G.C. Sharma vs Commissioner of Income Tax, Delhi and Others

M.R.A. Ansari, J.

(1) The petitioner herein Shri G. C. Sharma was directed by a notice dated 29th April, 1059 issued u/s 22(2) of the Income Tax Act, 1922( hereinafter referred to as the Old Act) to file his return of income for the assessment year 1959-1960. the relevant previous year, being the year ending 3 1/03/1959. In compliance with this notice the petitioner filed the return on 28/07/1962 declaring an income of Rs. 43,253.00. During the course of the assessment proceedings, it was found that the petitioner had claimed allowance for an expenditure of Rs. 18,000.00 representing .payment made to Modern Sanitations which according : to the petitioner was an expenditure incurred solely and exclusively for the purpose of the petitioner''s business. The petitioner also filed some documents by way of evidence in support of this claim. The Income tax Officer was of the view (i) that the petitioner''s claim was false (ii) that the petitioner had in fact not made any payment of Rs. 18,000.00 to Modern Sanitations (iii) that the documents filed by the assessed in support of this claim were fabricated by him and (iv) that the petitioner was not entitled to the deductions claimed by him in computing his income .The assessment was made on a total income of Rs. 82,000.00.This assessment was made on 30/03/1964 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the New Act).While completing the assessment the Income Tax Officer also directed the issue of a notice u/s 274 read with section 273 of the New Act and section 274 read with section 271 of the New Act to the petitioner. As in the opinion of the Income Tax Officer the minimum penalty imposable against the petitioner exceeded a sum of Rs. 100.00he referred the assessed''s case to the inspecting Assistant Commissioner u/s 274 of the Act.

(2) While these proceedings under sections 274 read with section 273 of the New Act and section 274 read with section 271 of the New Act were pending before the Inspecting Assistant Commissioner the Income Tax Officer also filed a complaint against the petitioner in the Court of the Sub Divisional Magistrate New Delhi u/s 277 of the New Act and u/s 193, 467 and 471 of the Indian Penal Code. It is these Criminal Proceedings pending in the court of the Sub Divisional Magistrate, New Delhi that the petitioner seeks to challenge in this petition filed under Articles 226 and 227 of the Constitution of India .

(3) It may also be stated at this stage that the petitioner had filed an appeal before the appellate Assistant Commissioner against the assessment order passed by the Income Tax Officer on 30/03/1964 in respect of the assessment year 1959-60. That appeal is still pending .As already stated, by the time the petitioner filed the pre-sent petition before this Court, proceedings under S. 274 read with S. 273 of the New Act and S. 274 read with S. 271 of the New Act were still pending. But subsequent to the filing of this petition IT would appear that the penalty proceedings under S, 274 read with S. 273 of the New Act were dropped and the proceedings under S. 274 read with S. 271 of the New Act were disposed off and the Inspecting Assistant Commissioner levied a penalty of Rs. 28,000.00 against the petitioner under S. 271(1)(c) of the New Act. The petitioner preferred an appeal to the Income Tax Appellate Tribunal ? against this order of the Inspecting Assistant Commissioner and while confirming the levy of the penalty the said Tribunal reduced the quantum of the penalty to Rs. 10,000.00. The petitioner did not file any reference application either before the appellate Tribunal or before this Court against the said order of the Appellate Tribunal. The said order of the Tribunal levying a penalty of Rs. 10,000.00against the petitioner under S. 271(1)(c) of the New Act has, therefore., become final. As a matter of fact the petitioner is not seeking to challenge the said order of the Tribunal in the present writ proceedings. As already stated it is only the Criminal proceedings in the court of the S.D.M. New Delhi that are being challenged by the petitioner.

(4) The first ground on which these Criminal Proceedings have been challenged is that the assessment itself should have been made under S. 23(3) of the Old Act as the return filed by the petitioner wasin compliance with the notice under S. 22 (2) of the Old Act and the assessment proceedings should be deemed to have been commenced under the provisions of the Old Act and that if the assessment was made under the provisions of Old Act, then under S. 28 of the Old Act, the petitioner could not be subject to a criminal prosecution in respect of the same facts on which the penalty h:.d been imposed. The petitioner''s contention is clearly untenable in. view of the provisions of S. 297(2)(b) of the New Act which are as follows:-

"WHERE a return of income is filed after the commencement of this Act otherwise then pursuance of a notice u/s 34 of the repealed Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment year shall be made in accordance with the procedure specified in this Act."

(5) In the present case the assessee had filed the return of income for the assessment year 1959-60 on 7/08/1962 i.e. after the commencement of the New Act and the assessment for this year, has necessarily to be made under the New Act. The fact that a notice under S. 22(2)was issued to the petitioner prior to the commencement of the New Act is wholly immaterial. Even if it is assumed that the issue of the notice Under S. 22(2) of the Old Act amounts to commencement of the assessment proceedings for the assessment year 1959-61), the assessment has still to be made under the New Act, if the return of income is filed after the commencement of the New Act. Clause (c) of S. 297(2) will not apply to the petitioner''s case because it refers only to" any proceeding pending on the commencement of this Act before any Incometax authority the Appellate Tribunal or any court, by way of appeal reference of revision." It is not any proceeding pending on the commencement of the Act before the Income Tax Authority Appellate Tribunal or Court that has to be disposed of under the Old Act but it is only a proceeding by way of appeal, reference or revision which was pending on the commencement of the Old Act that has to be disposed of under the Act. The offences are alleged to have been committed after the repeal of 1922 Act and lh6l Act does not bar prosecution even if penalty is imposed. The further contention that If the assessment was made under the Old Act the penalty for concealment of income should also have beer, levied u/s 28(l)(c) of the Old Act also cannot be accepted in view of the decision of Division Bench by this Court in Civil Writ Petition No. 247 of 1967 decided on 25/02/1969.

(6) The next contention urged on behalf of the petitioner is that section 277 of the New Act will not apply to the petitioner as the petitioner had not made any statement in any verification under the New Act ,on the basis of which he is being prosecuted as the statement in the verification was contained in the return of the income filed by him under the old Act. First of all section 2/7 makes no reference to any return of income filed under the New Act. It refers to a statement in any verification under the New Act and such a statement in any verification needn''t Therefore necessarily be made in the return of income filed by the petitioner. Secondly the return of income filed by the petitioner on 7/08/1962 must be deemed to be a return filed under the New Act.

(7) The filing of the return of income is a part of the procedure for ascertaining and imposing liability upon the tax payer. Therefore theretarn of income was filed under the provisions of the New Act and section 277 of the New Act is applicable to any statement in such a return.

(8) Thirdly section 277/15 also applicable in cases where a person delivers an account or statement which is false even otherwise than in the return of income filed by him. In other words, if a person delivers an account of statement which is false during the course of the assessment proceedings under the New Act, he comes under the mischief of section 277.

(9) The petitioner is being prosecuted for offences under the Indian Penal Code in addition to an offence u/s 277 of the New Act. Whatever the petitioner''s objection might be with regard to the prosecution u/s 277 of the New Act, he cannot challenge the validity of his prosecution for offences under the Indian Penal Code because under the provisions of the New Act, unlike u/s 28 of the Old Act, a person can be penalised u/s 271 of the New Act as well as prosecuted for an offence in respect of the same facts.

(10) There are no valid grounds Therefore to interfere at this stage with the Criminal Proceedings pending against the petitioner in the court of Sub Divisional Magistrate, New Delhi.

(11) The petition is dismissed.

S.K. Kapur, J.

(12) I agree that the petition should be dismissed.