TaxTMI 
TaxTMI 
2023 (9) TMI 115
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....e was filed by opposite party no.2 alleging therein that the assessee (petitioner) filed returns of income for the Assessment Year 2011-12 on 31.07.2011 declaring a total income of Rs. 18,83,940/-. The case of the petitioner was selected for scrutiny under Section Computer Assisted Scrutiny Selection (CASS). The assessment order under Section 143(3) of the Income Tax was passed by the learned Deputy Commissioner of Income Tax, Jamshedpur on 13.09.2013 determining the total income at Rs. 20,66,090/- only. In assessment order, three additions, first one at Rs. 1,64,695/- only on the account of undisclosed interest income on National Saving Certificates, second one at Rs. 4,351/- on account of undisclosed Bank Interest and third one at Rs. 13,100/- on account of undisclosed interest on Fixed Deposits with Telco Ltd. were made. Before making the said additions as mentioned above, the assessee is said to have been given the reasonable opportunity of being heard, but the assessee failed to offer any satisfactory explanation in this regard. The assessee had concealed the income of Rs. 1,82,146/- deliberately as mentioned above. The assessee has deliberately provided inaccurate details of ....
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....its that thereafter only penalty proceeding was initiated against the petitioner. He submits that in view of Section 271(1)(c) of the said Act, the assessing officer imposed penalty of Rs. 56,285/- upon the petitioner for the said laches on behalf of the petitioner. He further submits that offence is made out for concealment of income and in view of that even if the penalty order has been set aside by the appellate tribunal, the case cannot be quashed on that ground. He submits that in view of the order passed by the Hon'ble Supreme Court in Radheshyam Kejriwal v. State of West Bengal and another; [(2011) 3 SCC 437] , both proceedings can go separately. He submits that same ratio was also there in the order passed by the Jammu and Kashmir High Court in CRMC No.205 of 2015, dated 28.09.2018 in Arun Arya v. Income Tax Officer . On these grounds, he submits that the entire criminal proceeding may not be quashed. 6. In view of the above submissions of the learned counsel for the parties, the Court has gone through the materials on record and finds that admittedly the petitioner has already filed return with regard to income of Rs. 18,83,940/-. On Computed Assisted Scrutiny Selecti....
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....r. It is contended on behalf of the respondents by Mr. Mihir Bhattacharjee, learned advocate, that since the prosecution has been launched and the learned Metropolitan Magistrate has taken cognizance of the same, this court should not at this stage quash the proceeding. If the Department cannot prove the case, the petitioner will be acquitted. He has Submitted that the facts disclose an offence which should be tried by the learned Metropolitan Magistrate. I am, however, unable to accept the contentions of Mr. Bhattacharjee. A criminal prosecution for an offence under a special statute must not be initiated as a matter of course where the prosecution would involve intricate questions of interpretation of the Income Tax Act. The Department should not rush with the prosecution without any determination by the Income-tax Officer of the liability of the accused-assessee which is sought to be made the basis for prosecution. In this case, though penalty proceeding under Section 271(1)(a) was initiated against the petitioner for delay in filing the return, no order has been passed. In other words, the Income-tax Officer did not find any reason to penalise the petitioner for delay in fi....
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....ate questions of interpretation of the Income Tax Act. The object of launching criminal prosecution for willful default in complying with the provisions of the Income Tax Act is to prevent evasion of tax. 9. The willful failure on the part of the defaulter and the nature of penalty was again the subject matter before the Hon'ble Supreme Court in the case of Gujrat Travancore Agency v. Commissioner of Income- Tax, Kerala; [(1989) 177 ITR 455] . Relevant paragraphs of the said judgment read as under: "Learned counsel for the assessee has addressed an exhaustive argument before us on the question whether a penal- ty imposed under s. 271(1)(a) of the Act involves the ele- ment of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in Order to demonstrate that the proceedings by way of penalty under s. 271(1)(a) of the Act are quasi criminal in nature and that therefore the element of mens rea is a mandatory requirement before a penalty can be imposed under s. 271(1)(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them were considered by the High Court and ....
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....roved in the proceedings taken by the Income tax Officer under s. 271(1)(a) of the Income-tax Act against the assessee for the assessment years 1965-66 and 1966-67." 10. Looking into the aforesaid judgment, it transpires that in most of the cases of criminal liability, the Hon'ble Supreme Court held that the intention of the Legislature is that the penalty should serve as a deterrent. In the case in hand, in view of the appellate order, penalty order is not there. 11. The willful failure of payment of tax was also the subject matter before the Andhra Pradesh High Court in the case of Income-Tax Officer v. Autofil & others; [(1990) 184 ITR 47 (AP)] . Relevant paragraph of the said judgment reads as under: "Therefore, wilfulness contemplates some element of evil motive and want to justification. In CIT v. Patram Dass Raja Ram Beri [1981] 132 ITR 671, a Full Bench of the Punjab and Haryana High Court, considering the term "wilful failure" occurring in section 276CC of the Income-tax Act, held that "willfulness certainly brings in the element of guilt" and thus the requirement of mens rea. Our Supreme Court in Gujarat Travancore Agency v. CIT, has observed that the creation of ....
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....y the complainant following the appellate Tribunal's order, no offence survives under the Income Tax Act and thus quashing of prosecution is automatic. In the instant case, the penalties levied under Section 271(1)(c) were cancelled by the respondent by giving effect to the order of the Income Tax Appellate Tribunal in I.T.A. Nos. 3129-3132. It is settled law that levy of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276C is automatic. In our opinion, the appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of 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. In our view, once the finding of concealment and subsequent levy of penalties under Section 271(1)....