tax Authorities or its officials - averments made in the complaint spell out the ingredients of the criminal offence or not? - assessment proceeding against company is still pending - HELD THAT - The complaint in question if perused it would clearly disclose that allegations made in the complaint is for trying to destroy the evidence and obstructing public authorities to discharge their duties. There cannot be any dispute to the fact that officials of the Income Tax Department in exercise of the provisions u/s 133A would be empowered to enter any place within the limits of the Area assigned to such Offices, any place kept by any persons in respect of whom he exercises the jurisdiction, any place in respect of which he authorizes for the purpose of u/s 133A and area within which such place is situated and such person is occupied such place inclusive of business or professional place and required any proprietor/ employee or any other person who may at the time and place be attending or helping in carrying on business or profession. Afford for such officials by facility to inspect the books of accounts or other documents available at such place, check or verify the cash, stock or other available articles or furnish such information as may be required which may be useful for a relevant to any proceeding under the Act, having been carried out by the officials of the Income Tax Department at 09.11.2015 at 3.15 pm and at the time of concluding survey proceedings on 10.11.2015 at 2.30 am, petitioner herein is alleged to have taken out page No.107 containing some notings from the folder numbered as A-3/AOSI/133A from one of the folder which had been impounded and swallowed it in the presence of the authorities. It is for the prosecution to prove the alleged incident during the course of the trial and as such it cannot be held that complaint does not disclose the prima-facie offences which is lodged against the petitioner. Correctness or otherwise of said allegations has to be decided only in the trial. This Court finds there is no good ground to entertain this petition. Hence, it stands rejected.

Summary

Issues:
Allegations of destroying evidence during Income Tax Department survey action under Section 133A of the Income Tax Act, 1961; Complaint lodged for offenses under Sections 353 and 204 of IPC; Petition for quashing the proceedings.

Analysis:
The judgment by the Karnataka High Court involved a case where the Income Tax Department officials conducted a survey at the office premises of M/s.A-One Steels India Private Limited based on credible information regarding bogus exemptions claimed under Section 10(38) of the Income Tax Act. The survey revealed suspicious activities related to Long Term Capital Gains (LTCG) exemptions. During the survey, the Director of the company allegedly swallowed a page containing notings from an impounded folder, leading to a complaint being lodged for obstructing public authorities and destroying evidence.

The petitioner argued that the complaint was lodged belatedly and lacked substantial evidence of the alleged offense. The petitioner claimed innocence and highlighted discrepancies in the prosecution's case, including the absence of the alleged swallowed page in the inventory. Additionally, the petitioner was not subjected to a medical examination to verify the swallowing of material. The petitioner sought quashing of the proceedings based on these grounds.

On the other hand, the Income Tax Department contended that the allegations in the complaint disclosed a prima facie case against the petitioner. The department supported the prosecution's case, emphasizing the seriousness of the offense and the necessity to proceed with the criminal proceedings.

The Court carefully examined the arguments presented by both parties and scrutinized the facts of the case. It noted that the survey proceedings were conducted within legal parameters under Section 133A of the Income Tax Act. The Court highlighted the discrepancy in the assessment orders of different companies associated with the petitioner and emphasized the need for a thorough trial to determine the validity of the allegations.

Ultimately, the Court held that the complaint disclosed sufficient grounds for proceeding with the criminal case. It refused to quash the proceedings, stating that the allegations in the complaint constituted offenses related to obstructing public authorities and destroying evidence. The Court emphasized that the final decision on the case's merits should be made during the trial, and the observations made in the judgment were limited to the consideration of the quashing petition.

In conclusion, the Karnataka High Court's judgment addressed the issues of obstructing authorities during an Income Tax Department survey and the subsequent criminal complaint. The Court emphasized the need for a trial to establish the validity of the allegations and declined to quash the proceedings based on the prima facie case presented in the complaint.