TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 1737
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....nd ad-interim relief was granted since Special Criminal Application No.528 of 1999 raising similar issues also came to be admitted and relief was granted therein. 4. Be that as it may, learned counsel appearing for the applicants would contend that order dated 23.1.2012 passed in Special Criminal Application No.528 of 1999, in which various contentions raised in the present application and certain case laws vis-a-vis provisions of the Income Tax Act, 1961 never fell into consideration of the Court and, therefore, straightway dismissal of Special Criminal Application No.528 of 1999 shall have as such no bearing on the present proceedings and it is to be heard on its own merits. 5. At the time of hearing of this application, a xerox copy of the Death Certificate dated 25.1.2011 issued by the competent authority of Municipal Corporation of Greater Mumbai about death of applicant no.2, Mr.Nagin Radhakishan Agrawal, which took place on 7.1.2011, is produced on record and, accordingly, this application stands abated qua petitioner no.2 herein. 6. Brief facts of the case:- 6.1 Petitioner no.1 is a public limited company and petitioner nos.3 to 7 are Directors of petitioner no.1 compan....
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.... the accused No.1 within the knowledge of rest of the accused on 29.11.1995. The assessment for the said assessment year was framed u/s. 143(3) of the Act and order determining the total loss of Rs. 5800733/- was passed on 12.5.1998. (6) The return of income for A.Y. 96-97 was filed on 30.11.1996 declaring total income of Rs. 69890/-. The return of income was signed and verified by Shri. R.N. Aagarwal, the accused No.2, the director of the accused No.1 within the knowledge of rest of the accused on 28.11.1995. The same was accepted u/s. 143(1)(a) on 28.2.1997. The assessment was taken for scrutiny u/s. 143(3) and the total income was determined at Rs. 148334/- vide order dated 26.3.1999. (7) The Search u/s. 132 of the Act was carried out at the business premises of the accused on 1.12.1995 which was finally concluded on 5.1.1996. The accused No. 1 company is one of the six companies of N.R. Agarwal Companies which were covered u/s. 132 of the Act. The accused during the course of Search proceeding did not make any true and correct disclosure of undisclosed income. The statement of accused No. 2 was recorded during the search proceedings. (8) In response to notice u/s. 158BC o....
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.... No. 1 for the conduct of business of company and as such all the accused shall be deemed to be guilty of offences and shall be liable to be proceeded against and punished accordingly. Thus, it clearly establishes that all the accused have committed the offences punishable u/s. 276C(1), 277 rws 278B of the Act within the jurisdiction of this Honourable Court and therefore, the Honourable Court has jurisdiction to try, inquire and to hear the case." stock of imported waste worth and Rs. 168000/- being the value of stock of imported pulp lying in the factory premises of accused no. 1 at 169, GIDC, Vapi." 6.4 Thus, the case of the department is based on undisclosed income on account of excess of stock viz. imported waste worth and also of imported pulp lying in the factory premises and such undisclosed income for both the above together was Rs. 3,33,000/-. It is emphatically submitted by learned counsel for the applicants that though raid was carried out on the business premises of petitioner no.1 and resident of directors on 1.12.1995, at the relevant point of time a new Chapter XVIB was introduced in the Act, 1961 which provided special procedure for search cases with effect from....
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.... even proceedings under Section 271 (1) (c) ought not to have been started. Besides the complaint is not in respect of concealment in the block return. The fact is that the complaint is in respect of omission in return under Section 139 and not in the block return. 9. Learned counsel for the applicants relied on various decisions including that in the case of A.C.I.T. v. Velliappa Textile Mills Ltd. reported in 263 ITR 550, wherein it was held that when punishment of imprisonment is compulsory, company cannot be proceeded against and the Supreme Court quashed and set aside the prosecution against the company under Section 276 (C) and 277 of the Act 1961. Further, none of the Directors had any concern with the conduct of the business of the company at the time of commission of offence and particulars regarding conduct of business and responsibility etc. was not stated in the complaint, apart from the averments made of general in nature and, therefore, it would be a travesty of justice to prosecute the directors. Attention is also drawn to Section 276 (CCC) of the Act 1961 where intent of the legislature is of no prosecution in respect of the search prior to 1.1.1997. 10. Learned ....
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....ners was not valid, however, criminal proceedings against the firm could continue. 13. Assistant Commissioner, Assessment-II, Bangalore and Others v. Velliappa Textiles Ltd. and Another reported in (2003) 263 ITR 550 (SC), wherein the Apex Court considered Section 279(2), 279, 278B, 278, 277, 276C of the Act 1961, wherein the Apex Court no doubt held that the grant of sanction is purely an administrative act and affording an opportunity of hearing to the accused is not contemplated at this stage and further as per majority view that each of the Sections viz. 276C, 277 and 278 read with Section 278B requires imposition of mandatory terms of imprisonment coupled with fine and leaves no choice to the Court to impose only fine and since it was difficult to impose punishment of fine in lieu of imprisonment on a company, the prosecution of the company could not be sustained. However, the third Honourable Judge consisting of the Bench made a note of dissent on the above issue. However, the Bench was unanimous about interpretation of penal statute in strict manner and provision of sanction is made in order to protect persons from unnecessary prosecutions and consequent harassment and such....
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....ks was also around Rs. 21.30 Lacs and expenditure including raw materials and payment of excise duty, salary and other expenses was to the tune of more than Rs. 30 Crores, there was no reason for the assessee not to disclose such stock or to evade tax. Even otherwise CIF value of imports of raw material was around 6138 matric tonne for the above year. So stock worth even as per the asssessment order was of Rs. 3,33,000/- only. 17. Collectively, therefore, the impugned criminal proceedings launched by respondent no.1 by way of criminal case no.2705 of 2001 in the Court of Chief Judicial Magistrate deserves to be quashed and set aside. 18. As against above, learned counsel for the revenue would contend that keeping in view Special Criminal Application No.528 of 1999 which was admitted and interim relief granted therein and, based on above, present application was admitted and relief was granted is already dismissed by this Court on 23.1.2012 wherein also similar contentions were raised and, therefore, this application also deserve to be dismissed. One more Criminal Misc. Application No.3436 of 2004 was also dismissed by an order dated 2.2.2012 which was also ordered to be heard wit....
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....of India v. Dharmendra Textile Processors (2008) 174 Taxman 571 (SC) in the context of Section 11AC of Central Excise Act, wherein the Apex Court considered relevant provisions as to whether Section 11AC was inserted by the Finance Act 1996 with an intention of imposing of mandatory penalty on persons, who evade payment of tax can be read to contain mens rea as an essential ingredient and there is scope for levying penalty below prescribed minimum limit, and it was held by the Apex Court that penalty cannot be levied below prescribed minimum limit. 22. Lastly in the context of Section 56 of Foreign Exchange Regulation Act, 1973, it was held that there was no immunity to companies from prosecution merely because prosecution is in respect of offences for which punishment prescribed is mandatory imprisonment and though company cannot be sentenced to imprisonment, for that reason only company cannot be given complete immunity from prosecution where mandatory punishment is imprisonment coupled with fine and the Court can resort to punishment of imposition of fine, which is also a prescribed punishment. 23. Having regard to the facts and circumstances and submissions made by learned co....
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....cuments or transactions where such asset, entry or other document or transaction repaying wholly or partly income or property which has not been or would not have been disclosed for the purposes of the Act. Therefore, what the assessee had already disclosed or would have disclosed is not to be treated as undisclosed income. Besides, reference was made to Chapter XIV-B of the Act, whereby the undisclosed income incorporated into the scheme with effect from 1.7.1995 to 30.12.1996 was deleted and, accordingly, search was required to be assessed separately, for which budget note for the year 1995-96 were also relied on. The assessee tried to justify that the block assessment period was, therefore, a single unit of assessment year comprising a period of ten years and, hence, the income tax in the block assessment would not be said to be relating to the particular year of regular year of assessment. It was with this objective only the concept of block assessment was introduced. The assessee also relied on various other provisions. By relying on comparison of provisions for block assessment for the period 1.7.1995 to 31.12.1996 and similar provisions which were made effective from 1.1.199....
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....levy of interest and penalty under Section 271 (1) (c), 271 (A), 271-B of the Act. That there is no mention of Section 276-C in Section 158BF of the Act and, as a matter of fact, a careful reading of Section 276-C transpires that if a person willfully admits to evade any tax, penalty or interest chargeable or imposable under the Act, 1961 then only prosecution can be launched. 26. None of the authorities gave clear finding about evading tax willfully and on the contrary deduction was given under Section 80IA by ITAT Bench to the extent of Rs. 99,900/-. Therefore, a company having past turnover and shown in third annual report 1995-96, C.I.F. value of imports of row-material and capital goods to be considered in quantity, it was 6138.894 for the value of Rs. 7,24,23,783/-. Minor lapse on the part of the assessee of not mentioning such a stock, undisclosed income in the facts of this case do not attract launch of prosecution under Section 276-C (i) and 277 read with Section 278-B of the IT Act, 1961. 27. So far as decisions relied on by learned counsel for the applicants as well as for the respondents, proposition of law laid down therein cannot be disputed but at the same time, ....