Assistant Commissioner of Income Tax vs Belco Engineers (P.) Ltd.

Bahri, J.—This petition has been brought against the order dated 29-9-1988, of an Addl. Chief Metropolitan Magistrate, Delhi, by which she had declined to take cognizance of the offence alleged in the complaint filed by the petitioner for proceeding against respondents for offence punishable under sections 276C (1) and 277 of the income tax Act, 1961 (''the Act'').

In the assessment proceedings pertaining to the assessment year 1982-83, the respondents had filed the returns in which they had shown certain excess amounts having been spent on raw material and had under-valued the value of scrap. The ITO had not accepted the valuation given by the respondents in the returns and had made two additions, one in the sum of Rs. 2,50,000 and the other in the sum of Rs. 52,220. It appears that in appeal the addition of Rs. 2,50,000 was reduced to Rs. 1,32,000. It is not necessary to deal with the impugned order of the Addl. Chief Metropolitan Magistrate in view of the subsequent development taking place in the matter. It is now not disputed before me that in an appeal brought before the Tribunal, the Tribunal had passed the judgment on 28-2-1989, by which both these additions have been deleted and the valuations given by the respondents have been accepted. Now the short question which arises for decision in view of the fact that the highest appellate authority in the income tax matters having deleted the aforesaid additions and having accepted the returns of the respondents on those aspects, whether the complaint for commission of any offence under the Act could still continue? This question stands now authoritatively settled by the Supreme Court in P. Jayappan v. S.K. Perumal, First TTO AIR 1984 SC 1693. I quote the law laid down by the Supreme Court in this respect as follows:

"...It is true that as observed by this Court in Uttam Chand and Others Vs. Income Tax Officer, Central Circle, Amritsar, , the prosecution once initiated may be quashed in the light of a finding favourable to the assessee recorded by an authority under the Act subsequently in respect of the relevant assessment proceedings but that decision is no authority for the proposition that no proceedings can be initiated at all u/s 276C and section 277 as long as some proceeding under the Act in which there is a chance of success of the assessee is pending. A mere expectation of success in some proceeding in appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings u/s 276C and section 277 of the Act. In the criminal case all the ingredients of the offence in question have to be established in order to secure the conviction of the accused. The criminal court no doubt has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act. It does not, however, mean that the result of a proceeding under the Act would be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it. Otherwise there is a danger of a contention being advanced that whenever the assessee or any other person liable under the Act has failed to convince the authorities in the proceedings under the Act that he has not deliberately made any false statement or that he has not fabricated any material evidence, the conviction of such person should invariably follow in the criminal court" (p. 1695)

So in view of the law laid down by the Supreme Court in the case of Uttam Chand and Others Vs. Income Tax Officer, Central Circle, Amritsar, hold that now the criminal complaint could not be at all proceeded against the respondents for the aforesaid offences and, thus, I dismiss this criminal revision.