2020 (7) TMI 649 - HC - Income Tax

Dismissed criminal petition, trial to proceed, defense to be tested at trial not preliminary stage

Mrs. Jayashree Versus The Income Tax Officer Non-Corporate Ward – 11 (4), Chennai

Mrs. Jayashree Versus The Income Tax Officer Non-Corporate Ward – 11 (4), Chennai - [2020] 427 ITR 209 (Mad) Issues involved:Petition to quash proceedings in EOCC No.161 of 2016 under Section 276 CC of Income Tax Act for non-filing of return and claiming exemption.Analysis:1. The petitioner filed a petition to quash all further proceedings in EOCC No.161 of 2016, citing that despite reinvesting the sale consideration in a residential property, the respondent/complainant alleged non-filing of income tax return for the assessment year 2013-2014. The petitioner argued that the income was exempted under Section 54 F of the Income Tax Act and thus, no taxable income existed.2. The Special Public Prosecutor contended that the trial had commenced, with some prosecution witnesses examined, and further evidence was pending. The petitioner's counsel and the Special Public Prosecutor presented their arguments before the court.3. The court referred to judgments by the Hon'ble Supreme Court of India in similar cases, emphasizing that the High Court should not delve into witness statements or record findings during Section 482 Cr.P.C. proceedings. The court reinstated a complaint case for further proceedings based on merits and in accordance with the law.4. Another Supreme Court case highlighted that the High Court exceeded its jurisdiction by assessing disputed facts and allowing a petition under Section 482 Cr.P.C. The court stressed that the accused's defense should be tested during the trial, not at the preliminary stage, and the High Court's detailed analysis was deemed incorrect.5. Additionally, the Supreme Court's ruling in a different case emphasized that while invoking Section 482 Cr.P.C., the court should not delve into the validity of evidence but focus on whether the complaint contains allegations constituting the offenses complained of. The court should ensure that the preconditions for taking cognizance are met and assess if the allegations, if accepted, constitute the alleged offense.6. Based on the above legal precedents, the High Court concluded that the quash petition could not be entertained at that stage. The court directed the trial court to proceed with the case, allowing the petitioner to raise all grounds during the trial. The petitioner was relieved from personal appearance except for specific court proceedings, and the trial court was instructed to complete the trial within six months from the date of the order.7. Consequently, the High Court dismissed the criminal original petition, closed associated criminal miscellaneous petitions, and disposed of them with specific directions for further trial proceedings in EOCC No.161 of 2016.