1986 PLP 505 (PTD)

Uttam Chand v. Income‑tax Officer, Central Circle, Amritsar (1982) 133 I T R 909 and Parkash Chand v. Income‑tax Officer, 'A' Ward Sonepat (1982) 134 I T R 8 ref. D.N. Awasthy with B.K. Jhingan for Petitioners. Ashok Bhan with A . K Mittal for Respondents The petitioner is a registered firm. It is an assessee under the Income‑tax Act, 1961. For the assessment year 1973‑74, the petitioner firm returned a certain sum as its incomes. The Income‑tax Officer, while framing the assessment made considerable additions thereto. On appeal to the Appellate Assistant Commissioner, the amount was reduced. On cross‑appeals to the Income‑tax Appellate Tribunal, certain additions were again made. Thus, in the quantum proceedings the matter came finally to rest. Simultaneously the Inspecting Assistant Commissioner of Income‑tax passed an order of penalty against the petitioner‑firm. The petitioner's appeal to the Income‑tax Appellate Tribunal was dismissed. The petitioner, thereupon, successfully sought a reference to the High Court, bearing No. Income‑tax Reference 11 of 1981, which is pending. The question posed therein is to the effect, whether the Inspecting Assistant Commissioner of Income‑tax was legally authorized to levy penalty. The third step which that Department took is to obtain sanction from the Commissioner of Income‑tax to prosecute the petitioner before a Criminal Court under section 277 of the Income‑tax Act. In the said complaint, charge having been framed against the petitioner‑firm, it has approached this Court to get quashed the same by invoking inherent jurisdiction of this Court under section 482 of the Criminal Procedure Code. It is being bemoaned that the present proceedings are in the nature of an abuse of the process of the Court and, in the interests of justice, these be quashed.

2. Mr. D.N. Awasthy, learned counsel for the petitioner‑firm, has, in the first place, contended that the sanction accorded by the Commissioner of Income‑tax is an unmindful sanction and as such the criminal complaint cannot proceed. From the bare perusal of the impugned order of the Magistrate, it seems that the question as such was never raised before him. The question of sanction however, was raised in quite a different context before the learned Magistrate. Since I do not have the advantage of his view on the question as raised I do not propose to touch the question raised. In the present proceedings, I am not even inclined to permit Mr. Awasthy to raise this question in the manner he has attempted to project it. The petitioner may, if so advised, it in a proper manner before the Court dealing with the matter.

3. The second contention of Mr. Awasthy is that since, penalty proceedings are open to correction by decision in Income‑tax Reference No. 11 of 1981, the complaint cannot be allowed to proceed. The precise objection is that the Supreme Court in Uttam Chand v. Income‑tax Officer, Central Circle, Amritsar (1982) 133 1 T R 909 (S C) and this Court in Parkash Chand v. Income‑tax Officer, A Ward, Sonepat (1982) 134 I T R 8 (Punj. and Har. ) have in substance taken the view that in case the finding of the Income‑tax Appellate Tribunal in penalty proceedings was that there was no proof of concealment of income or deliberate furnishing of inaccurate particulars, then criminal proceedings cannot continue under section 277 of the I.‑T. Act, 1961. It is the admitted position that if under the old Act of 1922 penalty proceeding has been taken against the assessee, then no prosecution could be launched against him. But, under the present Act of 1961, there is no such bar, for penalty proceedings can be launched as also prosecution. It is also a settled principle that whatever adverse has been observed in the orders in assessment or penalty proceedings, that is not binding on the criminal Court while determining the guilt of the assessee. But a principle of good sense seems to have been grafted in the aforesaid principle by settling that in case the Tribunal comes to a finding in penalty proceedings (and, if I may say so, in quantum proceedings as well) that the assessee had not furnished inaccurate particulars or had not concealed his income, then that finding has, in a way been made to influence the mind of the Criminal Court in requiring it to drop proceedings?? is precisely in these circumstances that in the afore ?referred to two cases, namely, Uttam Chand's case (supra) and Parkash Chand's case (supra), criminal proceedings were dropped, making it incumbent on the criminal Courts to take into account the findings of the Tribunal that are in favour of the assessee so as to give a death knell to the criminal proceedings.

4. In the instant case, as yet there is no such finding which is favourable to the assessee‑petitioner. In anticipation and expectancy that such a finding would perhaps emerge on the result of decision of Income‑tax Reference No. 11 of 1981, it is contended that, since the order of the Tribunal is not final and is subject to correction in the light of the opinion given by this Court, it might well be that the jurisdictional foundation is knocked off and penalty proceedings may have to be undertaken by the Income‑tax Officer, and in that event he may take a different view so as to absolve the petitioner altogether from imposition of any penalty. And, if he does not do so there are two other higher forums open in which such a finding can come about. As it is, this is long chain of thought based upon a long list of expectancies. As at present advised. I am of the view that these expectancies should not stand in the ways of the criminal Court to proceed in the matter. As noticed earlier, this Court had stepped in to quash proceedings on the finding of the final order of the Tribunal in favour of the assessee. This Court has so far not stopped any proceedings against???? the assessee in a criminal Court on mere expectancy. It is needless to emphasize that, in case the expectancies of the petitioner fructify, and it gets an order in its favour by the time the trial is pending, or even at the appellate and revisional stages, all those Courts, in dealing with that matter, would be required to give due regard to those findings in case they are favourable to the assessee, in view of Uttam Chand's case (supra). Thus, I am inclined to take the view that the proceedings against the petitioner at the instant stage are not an abuse of the process of the Court and staying them obviously would not be in the interest of justice. It is true that there is no bar of limitation for economic offences under the law, yet, at the moment, proceedings cannot be allowed to stagnate in the criminal Court and make the law relating thereto a mockery.

5. For the foregoing reasons, this petition fails and is hereby dismissed. M . B . A .?????????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.