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TMI Blog2023 (10) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... SANJAY KUMAR DWIVEDI For the Petitioner : Mr. Sumeet Gadodia, Advocate For the State : Ms. Nehala Sharmin, S.P.P. For O.P. No. 2 : Mr. Ratnesh Nandan Sahay, Sr. S.C. Heard Mr. Sumeet Gadodia, learned counsel for the petitioner, Ms. Nehala Sharmin, learned counsel for the State and Mr. Ratnesh Nandan Sahay, learned counsel for the opposite party no. 2-Income Tax Department. 2. This petition has been filed for quashing the entire criminal proceedings arising out of Complaint Case No. 09 of 2012 including the order taking cognizance dated 04.06.2012 passed by the learned Special Judge, Economic Offences, Ranchi, whereby, cognizance under Section 276CC of the Income Tax Act, 1961 has been taken against the petitioner, pending in the Court of the learned Special Judge VII, Economic Offences, Ranchi. 3. The complaint case was filed by opposite party no. 2 alleging therein that a search under Section 132 of the Income Tax Act was undertaken in Mongia Group of cases by the Investigating Wing, Jharkhand and during the course of search operation, various incriminating documents relating to the petitioner were found and seized. It was further alleged that notices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable cause and noncompliance of the notices of the Assessing Officer. On the basis of the aforesaid allegations, Complaint Case No. 09 of 2012 was filed by opposite party no. 2 in the Court of the learned Special Judge, Economic Offence, Ranchi. 4. Mr. Gadodia, learned counsel for the petitioner submits that the search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted by the Investigation Wing, Jharkhand. Pursuant to search and seizure, notices under Section 153A of the Income Tax Act was issued to the petitioner on 15.02.2011 for filing of income tax return for the assessment year 2005-06 to 2010-11. On 15.03.2011, the petitioner filed a letter seeking 30 days' time to submit returns and he was granted time till 15.04.2011 for compliance of notice issued under Section 153A of the Income Tax Act. Again letter dated 25.04.2011 was filed by the petitioner and time till 05.05.2011 was granted to the petitioner. He further submits that on 19.07.2011, a show-cause notice under Section 276CC of the Income Tax was issued for initiation of prosecution proceeding for non-filing of income tax returns and the petitioner was directed to file reply by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilarly for the period 2008-09, pursuant to remand order passed by the ITAT, appeal-effect-order dated 28.05.2020 was passed by determining refundable amount of Rs. 3,42,815/-. For the period 2009-10, the Appellate Authority confirmed demand of Rs. 20,61849/- against the petitioner. He submits that the assessment order for the period 2010-11 was set aside by the Appellate Court vide order dated 29.09.2015 and pursuant to that, the assessment order dated 30.10.2015 was passed wherein the petitioner was found for refund of Rs. 2,50,70,600/-. He submits that for the block assessment period, the refund was found to be refundable to the petitioner and refunds were already adjusted against outstanding demand of the petitioner, despite thereof, the respondents are proceeding with the prosecution under Section 276CC of the Income Tax Act. He submits that in this background, when there is no demand, filing of the prosecution itself is bad in law. He submits that to allow to continue the proceeding will amount to abuse of process of law. He further submits that the case arising out of the same search and seizure, the petitioner and Balvinder Singh Saluja @ Balvinder Singh moved before this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in I.T.A. Nos. 3129-3132. It is settled law that levy of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276C is automatic. In our opinion, the appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive finding of the Income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supersedes the order of the Assessing Officer under Section 143(3) more so when the Assessing Officer cancelled the penalty levied. In our view, once the finding of concealment and subsequent levy of penalties under Section 271(1)(c) of the Act has been struck down by the Tribunal, the Assessing Officer has no other alternative except to correct his order under Section 154 of the Act as per the directions of the Tribunal. As already noticed, the subject matter of the complaint before this Court is concealment of income arriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... protective measure because a similar penalty had already been imposed on the two partners for concealment of the said income. The Tribunal found that, under law, a protective order of assessment can be passed but not of penalty. The learned counsel for the Revenue was unable to challenge this view of the Tribunal and frankly conceded that he was not able to cite any provision of law or decided case which warranted a protective order of penalty. That apart, no finding was recorded by the IAC that there was any wilful concealment of the income and in the absence of such a finding, the order of penalty would be unsustainable. The other reason given for deleting the penalty was that the income did not accrue to the present firm. As is apparent from the facts stated above, the amount received by the firm was not credited in its account and instead credited to the accounts of Lachhman Dass and Sat Parkash who were partners in the earlier firm. The assessee-firm, therefore, did not treat the said amount as its own and it being a firm different from the one to whom the refund had been made could not be held guilty of any concealment. The Tribunal, therefore, rightly deleted the penalty an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year; or (b)The tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source, does not exceed three thousand rupees 14. Looking into clause(ii)(b) of section 276 CC, it is crystal clear that if the tax payable determined on regular assessment is reduced by advance tax paid and the tax deducted at source does not exceed Rs.3,000/- such an assessee shall not be prosecuted for not furnishing the return under section 139(1) of the said Act. In the case in hand, in view of subsequent orders passed by the concerned authority under the statute, there is no assessment against the petitioners. Thus, the tax liability is not there even to the tune of Rs. 3,000/- in view of the said proviso and this aspect of the matter has already been considered by the Hon ble Supreme Court in the case of Sasi Enterprises(supra) on which much force has been made by the learned counsel for the Income Tax Department and the said aspect was discussed in paragraph no. 25 of the said judgment which is quoted as under: 25. Section 276-CC applies to situations where an assessee has failed to file a re ..... 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