TaxTMI 
TaxTMI 
1988 (3) TMI 13
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....the fifth petitioner is a broker for petitioners Nos. 1 to 3. One Manoharan, who is the sixth accused in the case, was formerly the manager of the first petitioner. For the assessment year 1975-76, return dated September 24, 1975, was delivered to the first respondent on or about September 25, 1975. The total income, after adjusting the loss carried forward and unabsorbed depreciation of prior years, was shown as nil. The second petitioner had signed the return as the director in charge of that administration. Along with the return, profit and loss account was also filed. Debit sides showed that interest of Rs. 4,57,270 was paid which included alleged payment of interest to five persons, viz., V. K. Thirupandia Nadar, K. Rajendran, S. P. Chokalinga Nadar, Smt. Jayalakshmi Ammal and C. Kandasami, in all amounting to Rs. 37,94,544. The return also showed that two credit entries totalling Rs. 2 lakhs purporting to be from one Prabhakaran dated June 14, 1974 and June 15, 1974 and three debit entries by cheques to the said Prabhakaran dated November 15, 1974, November 18, 1974 and November 19, 1974 of Rs. 50,000, Rs. 50,000 and Rs. 1 lakh, respectively. While the assessment proceedings ....
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....xth accused, when examined, stated that he did not know anything about Prabhakaran or those five persons to whom interest was shown as paid and that he did not receive any cash from the fifth petitioner under any of those eight cheques. None of the petitioners was able to give any information either about Prabhakaran or about the five persons. On these materials, the respondent, finding that the counterfoils of the cheques and the cheques were at variance with each other and that the amounts under the eight cheques had really been drawn by the fifth petitioner who admittedly was a broker for them and had not been drawn by any one of the persons shown in the counterfoils, held that the petitioners and the sixth accused had entered into a conspiracy and for that purpose had fabricated cheques, counterfoils, account books, ledgers, day books and had prepared false returns, verified by, the second petitioner and delivered the same to him and had also made false statements on oath during the proceedings and that, therefore, they had committed offences under sections 120B and 420 read with sections 511 and 193, Indian Penal Code, and section 277 of the Income-tax Act. The above complaint....
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....ould still continue, without any reference to the assessment proceedings being started afresh. Learned counsel also relied upon certain decisions which I shall refer to. The question that arises for consideration is whether, in the circumstances of this case, the order of the Tribunal directing the respondent to redo the assessment is a ground for quashing the criminal prosecution ? I shall first refer to the decisions relied upon by learned counsel for the Revenue. In P. Jayappan v. S. K. Perumal [1984] 149 ITR 696, the Supreme Court held that merely because reassessment had been ordered, it would not be a bar to a prosecution in an offence committed in relation to the filing of the returns. The assessee in that case had initially filed returns for the year 1977-78 and the same had been accepted by the Department. Later, a search of the residence and seizure of several documents and account books revealed the suppression of purchase, of existence of several bank accounts, fixed deposits, investments in the names of his wife and daughters and several bank accounts not disclosed in the statements filed along with the returns. Criminal prosecution, therefore, was launched for offen....
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....both in civil and criminal courts. The proceedings before the income-tax authorities can be construed only as civil proceedings. Further, the complaint launched is independent of the order passed by the Income-tax Officer and the order of the Income-tax Officer has been quoted incidentally in the complaint. The complaint, as it is, makes out a prima facie case against the petitioners herein and, no doubt, it is for the complainant to establish the offences against the petitioners herein, before the criminal court." In Arulprakasam (S. R.) v. Tmt. Prema Malini Vasan [1987] 163 ITR 487, S. A. Kader J. of this court, held that filing of a revised return did not take away the falsity of the original return. Subsequent to the filing of the original return, a raid on the premises of the office and residence resulted in the seizure of more than one set of account books maintained by the petitioner, scrutiny of which showed suppression of collections. The assessee filed a revised return showing higher total income. The Income-tax Officer determined the total Income at a figure higher than the one shown in the revised return. The same was confirmed by the Commissioner of Income-tax. The Tr....
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....ature. The firm was, therefore, held to be a registered firm entitled to the concession due to a registered firm. The petition to quash the criminal prosecution on the ground that, in view of this positive finding by the Tribunal, the prosecution could not be continued, was rejected by the Punjab and Haryana High Court. Reversing the order of the High Court, the Supreme Court held that, in view of the finding recorded by the Tribunal on an appraisal of the entire material on record that the said partner was really a partner of the assessee-firm and the firm was really a genuine firm, there could be no prosecution for filing false returns. Embodying the same principle is the decision of the Delhi High Court in W. L. Kohli v. CIT [1985] 152 ITR 154. The assessee was prosecuted for offences under sections 277 and 278 of the Income-tax Act and sections 193 and 196 of the Indian Penal Code for having filed false returns and for having concealed considerable income. The assessee had filed two returns, one in his status as individual and the other, as a firm known as W. L. Kohli and Co.The Income-tax Officer found that the firm was fictitious and the income attributed to the firm really ....
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....but were true. In Uttam Chand's case [1982] 133 ITR 909 (SC), the Tribunal had given a positive finding that the signature of the partner was really hers and that the firm was, therefore, a registered firm ; in other words, the firm had been found to be a genuine one and the signature of the partner in the partnership deed was found to be not forged. When these findings are accepted, there is no falsity in the returns. Hence, the assessee could not be prosecuted for filing false returns since the returns themselves were found to be true. Similarly, in Kohli's case also [1985] 152 ITR 154 (Delhi), there was a positive finding that the firm "W. L. Kohli and Co." did really exist. Facts, in the instant case, however, are entirely different. No doubt, the Tribunal has set aside the assessment and has ordered de novo assessment to peruse the accounts to verify the physical existence of the two heads of additions and to give an opportunity to the petitioner to explain the source. The Tribunal has not held that the entries regarding Prabhakaran are true or that the entries regarding, payment of interest to the five persons are true. All that the Tribunal has stated is that, before the In....