TaxTMI 
TaxTMI 
2022 (12) TMI 698
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....nsent of the learned counsel for the parties these matters were posted for 29.11.2022. 2. Today, Mr. Ratnesh Nandan Sahay, learned counsel for the O.P. No. 2 seeks further time for filing counter affidavit but the said prayer is rejected in view of the fact that much indulgence has been provided to the O.P. No. 2 for filing counter-affidavit and accordingly, these matters are being heard on merit. 3. In both the cases common question of law is involved that is why both the petitions are being heard together with the consent of the learned counsel for the parties. 4. Heard Mr. Sumeet Gadodia, learned counsel for the petitioners, Mr. Rajnesh Vardhan, learned counsel for the State and Mr. Ratnesh Nandan Sahay, learned counsel for the O.P. No. 2. 5. Cr.M.P. No.591 of 2017 has been filed for quashing of entire criminal proceeding including order taking cognizance dated 10.11.2016 passed by the Special Sub-Judge-VII, Economic Offence, Ranchi in Complaint Case No. 07 of 2016/Eco. Off. Case No. 7 of 2016 for the offence under sections 276C (1), 277 and 278E of the Income Tax Act, 1961, pending in the Court of learned Special Sub-Judge-VII, Economic Offence, Ranchi. 6. Cr.M.P....
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....he Show Cause Notice for initiation of prosecution is based on presumption. (vii). It has been further alleged that the reply of the assessee was carefully considered by Principal Director of Income Tax (Investigation) and sanction was accorded under section 279(1) of the Income Tax Act by the said authority for prosecuting the petitioner. (viii). In the complaint petition, it has been further alleged that the Enquiry/Investigation Report reveals that the petitioner has transacted certain scripts of shares whose value has been appreciated 50 times in one year. (ix). It has been further alleged that the Director of the Company, in whose share the petitioner had transacted, has been examined on oath and he has stated that the was only a dummy Director and the company was controlled and managed by one Deepak Patwari. (x). It has been further alleged that said Deepak Patwari has been examined on oath and he has admitted that he was engaged in the business of providing bogus accommodation entries to various beneficiaries. (xi). In view of the aforesaid facts, it has been stated in the complaint petition that the said statements strengthen and....
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....7 and 278 E of the Income Tax Act, 1961 and, accordingly, proposal was made for launching prosecution under section 276C(1), 277 and 278E of the Act by Deputy Director of Income Tax (Investigation) to the Principal Director of Income Tax (Investigation), Patna vide letter dated 20th May, 2016. (v). It has been further alleged that even opportunity of being heard was afforded to the petitioner by issuance of Show Cause Notice dated 07.06.2016 requiring the petitioner to show cause against the intended prosecution against him under section 276C(1), 277 and 278E of the Income Tax Act. (vi). It has been further stated that the assessee had replied to the said show cause notice and in his reply, the assessee has specifically stated that the case of the petitioner is yet to be assessed under section 153A of the Income Tax Act and, at present, the Show Cause Notice issued for initiation of prosecution is based on presumption. (vii). It has been further alleged that the reply of the assessee was carefully considered by Principal Director of Income Tax (Investigation) and sanction was accorded under section 279(1) of the Income Tax Act by the said authority for pr....
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.... Sumeet Gadodia, learned counsel appearing on behalf of the petitioners in both the cases draws the attention of the Court to Section 277C(1) of the Income Tax Act and submits that this section provides for penalty and prosecution is prescribed therein. He further submits that section 277 of the Income Tax Act speaks of false statement filed by any assessee. He further submits that section 278(E) of the Act speaks of culpable state of mind. He further submits that there is allegation against the petitioners that the petitioners have obtained Long Term Capital Gain which is found to be incorrect. He submits that the penalty was imposed upon the petitioner in Cr.M.P. No. 591 of 2017 by order dated 06.06.2018 which was challenged by the petitioner before the First Appellate Authority and the First Appellate Authority affirmed the penalty thereafter the Second Appellant Authority by order dated 15.07.2020 set aside the penalty imposed upon the petitioner. He further submits that so far as petitioner in Cr.M.P. No. 593 of 2017 is concerned, penalty has not been imposed upon the petitioner. He elaborates his arguments by way of submitting that once the penalty imposed upon the petitioner....
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....ot be made to suffer and face the rigours of criminal trial when the same cannot be sustained in the eye of the law because the entire prosecution in view of a conclusive finding of the Income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under section 254 of the Act, a finding of the Appellate Tribunal supersedes the order of the assessing officer under Section 143(3) more so when the assessing officer cancelled the penalty levied. 26. In our view, once the finding of concealment and subsequent levy of penalties under Section 271(1)(c) of the Act has been struck down by the Tribunal, the assessing officer has no other alternative except to correct his order under Section 154 of the Act as per the directions of the Tribunal. As already noticed, the subject-matter of the complaint before this Court is concealment of income arrived at on the basis of the finding of the assessing officer. If the Tribunal has set aside the order of concealment and penalties, there is no concealment in the eye of the law and, therefore, the prosecution cannot be proceeded with by the complainant and further proceedings will be illegal and without jurisdi....
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.... counsel for the parties the Court has gone through the materials on record and finds that admittedly complaint was filed under sections 276(C)(1), 277 and 278E of the Income Tax Act in both the cases and accordingly, the learned court has taken cognizance in that sections and aggrieved with the same, the petitioners have moved this Court. It is an admitted fact that the petitioner in Cr.M.P. No. 591 of 2017 was imposed penalty which was affirmed by the First Appellate Authority and the Second Appellate Authority by order dated 15.07.2020 has been pleased to set aside penalty imposed upon the petitioner. In the second case i.e. Cr.M.P. No. 593 of 2017 the penalty has not been imposed upon the petitioner. The question framed in the case of K.C. Builders (supra) at para 8 are the identical which is subject matter of these cases. Particularly the law point framed at para 8 (a), (b)and (c) and in that case in para 25 it has been clearly held that once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under section 276C is automatic. The case of the petitioners is fully covered with the case of K.C. Builders (supra). The case of K.C. Bui....