9911796707
TMI Blog1995 (7) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 482 of the Code of Criminal Procedure, seeks quashing of a complaint, annexure P-12, under the same very sections of the Income-tax Act. The facts of Criminal Miscellaneous No. 5476-M of 1994, reveal that the petitioner filed its income-tax return for the assessment year 1987-88, declaring a net loss of Rs. 1,35,08,064. However, after some time, i.e., on June 8, 1989, it suo moto filed a revised return declaring a net loss to the tune of Rs. 50,20,671. This revision was made before the finalisation of assessment. On July 31, 1989, respondent No. 1, Deputy Commissioner of Income-tax, finalised the assessment under section 143(3) of the Income-tax Act, vide orders, annexure P-1. It is the case of petitioner that large scale disallowances of expenses claimed by the petitioner company were made as a result of which, upon finalisation of assessment, the loss return of the petitioner became a return of profit showing net income of Rs. 73,61,040. On the same very day, i.e., July 3, 1989, respondent No. 1 issued notice to the petitioner under section 273(2) of the Act calling upon it to show cause as to why action for non-payment of advance tax should not be taken. No notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner filed reply to the notice aforesaid. On December 11, 1992, the Commissioner of Income-tax granted sanction for prosecution of the petitioner on eleven additional grounds and on December 21, 1992, a complaint was actually filed in the court of the Chief Judicial Magistrate, Faridabad, under sections 276C(1), 277 read with section 278B of the Income-tax Act. Notice of the complaint was issued to the petitioner as also eleven other persons, comprising the board of directors of the company. It requires to be mentioned here that on reassessment in pursuance of the orders passed by the appellate authority, the income of the petitioner stood reduced to Rs. 9,67,340 plus capital gains of Rs. 1,67,400. On March 18, 1993, the petitioner filed an application under section 154 of the Act for rectification of the mistake before respondent No. 1 and vide orders dated May 17, 1993, the said respondent dismissed the application. Meanwhile, the petitioner's appeals came up for hearing and vide orders dated November 16, 1993, further relief was given to it in respect of its claim of depreciation and ESA on 500 KVA diesel generating set and quantum effect of this relief was to the tune of Rs. 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-tax (Appeals), Chandigarh, assailing the assessment order and vide annexure P-3, dated March 14, 1985, the petitioner replied to the show-cause notice issued by the respondent proposing to impose penalty. On July 16, 1985, vide order, annexure P-4, the Commissioner of Income-tax (Appeals) substantially allowed the appeal filed by the petitioner. The assessing authority, vide annexure P-5, gave effect to the order in appeal passed by the Commissioner of Income-tax (Appeals). As a result thereof, the income of the petitioner was computed at a loss of Rs. 32,97,100. Vide orders dated August 21, 1985, the Department rectified the mistake in the order in appeal under section 154 and on July 31, 1989, vide annexure P-6, the respondent gave effect to the order of the Commissioner of Income-tax (Appeals) dated August 21, 1985, whereby the net loss was enhanced as a consequence of the order of the Commissioner of Income-tax (Appeals) from Rs. 32,97,100 to Rs. 37,99,830. The Department, being aggrieved with the orders passed by the Commissioner of Income-tax (Appeals), preferred an appeal before the Income-tax Appellate Tribunal. After the matter was decided by the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the delay in refunding the amount to the petitioner. On August 16, 1993, an application filed by the Department before the Tribunal under section 256(1) requesting the Tribunal to refer the matter to this court, since it involved a question of law, was declined. Aggrieved with the Tribunal's order dismissing the application under section 256(1), the Department moved this court under section 256(2) seeking directions to the Tribunal to refer the matter to this court. Notice of motion was issued by this court and the matter is stated to be still at the admission stage. In this petition as well, the contention of learned counsel asking for the quashing of the complaint is the same as has been noted above, with regard to the first petition. The petition came up before this court for motion hearing on April 18, 1994, when notice was issued for May 24, 1994, and further proceedings were stayed till further orders. On the adjourned date, Mr. Sawhney, learned counsel for the Department, stated that he had been supplied only the copy of the petition and the annexures attached thereto were not made available to him. That being the position, the matter was adjourned to July 29, 1994, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter, it was not thought appropriate to adjourn the matter any further. Mr. Sawhney, learned counsel appearing for the respondent-Department, contends that the result of a proceeding under the Act cannot be binding on the criminal court, which has, therefore, to adjudge the case on the basis of evidence placed before it. An alternative argument of learned counsel is that mere expectation of success in the proceedings before the higher authorities constituted under the Act can hardly be a good ground to quash criminal proceedings. Mr. Sawhney, for his contentions aforesaid, has relied upon a judgment of this court in Sant Parkash v. CIT [1991] 188 ITR 732 as also another judgment of this court in Surjit Engg. Works v. ITO [1994] 210 ITR 547. After giving anxious thought to the contentions of learned counsel for the Department, this court, however, finds that there is absolutely no substance therein. In Sant Prakash's case [1991] 188 ITR 732, this court no doubt held that the result of a proceeding under the Act would not be binding on the criminal court but at the same time it was also held that the criminal court no doubt has to give due regard to the result of any proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gination, can it be said that, during the assessment year in question, the assessee had concealed its income. 'Income' has been defined in section 2(24) of the Act which clearly includes profits, gains, dividends or other benefits derived only. Loss cannot possibly be termed as income. Under section 139(1) of the Act, a person is required to furnish a return only if his total income during the previous year exceeded the maximum amount which is not chargeable to income-tax. If the same falls short of the maximum amount which is not chargeable, which has been the case here as per final assessment, he need not file a return. A person, who sustains a loss, however, may file a return in view of sub-section (3) of section 139 of the Act if he wants to claim that the loss or any part thereof should be carried forward. The penal provisions of section 271(1)(c), therefore, are attracted only in the case of an assessee having positive income and not loss, as the question of concealment of income to avoid payment of tax would arise only in the former case. " A single Bench of this court in D. N. Bhasin v. Union of India [1988] 171 ITR 7, held that " if the findings of the income-tax auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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