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TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1599
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....ed by Director of Income Tax (INV)-1, Delhi, was conducted on 13.06.2014 at the premises of Petitioner/Raj Kumar Kedia at P-12, Hauz Khas Enclave, Second Floor, New Delhi and some incriminating documents were seized. The search action commenced on 13.06.2014 and concluded on 17.06.2014. Panchnama was prepared on the spot in respect of search and seizure action carried out in the aforesaid premises. 3. The statement of the Petitioner was recorded on Oath under Section 132(4) of the I.T. Act on 13.06.2014 and 17.06.2014. The Petitioner in his statement, admitted that in addition to his regular business activity of Share Broking, he was involved in the activity of providing accommodation entries to various beneficiaries and also explained in detail the modus operandi followed by him in providing such entries. 4. As per the Petitioner, Accommodation Entry is a financial transaction between two parties, whereby one party enters the transaction in his books for accommodating the other party in lieu of cash of equal amount and commission charged over and above at a certain fixed percentage of giving such Accommodation Entry, which may be a long term or a short-term Accommodation ent....
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....Cause Notice dated 30.01.2015 was issued by learned DIT (Inv.)-I, Income Tax Department, New Delhi. The Petitioner gave a Reply dated 23.02.2015 under his signatures, to the Show Cause Notice. However, the Reply was not found satisfactory as it was stated that levy of penalty is a pre-condition for launching of prosecution, which can be levied by the Assessing Officer and not by the Investigating Agency. It was also stated in the Reply that prior to the issue of Notification dated 13.11.2014, no power for prosecution was available with the authorities of Investigation Directorate. A reference was also made to his Letter dated 14.10.2014 through which he had retracted his earlier statement. 12. It is submitted that levy of penalty is not a pre-condition for launching of prosecution, as penalty is initiated in the Assessment Order; the only requirement is that the Complainant should have evidence in support of the allegations made in the Complaint. 13. It was asserted that the Petitioner had concealed his income, and thus, committed and offence punishable under Section 276-C(1) and Section 277-A I.T. Act, wilfully with an intent to enable the beneficiaries to evade tax chargeab....
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....rcise the power of a junior authority, would defeat the legislative intent. The learned ACMM miserably failed to consider that Principal Director is an Authority superior to Commissioner and the same is against the mandate of law. 21. Section 2(16) of the Act is not applicable to the facts in the Complaint and the same cannot be used interchangeably as the power delegated to one class of Officers, has to be exercised only by that class of Officers. 22. Reliance has been placed on Dr. Nalini Mahajan vs. DIT (Inv.) 257 ITR 123 (Del.), wherein it was held that the provisions of Income Tax Act envisages a hierarchy of the Officers. Had the legislature intended to confer the power of issuing authorization of warrant upon all officers who come within the purview of interpretation clause of "Director" or "Director-General", it was not necessary to mention therein that where the Director or the Director-General or the Chief Commissioner or the Commissioner or the Joint Director or Joint Commissioner, as the case may be, empowered in this behalf by the Board, would have also come within the purview of the definition of the Director-General or Director. A statutory power is conferred b....
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.... of challenge is that the Complaint was filed prematurely since there was no Assessment Order to reflect that there was evasion of Tax. 29. Section 276-C(1) provides for punishment in case if a person wilfully attempts in any manner to evade any tax penalty or interest chargeable or imposable under the Act. However, the Assessment proceedings for Assessment Year 2014-15 have not been completed and 2015-16 had not commenced on the said date when the single Sanction under Section 279(1) was granted on 12.03.2015. The question of evasion of tax did not arise on the date of filing of Complaint since the evasion of tax was not determined on the basis of grant of sanction or on the date of filing of Criminal Complaints. The Complaints are, therefore, pre-mature and liable to be dismissed. 30. Furthermore, Section 276-C(1) Income Tax Act is a case where the amounts sought to be evaded exceeds Rs.25 lakhs, the punishment would be RI for not less than six months, but may extend to 7 years. However, if the amount evaded is less than Rs.25 lakhs, the punishment prescribed is a term not less than 3 months, but may extend till 2 years. It is submitted that the determination of the amounts....
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....sed. 38. The first contention raised on behalf of the Petitioner is that he Sanction has been granted by the Principal Director (Inv.)-I for launch of Prosecution, when in fact Section 279(1) of the Act authorizes only Principal Commissioner or Commissioner or Commissioner (Appeals) as the appropriate Authority within the meaning of Section 279-C UA. 39. Section 2(16) of the Act defines Commissioner as under : 2(16) "Commissioner" means a person appointed to be a Commissioner of Income-tax or a Director of Income-tax or a Principal Commissioner of Income-tax or a Principal Director of Income-tax under sub-section (1) of Section 117" 40. Section 116 gives the list of Income-tax Authorities which reads as under : "116. There shall be the following classes of income-tax authorities for the purposes of this Act, namely: (a) the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), (aa) Principal Directors General of Income-tax or Principal Chief Commissioners of Income-tax, (b) Directors-General of Income-tax or Chief Commissioners of Income-tax, (ba) Principal Directors of In....
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....ay be notified by the Principal Director General in this regard. To say at this stage that the Deputy Director had no authority to file the Complaint, is premature and no such inference can be drawn that the Complaint has been filed by a person not duly authorised. However, the Petitioner shall be at liberty to raise this objection at the appropriate stage. 48. The third ground of challenge is that the Sanction Order dated 12.03.2015 is vague in so much as it does not specify if the Sanction has been granted under Section 276-C(1) of 276 (2). 49. However, this argument has been made without referring to the Sanction Order wherein the Sub Section (1) of Section 276 has been reproduced for considering whether the Sanction is mandated. The very fact that the entire Section 276 (1) has been reproduced and thereafter, Sanction granted clearly implies that the Sanction is under Section 276 (1) Income Tax Act. The argument on the Sanction being without application of mind or vague is not tenable on record. 50. The last argument which has been contended is that the Complaint is premature as the Assessment of the income for the Financial Year 2015-16 was yet to be finalized. 51.....