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TMI Blog2023 (9) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... er is set aside, it will be presumed that there is no concealment and quashing of prosecution under Section 276C(1) of the Income Tax Act is automatic. The petitioner cannot be allowed to suffer and to face criminal trial and the same cannot sustain in the eyes of law. There is no doubt that penalty proceeding and prosecution can go simultaneously in the facts and circumstances of the cases, however, in the case in hand, the penalty proceeding has already been set aside in view of the appellate order. The Court finds that in view of the above judgments, the case of the petitioner is fit to be allowed. Further, if the penalty proceeding has been set aside, mens rea is one of the essential ingredient of a criminal offence. Petition allowed. - Hon ble Mr. Justice Sanjay Kumar Dwivedi For the Petitioner : Mr. Amit Kumar Das, Advocate For the State : Mr. Vishwanath Roy, S.P.P. For the O.P. No.2 : Mr. Anurag Vijay, Jr. S.C., Mr. R.N. Sahay, Sr. S.C., Ms. Sharda Kumari, Advocate ORDER Heard Mr. Amit Kumar Das, learned counsel for the petitioner, Mr. Anurag Vijay, learned counsel for opposite party no.2 and Mr. Vishwanath Roy, learned counsel for the State. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nching prosecution under Section 276C(1) of the Income Tax Act, 1961 against the accused for the Assessment Year 2011-12 has been accorded to by the Principal Commissioner of Income Tax, Jamshedpur on 03.03.2016. However, in the aforesaid sanction order, some mistake was apparent which later on was rectified by the learned Principal Commissioner of Income Tax, Jamshedpur vide order dated 21.03.2016 passed under Section 154 of the Income Tax Act, 1961. 4. Mr. Amit Kumar Das, learned counsel for the petitioner submits that the subject matter of the assessment in the complaint case was also the subject matter of penalty under Section 271(1)(c) of the Income Tax Act, 1961. He submits that against the penalty order dated 27.11.2015, the petitioner filed an appeal being ITA No.117/Ran/2016 before the appellate tribunal under the said Act and vide order dated 08.12.2016, the said appeal was allowed and penalty order was set aside. He submits that in view of this fact, the foundation itself has been set aside. The entire criminal prosecution with regard to the said Act is malicious one. He also submits that the case of the petitioner is fully covered in view of the judgment passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The willful default of payment of tax was the subject matter before the Calcutta High Court in Gopal Ji Shaw v. Income Tax Officer, Calcutta others ; [(1988) 173 ITR 554 (Cal)] . Relevant paragraphs of the said judgment read as under: The Division Bench of this court held as follows: In the facts of this case, it appears to us that interest having been charged by the Income-tax Officer up to the date of the filing the return, the principles laid down by the Supreme Court in M. Chandra Sekhar [1985] 151 ITR 433 are clearly attracted. The fact that such interest was waived Subsequently by the Commissioner of Income-tax would make no difference in principle inasmuch as it is the primary act of the Income-tax Officer in accepting the return filed and charging interest up to the date of the filing which raises the presumption of extension of time. What was waived by the Commissioner was interest which was already charged by the Income-tax Officer. As held by the Gujarat High Court in Liberal Engineering Works' case [1986] 158 ITR 520, the Income-tax Officer, having levied interest up to the date of the filing of the return, was not justified in further invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a case. In the criminal proceeding, wilful default in filing the return has to be established. By charging interest under Section 139(8), the Income-tax Officer has impliedly extended the time to file the return and the question, therefore, of wilful default in filing the return of income does not and cannot arise. As a matter of fact, although in this case, penalty proceeding was initiated, it was not proceeded with thereafter, which only goes to show that the Department did not consider it necessary to impose any penalty after realisation of interest under Section 139(8). In a criminal case, it is not for the accused to establish his innocence. The onus is on the prosecution to bring home the guilt of the accused. Mens rea is an essential ingredient of a criminal offence. The fact of extension of time to file the return excludes the element of mens rea inasmuch as it must be presumed that the Income-tax Officer, being satisfied that there was ground for delay in filing the return, had extended the time. The object of launching criminal prosecution for wilful default in complying with the provisions of the Income-tax Act is to prevent evasion of tax. But in each an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentence. There can be no dispute that having regard to the provisions of s. 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to dis- courage the repetition of the offence. In the case of a proceeding under s. 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need of establish the element of mens tea it is generally sufficient to prove that a default in complying with the statute has occu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] has held that if the appellate tribunal has set aside the order of penalty, how the criminal proceeding can be sustained. Relevant paragraph of the said judgment reads as under: In the instant case, the crux of the matter is attracted and whether the prosecution can be sustained in view of the order passed by the Tribunal. As noted above, the assessing authority held that the appellant-assessee made a false statement in respect of income of Young India and Transport Company and that finding has been set aside by the Income-tax Appellate Tribunal. If that is the position then we are unable to see as to how criminal proceedings can be sustained. 14. Further, if the penalty order has been struck down, criminal case cannot survive. It has been held by the Hon'ble Supreme Court in the case of K.C. Builders another v. Assistant Commissioner of Income- Tax; [(2004) 265 ITR 562 (SC)] . Relevant paragraphs of the said judgment read as under: The above judgment squarely applies to the facts and circumstances of the case on hand. In this case also, similarly, the application was moved by the assessee before the Magistrate to drop the criminal proceedings wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be illegal and without jurisdiction. The Assistant Commissioner of Income Tax cannot proceed with the prosecution even after the order of concealment has been set aside by the Tribunal. When the Tribunal has set aside the levy of penalty, the criminal proceedings against the appellants cannot survive for further consideration. In our view, the High Court has taken the view that the charges have been framed and the matter is in the stage of further cross-examination and, therefore, the prosecution may proceed with the trial. In our opinion, the view taken by the learned Magistrate and the High Court is fallacious. In our view, if the trial is allowed to proceed further after the order of the Tribunal and the consequent cancellation of penalty, it will be an idle and empty formality to require the appellants to have the order of Tribunal exhibited as a defence document inasmuch as the passing of the order as aforementioned is unsustainable and unquestionable. 15. In view of the above judgments, the Court comes to the conclusion that once penalty order is set aside, it will be presumed that there is no concealment and quashing of prosecution under Section 276C(1) of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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