1995 (4) TMI 57 - HC - Income Tax

Court Upholds Criminal Proceedings Post Appeal, Stresses Independent Evidence Assessment

The High Court dismissed the revision petition, affirming the continuation of criminal proceedings despite the Appellate Tribunal accepting the appeal. ... Criminal Proceedings Issues:1. Quashing of criminal proceedings based on acceptance of appeal by the Appellate Tribunal.2. Interpretation of the effect of reassessment proceedings on criminal prosecution under sections 276C and 277 of the Income-tax Act, 1961.Analysis:1. The revision petition was filed challenging the order of the Chief Judicial Magistrate, Ferozepur, which framed charges against the petitioner for offences under sections 276C and 277 read with section 278B of the Income-tax Act, 1961. The petitioner, a registered firm, had filed its income tax return declaring an income of Rs. 1,28,050, but the Income-tax Officer made an addition of Rs. 1,75,000 during assessment proceedings. Subsequently, penalty proceedings were initiated under section 271(1)(c) of the Act. The petitioner's appeal to the Commissioner of Income-tax (Appeals) was dismissed, leading to the filing of a criminal complaint against the petitioners before the Chief Judicial Magistrate. However, the Income-tax Appellate Tribunal accepted the petitioner's second appeal and remanded the matter to the Income-tax Officer. The petitioner argued that since the appeal was accepted, the criminal proceedings should be quashed, citing a decision from the Kerala High Court with a similar context.2. The petitioner relied on the Kerala High Court decision, which opined that if the basis of prosecution is taken away due to the setting aside of the assessment by the Tribunal, the complaints are liable to be quashed. However, the respondent cited a Supreme Court judgment stating that there is no provision in the law preventing the launch of a prosecution until reassessment proceedings are completed. The Supreme Court emphasized that the expectation of success in other proceedings should not hinder the institution of criminal proceedings. The court highlighted that the criminal court must independently assess the evidence before it, even if there have been prior proceedings under the Income-tax Act. The judgment concluded that quashing the proceedings and allowing a fresh complaint would serve no purpose, aligning with the Supreme Court's position. Therefore, the revision petition was dismissed based on the Supreme Court's interpretation of the law.In conclusion, the High Court dismissed the revision petition, upholding the continuation of the criminal proceedings despite the acceptance of the appeal by the Income-tax Appellate Tribunal. The court emphasized that the criminal court must assess the evidence independently, regardless of the outcomes of previous proceedings under the Income-tax Act, in line with the Supreme Court's stance on the issue.