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TMI Blog2020 (11) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... nces under Section 276C(1) of the Income Tax Act, 1961. After the order passed by the Income Tax Appellate Authority, the Assessing Officer completed the assessment proceedings, where the total demand was reworded for ₹ 40,36,84,241/- and the net amount payable was determined at ₹ 4,21,31,164/-. After adjusting the TDS amount the tax liability and the penalty stood at ₹ 1,45,23,900/- and ₹ 4,56,94,344/- respectively by an assessment order dated 28.06.2019. It is categorically established that there was a concealment of income with a view to evade the payment of taxes. Therefore, the grounds raised by the learned Senior Counsel appearing for the petitioner are not helpful to the case on hand. This Court is not inclined to quash the proceedings in E.O.C.C.No.401 of 2018 on the file of the Court of the Additional Chief Metropolitan Magistrate, Economic Offences-II, Egmore, Chennai. The petitioner is at liberty to raise all the grounds before the trial Court. - CRL.O.P.No.3891 of 2020 and Crl.M.P.Nos.2232 & 2233 of 2020 - - - Dated:- 28-10-2020 - THE HONOURABLE MR.JUSTICE G.K.ILANTHIRAIYAN For the Petitioner : Mr. P. Kumar, Senior Counsel For Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside and as such the petitioner is not at all liable to be prosecuted. He further submitted that while being so, suppressing the said fact that the said assessment order itself was set aside, the respondent herein granted sanction order dated 16.10.2018 to prosecute the petitioner under the Income Tax Act. Before the date of sanction, the assessment order itself set aside and it was wantonly suppressed by the respondent and obtained sanction from the authority concerned. Therefore, on this ground alone, the complaint cannot be sustained as against the petitioner, since the sanction authority without application of mind, without perusal of records, and without any reasonable satisfaction, accord sanction to prosecute the petitioner herein. When the assessment order for the assessment year 2008- 09 is the basis for the lodgement of complaint, the order of set aside ought to have been disclosed before the authority concerned before granting sanction to prosecute the petitioner herein. 2.3. He further submitted that if the criminal prosecution is allowed to be continued, the respondent could not be able to produce the assessment order before the trial Court as such there is absolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... multaneously, the assessment proceedings was also initiated under Section 147 148 of the Income Tax Act, and taxable income of ₹ 52,13,72,203/- was determined and accordingly, the demand was raised by the Assessing Officer. Therefore, the petitioner was issued show cause notice, why prosecution proceeding should not be initiated for concealing the particulars of income. After receipt of the same, the petitioner submitted his explanation that he was under impression that the TDS ₹ 3,53,22,371/- deducted on such income will be sufficient to meet the Tax liability. He also submitted that on enquiry further revealed that TDS amount disclosed in the Income Tax Return was only ₹ 10,000/- and computation of the Total Income and Tax Memo did not show these share transactions. The act of the petitioner is nothing but to evade the payment of tax. 3.2. She further submitted that the complaint is not consequent to any assessment order and it is only based on the enquiry of the Investigation Wing of the Income Tax Department. The complaint is off shoot of investigation and is not on the basis of assessment order. More over, the assessment order is not set aside on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Director of Income Tax Investigation, Chennai, the petitioner replied that he was under impression that the TDS ₹ 3,53,22,371/- deducted on such income will be sufficient to meet the tax liability. On enquiry, it revealed that the TDS amount disclosed in the income tax return was only ₹ 10,000/-. Therefore, the petitioner evaded the payment of taxes which was due to the exchequer. 6. The learned Senior Counsel raised grounds on three folds. First one is that the complaint lodged only on the basis of the assessment order dated 25.02.2018 and the said assessment order itself was set aside by an order dated 28.08.2018 by the Income Tax Appellate Authority as such, there is no basis for the respondent to proceed further in the impugned complaint. The second one is that the respondent suppressed the above fact and obtained sanction from the authority concerned by an order dated 16.10.2018, to prosecute the petitioner for the offence punishable under Section 276C(1) of the Income Tax Act, 1961. The third point is that the sanction authority without considering the above order passed by the Appellate Authority and mechanically accorded sanction to prosecute the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present complaint and it is simultaneous proceeding of the Income Tax Department. 9. That apart, the sanctioning authority viz., the Principal Director of Income Tax Investigation, Chennai, issued show cause notice to the petitioner, why prosecution proceeding under Section 276C(1) of the Income Tax Act, would not be initiated against the petitioner for wilful attempt to evade the tax, interest/penalty, chargeable or imposable under the Act. On receipt of the same, the petitioner appeared through his Chartered Accountant viz., Kalyanasundaram, under authorization and submitted his written submission stating that the prosecution proceedings may be kept in abeyance until the disposal of the appeal filed before the Income Tax Appellate Tribunal, Cehnnai. Therefore, the authorized representative of the petitioner informed the sanctioning authority about the pendency of the appeal. The learned Principal Director of Income Tax, after careful consideration of the submission made by the petitioner through his authorized representative stated as follows:- 6. The submissions made by the assessee have been carefully considered. The submissions made are not acceptable for the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under section 276C or section 277 of the Act. The institution of the criminal proceedings cannot in the circumstances also amount to an abuse of the process of the court...... She also relied upon the judgment of the Hon'ble Jammu Kashmir High Court made in CRMC.No.205 of 2015 dated 28.09.2018 in the case of Arun Arya Vs. Income Tax Officer, as follows :- .............In the fight against tax evasion, monetary penalties are not enough. When a calculating tax dodger finds it a profitable proposition to carry on evading taxes over the years, if the only risk to which he is exposed is a monetary penalty in the year in which he happens to be caught. The public in general also tends to lose faith and confidence in tax administration when a tax evader is caught, but the administration lets him get away lightly after paying only a monetary penalty- when money is no longer a major consideration with him if it serves his business interest.............. She also relied upon the judgment reported in (2011) 3 SCC 437 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re initiating criminal prosecution. 11. In the case on hand, the assessment order passed by the Assessing Officer has been set aside by the Income Tax Appellate Authority by an order dated 28.08.2018. Even when the appeal was pending, the authorized representative of the petitioner submitted before the sanctioning authority and it was duly considered and accorded sanction for the reason that the prosecution proceedings are separate and distinct from the assessment or reassessment proceedings. There is no requirement under the Act that the assessment proceedings should be completed before lunching prosecution. Therefore, the above judgments are squarely applicable to the case on hand and the respondent is rightly lodged the complaint as against the petitioner for the offences under Section 276C(1) of the Income Tax Act, 1961. 12. In fact, after the order passed by the Income Tax Appellate Authority, the Assessing Officer completed the assessment proceedings, where the total demand was reworded for ₹ 40,36,84,241/- and the net amount payable was determined at ₹ 4,21,31,164/-. After adjusting the TDS amount the tax liability and the penalty stood at ₹ 1,45,23,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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