9911796707
TMI Blog1995 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (for short "assessee") is also an income-tax assessee and for the assessment years 1983-84 and 1984-85, the assessing authority found that the assessee has concealed the particulars of its income and has furnished inaccurate particulars. For the assessment year 1983-84, it was found by the assessing authority that the assessee has concealed particulars of its income to the extent of Rs. 5,608 and for the assessment year 198485 it was found that the assessee has concealed income to the extent of Rs. 21,091. Consequently, the assessing authority initiated proceedings under section 271(1)(c) of the Income-tax Act, 1961 (for short "the I.T. Act"), and for the concealment of income in the assessment year 1983-84, by the order dated March 29, 1988 (annexure "B"), the Income-tax Officer, Circle III(1), Nagpur, passed an order under section 271(1)(c) of the Income-tax Act, and imposed minimum penalty of 100 per cent. of the tax sought to be evaded on the concealed income. Similarly, by the order dated March 28, 1988 (annexure "B-1"), the said Income-tax. Officer passed an order under section 271(1)(c) for the concealment of income in the assessment year 1984-85 and imposed the minimu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal, rejecting the appeals filed by the Department, an application under section 256(1) of the Income-tax Act was filed by the Department before the Income-tax Appellate Tribunal for referring the questions of law arising from the said order to the High Court. However, the Income-tax Appellate Tribunal did not find any merit in that application and held that the order was concluded on facts and no question of law arose from the said order warranting reference to the High Court. It is not disputed by counsel for the Revenue before me that the orders passed by the Income-tax Appellate Tribunal on September 23, 1992, whereby it maintained the order passed by the Deputy Commissioner of Income-tax (Appeals) setting aside the penalty orders dated March 28, 1988, and March 29, 1988, have attained finality. After the penalty order passed by the concerned Income-tax Officer on March 29, 1988, and March 28, 1988, stood set aside finally up to the Income-tax Appellate Tribunal, the assessee and its partners who were accused persons in the complaint filed before the Chief Judicial Magistrate, Nagpur, prayed for their discharge on the basis of the final order passed by the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act. In support of his contention, learned counsel for the respondent-complainant relied upon the decision of the Delhi High Court in Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO [1986] 158 ITR 496. Learned counsel for the respondent-complainant has not disputed the correctness of the contentions of learned counsel for the accused petitioners that the penalty orders passed by the concerned Income-tax Officer against the accused petitioners under section 271(1)(c) of the Income-tax Act, for the assessment years 1983-84 and 1984-85 came to be quashed and set aside by the Deputy Commissioner of Income-tax (Appeals) on May 31, 1989, and as a matter of fact prior thereto, the respondent-complainant lodged the complaint against the accused-petitioners for the offence punishable under sections 276C and 277 read with section 278 of the Income-tax Act. There is also no dispute that the common orders passed by the Deputy Commissioner of Income-tax (Appeals) on May 31, 1989, quashing the penalty orders under section 271(1)(c) has been maintained by the Income-tax Appellate Tribunal, Nagpur Bench, Nagpur, and an application filed by the Department under section 256(1) of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the criminal proceedings against the assessee could not continue and were liable to be quashed". The aforesaid view was followed by the Punjab and Haryana High Court in Kanshi Ram Wadhwa v. ITO [1984] 145 ITR 109 as well and M. M. Punchhi J, as he then was, held that : "Where the imposition of penalty has faltered there was no case to launch a criminal prosecution against the assessee." It was thus held that when there was no case for sustenance of penalty, it equally would not be a case for criminal prosecution. Consequently, the criminal complaint filed against the assessee in that case was quashed. In Banwarilal Satyanarain v. State of Bihar [1989] 179 ITR 387, the Patna High Court also followed the view of the Punjab and Haryana High Court and held that where, in the penalty proceedings, the final fact-finding authority under the Income-tax Act, who has expert knowledge of the subject, has deleted penalty in its entirety after having been satisfied that the assessee has furnished good and sufficient reasons for failure to deduct and/or pay the tax within time, the prosecution thereafter of the assessee would not be justified : "A question now arises whether, in a pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re on the partnership deed. The Income-tax Officer accepted the assertion of the said Janak Rani and held that the firm was not a genuine one and, accordingly, he cancelled the registration of the firm and the cancellation was affirmed by the Appellate Assistant Commissioner in appeal, but on further appeal being taken, the Income-tax Appellate Tribunal set aside the orders of the Income-tax Officer and the Appellate Assistant Commissioner, referred to above, and held that the firm was a genuine one. In the meantime, the Revenue filed a complaint case against the partners of the assessee-firm for their prosecution under section 277 of the Act. After the order of the Tribunal, the accused persons moved the learned Magistrate for discharging them from the criminal case which prayer was rejected, whereafter the matter was taken to the High Court of Punjab and Haryana for quashing the prosecution in the exercise of the inherent powers of the court under section 482 of the Code. The High Court refused to quash the prosecution on the ground that a criminal court is to independently go into the allegation mentioned in the complaint on the basis of evidence to be adduced before it by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aseless, prosecution could be sustained notwithstanding the finding made by the Income-tax Appellate Tribunal in penalty proceedings. Learned counsel for the petitioners cited the decision of the Punjab and Haryana High Court in Parkash Chand v. ITO [1982] 134 ITR 8. It was a similar case in which prosecution proceedings were initiated against an assessee for filing false returns. But pending the criminal proceedings, the Income-tax Appellate Tribunal examined the materials in penalty proceedings and arrived at a finding in favour of the assessee. In view of that finding the High Court quashed the prosecution proceedings. Bains J. relied on the decision of the Supreme Court in Uttam Chand v. ITO [1982] 133 ITR 909. That is a case where the Income-tax Appellate Tribunal set aside an order passed by the Income-tax Officer cancelling the registration of a firm. On its basis the assessee sought to have the prosecution proceedings quashed. The Supreme Court accepted the contention and quashed the proceedings. In Kanshi Ram Wadhwa v. ITO [1984] 145 ITR 109 (P H), M. M. Punchhi J. (as he then was), quashed a similar prosecution proceeding on the premise that with the annulment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any question of law, the said finding of fact recorded by the Income-tax Appellate Tribunal is unassailable. There is no dispute in the present case that the common orders passed by the Income-tax Appellate Tribunal on September 23, 1992, have attained finality and are not pending in reference before the High Court. In the orders passed by the Income-tax Appellate Tribunal, while disposing of the appeals, the Tribunal has held that the Department has failed to prove that the assessee has concealed the particulars of income or has furnished inaccurate particulars. The said finding recorded by the Income-tax Appellate Tribunal having attained finality, the very basis of the complaint filed by the Department on December 30, 1988, vanishes and cannot survive. It is true that the penalty proceedings under section 271(1)(c) and the prosecution under sections 276C and 277 read with section 278 of the Income-tax Act are distinct and separate and may co-exist, It is also true that there is no question of double jeopardy in such cases and the existence of one proceeding or the other proceeding is no bar to any of them, inasmuch as an assessee can be levied penalty as well as prosecuted fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was under purview in penalty proceedings. Can a finding given on those very facts by specialised bodies who have the technical expertise of the particular branch of law and are accustomed to administer the same everyday should be entirely ignored ? It is more in the context of the present cases, where the primary consideration is whether the petitioners had without reasonable cause failed to effect the deposits of tax deducted at source with the Government. The corresponding provisions under section 201(1) of the Income-tax Act are rather somewhat stringent when they speak of 'without good and sufficient reasons'. Section 276B, however, speaks of 'without reasonable cause or excuse'. A cause may appear to be 'reasonable', though still may not be good and sufficient'. Sufficiency goes farther than mere reasonableness. The distinction is of course thin. The Legislature has rather, apart from sufficient cause, now enjoined that it should also be good cause for not depositing the money where defaults have occurred. The standard of proof and explanation and the onus to be discharged by the assessee is much higher and heavy. In a criminal case, however, the dictates of law just deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances were before the Commissioner and the Appellate Tribunal and if they have after consideration come to the view that good and sufficient reason existed with the assessee not to make deposits with the Revenue within time, that finding cannot be lightly ignored and even though strictly may not be res judicata, is a valuable piece of evidence and overwhelming circumstance and a consideration which must weigh with the criminal court while assessing the reasonable cause prevailing with the assessee." Thus, it is apparent that the facts stated in the Sequoia Construction Co. P. Ltd.'s case [1986] 158 ITR 496 (Delhi), cited and relied upon by learned counsel for the Revenue, do not help the prosecution and rather support the contentions raised by learned counsel for the petitioners. The gravamen of the charge in the complaint filed by the complainant respondent is the concealment of income and/or furnishing of inaccurate particulars by the assessee for the assessment years 1983-84 and 1984-85 and on the self-same facts penalty orders were passed by the Income-tax Officer on March 29, 1988, and March 28, 1988, respectively. The said orders of penalty passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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