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TMI Blog2003 (5) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ompounded and the continuation of criminal prosecution would be an exercise in futility - Petition is allowed and the complaint and the summoning order are quashed. - - - - - Dated:- 14-5-2003 - Judge(s) : S. S. SARON. JUDGMENT S.S. Saron J.- The petitioners have filed this petition under section 482 of the Code of Criminal Procedure ("the Code" for short) for quashing the complaint under sections 276C and 277 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the assessment year 1985-86, filed against them (as reproduced in para. 1 of the petition) as also the summoning order dated September 17, 1987 (annexure P2), passed by the learned Chief Judicial Magistrate, Amritsar. The facts leading to the case are that petitioners Nos. 1 to 3 are partners of the accused-assessee firm, M/s. Bawa Gurmukh Singh and Sons (petitioner No. 4) ("the firm" for short). The Income-tax Officer of District II (VI), Amritsar, filed a complaint on September 17, 1987, against the petitioners as also Bawa Ram Singh and Smt. Gian Bai, son and wife, respectively, of Bawa Gurmukh Singh. They have since died. It is stated in the complaint that the accused firm is engaged in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscrepancy. The accused took adjournments but could furnish no explanation. Ultimately, a revised return was filed on March 7, 1986. The assessor, it is stated, had added Rs. 55,752, representing the value of the concealed stock in the revised return. This return was also verified by accused No. 2, Bhupinder Singh (petitioner No. 3), on page 4 in the prescribed form. This, it was stated to have been done with a view to wilfully attempting to avoid the payment of income-tax on the value of suppressed stock which would have the effect of enabling the accused to evade such tax. On filing of the complaint, the learned Chief Judicial Magistrate, Amritsar, vide his order dated September 17,1987 (annexure P2), summoned the accused for October 21, 1987, having found sufficient ground to proceed against them under sections 276C and 277 of the Act. Shri Sukhbir Singh, learned counsel appearing for the petitioners, has contended that the official of the Income-tax Department had asked for information which was furnished. It is contended that during discussion and talk of settlement, the firm filed its revised return in accordance with the circular on the clarification issued by the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable,- ... 277. If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable." To attract the above provisions, the complainant is required to establish that the accused have made a statement in any verification under the Act, or rules thereunder or has delivered an account or statement which is false and which he either knows or believes to be false or does not believe to be true. During the pendency of the present petition, the petitioner filed Criminal Miscellaneous No. 46407 of 2001 to place on record a clarification issued in respect of Circular No. 441 dated November 15, 1985 (see [1985] 156 ITR (St.) 165), declaring the higher income or wealth. It is contended that one of the grounds of challenge is that the case of the petitioners is covered under the amnesty scheme and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he immunity from penalty and prosecution is guaranteed to the assessee unlike the circular in respect of wealth-tax which appears to be clear on this point. Answer: The immunity from penalty and prosecution (sic is) applied in all cases whether of income-tax or of wealth-tax where the assessee admits the truth and pays taxes properly." The answer to question No. 1, evidently shows that an assessee should produce evidence of payment of taxes before March 31,1986, and the filing of returns would be regularized by issue of formal notices under section 148 of the Act. Besides, in cases where the assessments are pending, the taxpayer is to file a revised return before the Income-tax Officer along with the evidence of payment of taxes. It is not in dispute that a revised return was filed during the period of the amnesty scheme declaring Rs. 55,752 as the value of concealed stock which represented the cost of 191 girders, i.e., 745 girders minus 554 girders. The return was accordingly revised to Rs. 1,89,844. The Income-tax Officer accepted the revised return and framed the assessment on the same day. This procedure was completed on March 7,1986, i.e., before March 31, 1986, as was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not mean that a result of the proceedings under the Act would be binding on the criminal court which has to judge the case independently on the evidence before it. He also relies upon a judgment of the hon'ble Kerala High Court in C.G. Balakrishnan v. ITO [1988] 171 ITR 1 to contend the fact that the final assessment order was set aside, was no ground to quash the conviction. There is no doubt to the proposition raised by learned counsel for the respondent. However, in P. Jayappan's case [1984] 149 ITR 696, it was held by the hon'ble Supreme Court that in an appropriate case the result of proceedings under the Income-tax Act which has a bearing on the question in issue, the criminal court may drop the proceedings in the light of an order passed under the Act. In the case in hand, it is evident that the circulars issued by the income-tax authorities themselves provide an immunity from prosecution where the assessee admits the truth and pays the taxes properly. Nothing has been shown from the circular that the case would not be covered in the event of concealment. Rather, question No. 7 of the said circular clinches the issue which reads as under: "Question No. 7: Where the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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