2020 (3) TMI 342 - HC - Income Tax

High Court Orders Applicants to File Proper Application for Stay of Coercive Action

The High Court directed the applicants to file a proper application before the Magistrate for a reasoned order within two months, staying coercive action ... Penalty u/s 271(1)(c) - As submitted that regarding penalty as per the records, no such penalty existed against the applicants' firm and there were no records available in the office of the Pr. Commissioner of Income Tax, Meerut to show that any such penalty exists against the applicants' firm as is evident from page 103 of the application - HELD THAT:- Opposite party no.2 opposed the contentions made by the learned counsel for the applicants and submitted that the report regarding penalty for the assessment year 1983-84, which is annexed at page 103 is with respect to the Proprietor, Anand Kumar Jain and not with respect to the applicants' firm. It has further been submitted that in pursuance of the order dated 16.04.1999, a detailed application was moved by the applicants but various ground regarding whether any penalty existed against the applicants' firm have not been dealt with. It is directed that the applicant may file a proper application before the concerned Magistrate, who will after considering all the facts and circumstances of the case, pass a reasoned order, expeditiously, preferably within a period of two months from today, if there is no other legal impediment. For a period of two months from today or till the disposal of the applicants' application, whichever is earlier, no coercive action shall be taken against the applicants. Issues:1. Quashing of proceedings under Sections 276C, 277, 278 of I.T. Act2. Stay on the operation of N.B.W. passed by the courtAnalysis:1. The applicant sought to quash the proceedings of Case No. 1915/1997 under Sections 276C, 277, 278 of I.T. Act and stay the operation of N.B.W. The applicant and his father jointly conducted a partnership business, which was alleged to have discrepancies in income declarations. The Income Tax Department conducted a search in 1983, leading to discrepancies in the assessment for the year 1984-85. The Assessment Officer observed unexplained income based on discrepancies in the accounts. The Commissioner of Income Tax (Appeals) partially agreed with the explanation provided by the firm. Criminal proceedings were initiated against the applicants, leading them to approach the High Court under Section 482 Cr.P.C. The High Court directed the applicants to file a proper application before the concerned Magistrate for a reasoned order within two months, staying coercive action during this period.2. The applicants filed an application pursuant to the High Court's direction, but details regarding the penalty for the assessment year 1983-84 were not adequately addressed. The opposition contended that the penalty report annexed was for the proprietor, not the firm. The Magistrate was directed to consider all facts and circumstances and pass a reasoned order within two months, with no coercive action against the applicants during this period. The High Court disposed of the application with these observations, emphasizing the need for a proper application before the Magistrate to address the penalty issue comprehensively.