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TMI Blog2021 (4) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... on 120 of the Income Tax Act, 1961 and in supersession of the earlier notifications of the Government of India, the Central Board of Direct Taxes the authorization made in favour of Sri.T.Sunil Goutam, Deputy Director of Income Tax (Investigation), Unit-3(1), Bengaluru, is in consonance with the provisions of the Income Tax Act and does not suffer from any error or illegality as sought to be made out by learned Senior Counsel for respondent and hence, the contentions urged by learned Senior Counsel for respondent in this regard are rejected. Prosecution under section 276C(1) of the Income Tax Act - The gist of the offence under section 276C(1) is the wilfull attempt to evade any tax, penalty or interest chargeable or imposable or under reports of the income. What is made punishable is attempt to evade tax, penalty or interest and not the actual evasion of the tax . The expression attempt is nowhere defined under the Act or IPC. In legal parlance, an attempt is understood to mean an act or movement towards commission of a intended crime . It is doing something in the direction of commission of offence . Viewed in that sense in order to render the accused / respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, SR. ADVOCATE A/W SRI: ARVIND V. CHAVAN, ADVOCATE ORDER As common questions of fact and law are involved in these revision petitions, all the three revision petitions are disposed of by this common order. The outline facts of the cases are as follows:- The petitioner herein (the Income Tax Department) filed complaints against the respondent herein under section 200 Cr.P.C. alleging commission of offences punishable under section 276C(1) of the Income Tax Act, 1961 read with sections 201 and 204 of IPC. It was alleged in the complaints that during the search action under section 132 of the Income Tax Act in the premises of Eagleton Resort, Bidadi, Bangalore where the respondent was staying for time being, the search team proceeded to the said Resort and searched the respondent after completing due formalities. During the course of search, the respondent took out a piece of paper from his wallet and tore it in front of the officers. The officers immediately reassembled the said piece of paper. The investigation carried out with reference to the said piece of paper which was attempted to be destroyed by the respondent contained certain unaccounted loan transactions with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act no way bars the authorized officer from filing prosecution complaint if he is authorized by the competent authority. The only requirement under the Income Tax Act is the prior sanction from the competent authority as provided under section 279(1) of the Income Tax Act. The requisite sanction was given by the competent authority and therefore, the reasoning of the Special Court that the authorized officer was not competent to file prosecution complaints is legally untenable. 4(ii) The court below erred in not considering the mandate of law contemplated in section 280B(b) of Income Tax Act by which a Special Court is empowered to take cognizance of the offence upon a complaint made by the authority authorized in this behalf. The Special Court has also erred in not examining the scheme of the Income Tax Act in proper perspective. As per the provisions of the Income Tax Act, the jurisdictional assessing authority is empowered to file a complaint and the said authority cannot be divested of the said function solely on the ground that the amount of tax evaded was not quantified by passing an assessment order as contended by the respondent. 4(iii). The Court below committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The undisputed facts disclose that the respondent made an attempt to destroy the alleged document which would be part of the jurisdictional proceedings under section 132 of the Income Tax Act. Under the said circumstances, the facts alleged against the respondent render him liable for punishment under section 511 IPC though it was not contended by the prosecution. 5. Sri. M.B. Nargund, learned Additional Solicitor General of India appearing for petitioner argued in line with the above contentions. Placing reliance on the decision of the Hon'ble Supreme Court in RADHESHYAM KEJRIWAL vs. STATE OF WEST BENGAL, 2011(266) E.L.T. 294 (S.C.), with reference to para 43 thereof, submitted that, adjudication proceeding and criminal prosecution can be launched simultaneously; the decision in adjudication proceeding is not necessary before initiating criminal prosecution; both are independent in nature and therefore, non-quantification of the tax does not render the criminal prosecution of the respondent either illegal or vitiated. 6(i) On the same point, learned Additional Solicitor General of India referred to the principles laid down by the Hon'ble Supreme Court in P.JAYAPPAN v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search, the Special Court has committed a grave error in exercising jurisdiction under section 245 of Cr.P.C. Referring to the decision in PARKASH SINGH BADAL case, learned Additional Solicitor General of India emphasized that the petitioner / complainant having made out prima facie triable cases, the impugned orders discharging the accused is patently illegal and contrary to the principles of law enunciated by the Hon'ble Apex Court as well as by this Court and therefore, the same cannot be allowed to stand. 7. Countering the above submissions, learned Senior Counsel Sri.M.V.Seshachala appearing for respondent / accused argued in support of the impugned orders. In the course of his submissions, learned Senior Counsel raised the following questions for consideration namely:- 1. Whether the complaints filed by the Search Officer, Deputy Director of Income Tax (Investigation), Unit-3(1), Bangalore under section 276C(1) of the Income Tax Act, 1961 is without jurisdiction? 2. Whether the Principal Director of Income Tax (Investigation) Bangalore can exercise jurisdiction of the Director of Income Tax and that of superior officer Director General of Income Tax, Bangalor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omitted by Finance Act, 2002 with effect from 01.06.2002. Prior to its omission, the authorized officer had jurisdiction to estimate the undisclosed income in a summary manner based on search material calculating the tax, interest, penalty as if it is a regular assessment. The effect of omission of a provision is explained by the Hon'ble Supreme Court in GENERAL FINANCE Co. vs. ACIT, (2002)(257) ITR 338 thus: 6.... In the IT Act, s.276DD stood omitted from the Act but not repealed and hence, a prosecution could not have been launched or continued by invoking s. 6 of the General Clauses Act after its omission. 10. I have bestowed my careful consideration to the rival submissions. Since the trial Court has discharged the respondent mainly on the ground that the complaints filed by the complainant estimating the undisclosed income of the accused and launching the prosecution is without jurisdiction and that the piece of paper torn by the respondent / accused was not a document lawfully compelled to be produced as evidence and that the same was not obliterated, nor rendered illegible making out the offences under section 201 and 204 of IPC, the following questions ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts lodged by him under section 200 Cr.P.C. were without authority of law cannot be sustained. 13. The reliance placed by the learned Senior Counsel for respondent on section 153A and section 132(9A) of the Income Tax Act is misplaced. Section 153A of the Income Tax Act deals with the assessment in case of search or requisition. By virtue of this section, the Assessing Officer is empowered to assess or reassess total income in respect of each assessment year falling within six assessment years for the relevant assessment year in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, in respect of each assessment year falling within the six assessment years and for the relevant assessment year or years. 14. As per section 132(9A) of the Income Tax Act, the authorized officer is required to hand over search material within 60 days from the date on which last of the authorizations for search was executed, to the jurisdictional assessing officer for the purpose of determination of the tax. By virtue of the said provision, after handing over search material to the jurisdictional ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this notification or the Principal Director / Director of Income Tax specified in column (4) of the said Schedule shall exercise powers under Part C (Powers) of Chapter XIII and corresponding provisions of Chapter XXI (Penalties imposable), Chapter XXII (Offences and prosecutions) and other provisions incidental thereto of the said Act and perform the functions relating thereto in respect of the territorial areas of whole of India; Further clause (iii) thereof reads as under:- (ii) Authorises the Director General of Income Tax specified in column (2) or the Principal Director / Director of Income Tax specified in column (4) of the said Schedule to issue orders in writing for exercise of powers and performance of functions mentioned in (i) above by all or any of the Income Tax authorities who are subordinate to such Director General of Income Tax or Principal Director / Director of Income Tax, in respect of the territorial areas of whole of India; 18. In view of this notification, the authorization made in favour of Sri.T.Sunil Goutam, Deputy Director of Income Tax (Investigation), Unit-3(1), Bengaluru, is in consonance with the provisions of the Income Tax Act and does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a court competent to try offences under section 292,-- (i) which has been designated as a Special Court under this section, shall continue to try the offences before it or offences arising under this Act after such designation; (ii) which has not been designated as a Special Court may continue to try such offence pending before it till its disposal; (b) a Special Court may, upon a complaints made by an authority authorised in this behalf under this Act take cognizance of the offence for which the accused is committed for trial. From the reading of the above provision, it is clear that the offences punishable under the Act are triable only by the designated Special Court, and by virtue of proviso (b) of section 280B, a Special Court, upon a complaint made by an authority authorized in this behalf under this Act could take cognizance of the offence for which the accused is committed for trial. 23. Thus, a conjoint reading of the above provisions make it abundantly clear that the Special Court has no original jurisdiction to take cognizance of the offences under Chapter XXII of Income Tax Act unless the accused is committed for trial. These provisions theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n practice as an advocate for not less than seven years, requiring special knowledge of law. (3) Every person appointed as a Public Prosecutor or a Special Public Prosecutor under this section shall be deemed to be a Public Prosecutor within the meaning of clause (u) of section 2 of the Code of Criminal Procedure, 1973 (2 of 1974) and the provisions of that Code shall have effect accordingly. Secondly, in view of the proviso (b) of section 280B of the Income Tax Act, the Special Court is debarred from taking cognizance of the offences under Chapter XXII of the Income Tax Act without the accused being committed to the Special Court for trial. 26. In view of the above provisions, the Special Court could not have entertained the complaints as presented by the petitioner and could not have assumed jurisdiction to try the alleged offences without the accused having been committed for trial. That apart, all the offences alleged against the respondent being non-cognizable offences, the Special Court could not have proceeded in the matter based on the material collected by the authorized officer under section 132 of the Income Tax Act for the reason that investigation in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondent had received huge amount of interest on the said unaccounted loan. These allegations, even if accepted as true, the same do not prima facie constitute offences under section 276C(1) of the Income Tax Act. Tax, penalty or interest could be evaded provided tax or penalty is chargeable or imposable in respect of the above transactions. There is no presumption under law that every unaccounted transaction would lead to imposition of tax, penalty or interest. Therefore, until and unless it is determined that the unaccounted transactions unearthed during search were liable for payment of tax, penalty or interest, no prosecution could be launched on the ground of attempt to evade such tax, penalty or interest. As a result, the very prosecution launched against the respondent being premature and illegal cannot be allowed to continue. For the above reasons, I do not find any justifiable reason to interfere with the impugned orders. As the prosecution initiated against the respondent is bad in law and contrary to the procedure prescribed under the Code of Criminal Procedure and the provisions of the Income Tax Act, the revision petitions are liable to be dismissed and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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