TaxTMI 
TaxTMI 
1981 (10) TMI 35
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....ls lying with the assessee in the factory, it was asked to explain, (i) details of the components, (ii) date on which the same were given by the assessee. In response to the same the assessee-company's managing director, chartered accountant and the accountant put in appearance and confirmed that the said goods were covered in the list of raw materials lying in the factory of the assessee. Thereupon, they were required to furnish a copy of the list of raw materials which was accordingly submitted by the assessee's accountant, Shri R. S. Wadhwa, on February 2, 1976, showing the total raw materials lying in the factory at Rs. 80,168. However, further scrutiny of the assessment records revealed that the assessee had already filed one such list of raw materials lying in the factory and the same contained entirely different particulars of the articles lying in the factory from the list subsequently submitted by the assessee. The details of these lists are as under: List 'A' Rs. 105 H.S. Sheet 37,521.00 6,475 Kg. E.N. Bright 22,008.53 3,960 Kg. E.N. Bars 20,638.53 -------------------- 80,168.06 -------------------- List 'B' Lever clutch shaft 1,651 pcs. 9,906.0....
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....e same had not been shown by them in the original statement marked 'A'. Hence, he concluded that the assessee had concealed particulars of its income by not accounting for the components of machinery so purchased and he made a trading addition of Rs. 34,102 to the taxable income of the assessee on account of its being concealed income, vide order dated 10th March, 1976. Feeling dissatisfied, the assessee went in appeal which was heard and disposed of by the AAC, vide his order dated 27th April, 1977. The AAC closely scrutinised both the lists marked 'A' & 'B' as well as the account books and other records of the assessee and arrived at the conclusion that the original list of raw materials submitted by the assessee was correct inasmuch as the machine components purchased by the assessee from its allied concern on 26th March, 1973, had been disposed of in the month of March, 1973, itself and none of those could be lying in the closing stock of the raw materials. As a necessary corollary he found that the list 'B' prepared by Shri Wadhwa showing these machine components in stock of raw materials could not be correct. So, he allowed the appeal and deleted the trading addition fr....
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....h March, 1979) [since reported in [1982] 133 ITR 909 (SC) in support of his argument. The contention raised on behalf of the respondents, however, is that the mere fact that the order of the ITO has been set aside by the AAC as well as the I.T. Appellate Tribunal does not debar the criminal court from proceeding with the trial of the petitioner on charge under s. 277 and coming to an independent finding on the basis of the evidence which may be adduced by the parties before it. In other words, the findings of the appellate authorities are not binding on the criminal court and as such no case for quashing the complaint or the proceedings pending before it is made out. In this context, he has adverted to a decision of the Allahabad High Court in Dr. D. N. Munshi v. N. B. Singh [1976] Tax LR 677; [1978] 112 ITR 173. Incidentally this authority was followed by the Punjab and Haryana High Court in Uttam Chand v. ITO (Criminal Revision No. 15-M of 1976, decided on 22nd May, 1978) [since reported in [1982] 133 ITR 911 (P & H)] against which special leave was granted by the Supreme Court in Criminal Appeal No. 156 of 1979 (Uttam Chand v. ITO) [1982] 133 ITR 909. The facts in Uttam Ch....
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....f evidence to show that there was no offence committed by the accused but that by itself is not sufficient to direct the dismissal of the complaint of acquittal or discharge of the accused under the Criminal Procedure Code." The Supreme Court after granting special leave to appeal against the aforesaid order proceeded to dispose of Criminal Appeal No. 156 of 1979 forthwith (Uttam Chand v. ITO [1982] 133 ITR 909). Their Lordships observed that (p. 910): " In view of the finding recorded by the Income-tax Appellate Tribunal that it was clear on the appraisal of the entire material on the record that Shrimati Janak Rani was a partner of the assessee-firm and that the firm was a genuine firm, we do not see how the assessee can be prosecuted for filing false returns. We, accordingly, allow this appeal and quash the prosecution." In view of this authoritative pronouncement of the Supreme Court, the decisions of the Allahabad High Court (Dr. D. N. Munshi v. N. B. Singh [1978] 112 ITR 173) and the Punjab & Haryana High Court (Uttam Chand v. ITO [1982] 133 ITR 911) must be deemed to be no longer good law and I see no reason why the present petition too be not allowed and the compla....
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....en shown in Wadhwa's list of raw materials, it must, following that, the same could not be a correct list as is also the stand taken by the appellant. Thus, the very prop on which the Income-tax Officer is trying to justify his addition of Rs. 34,102 falls to the ground. The addition to my mind was uncalled for and need, therefore, be deleted from the assessment." The I.T. Appellate Tribunal on its own part again scrutinised the material on the record carefully before confirming the finding of the lower appellate court. It is well-settled law that if an appeal is provided against the order passed by a Tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal it is obvious that it is the appellate decision that is effective and can be enforced. [See CIT v. Amritlal Bhogilal & Co. [1958] 34 ITR 130 (SC)]. That, besides, I fully endorse the views expressed by the AAC and confirmed by the I.T. Appellate Tribunal that original statement of raw materials marked " A " correctly reflected the stock position and it was on account of sheer mistake on the part of the second accountant of ....
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....es. As for the second statement which was admittedly false and for which an explanation has already been furnished by the petitioner as well as Shri Wadhwa, the second accountant of the assessee, suffice it to remark that the learned counsel for the respondents has not been able to show as to what amount of tax would have been evaded if the said statement of account had been accepted as true, this being an essential ingredient of the offence before punishment can be awarded to the petitioner under the newly added cls. (i) & (ii) to s. 277 as it originally stood. Indeed, if the same were accepted to be correct, machine components would be still considered to be part of the raw materials in stock at the end of the financial year concerned and as such the question of concealment or evasion of income would not arise. Conversely if the original statement marked "A" were to be accepted and the machine components were taken as having been sold off there was no concealment of income as such. Thus, looked at from any angle, the continuance of the criminal trial against the petitioner will be nothing but an abuse of process of law and the same must be quashed. An argument was also advance....
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....d counsel for the respondents also raised an objection of preliminary nature, in that the order of the Magistrate framing a charge could be revised by the sessions court or this court under s. 397 of the Cr. PC but no revision petition having been moved by the petitioner under the said section within time, this court will not be justified in invoking its inherent jurisdiction to grant the relief which could be given in exercise of its revisional powers. Reliance in this context has been placed on Madhu Limaye v. State of Maharashtra, AIR 1978 SC 47, in which it was held thus [p. 50(2)]: "........ the exercise of the inherent power of the High Court ...... is not to be resorted to if there is a specific provision in the Code for the redress of the grievance of the aggrieved party." It may, however, be noticed that in the same authority the Supreme Court observed that the inherent power of the High Court should be exercised, although very sparingly, to prevent the abuse of process of any court or otherwise to secure the ends of justice. Still later, in Raj Kapoor v. State (Delhi Administration), AIR 1980 SC 258, the Supreme Court had an occasion to consider a case where the Hig....