Guru Nanak Enterprises vs Income Tax Officer

In this appeal by special leave the order impugned is the order of the High Court of Judicature for Rajasthan, Jaipur Bench, Jaipur, in S.B. Criminal Miscellaneous Petition No. 1213 of 1998 whereby the High Court dismissed the petition filed by the Appellant herein u/s 482 of the Code of Criminal Procedure, for quashing the proceeding pending in the court of the Special Judicial Magistrate (Economic Offices), Jaipur, initiated u/s 276CC read with Section 278B of the Income Tax Act, 1961. The High Court rejected the petition by a summary order. The facts are not disputed before us. The may be briefly stated thus:

In respect of the assessment year 1982-83, the Appellant-firm did not file its return in time, but in its delayed income tax return disclosed an income on which the tax liability was shown as Rs. 644. The Assessing Officer did not accept the return and made certain additions and imposed a tax liability of Rs. 10,476. The Appellant-firm, aggrieved by the order, preferred an appeal. The appellate authority remanded the matter to the assessing authority for fresh assessment making certain observations. The Assessing Officer thereafter assessed the Appellant-firm and on the basis of its assessment the tax liability came to Rs. 4,450. The Appellant-firm was still not satisfied and preferred an appeal. The appeal was partly allowed and ultimately a tax liability of Rs. 1,360 only was imposed.

The income tax Officer in the meanwhile lodged a complaint against the Appellant-firm u/s 276CC read with Section 278B of the income tax Act, 1961. The prosecution lodged by the income tax Officer was sought to be quashed by filing a petition u/s 482 of the Code of Criminal Procedure, but as we have noticed earlier the same was summarily dismissed.

We have heard counsel for the parties.

It appears to us that the case of the Appellant is clearly covered by proviso (ii)(b) to Section 276CC. In the instant case as noticed, the total tax liability of the Assessee was finally assessed at Rs. 1,360. u/s 276CC, proviso (ii)(b), shorn of unnecessary details, a person shall not be proceeded against under this section for failure to furnish in due time the return of income if the tax payable by him on the total income determined, as reduced by advance tax, if any, paid, and any tax deducted at source, does not exceed Rs. 3,000. As noticed earlier, the Assessee had disclosed a tax liability of Rs. 644 which on final assessment was determined as Rs. 1,360.

Counsel for the Revenue could not advance any argument to support the prosecution launched against the Appellant, because it is clear that the total income tax liability determined by the department was only Rs. 1,360 which is much less than Rs. 3,000 envisaged under the proviso.

We, therefore, in the facts and circumstances of the case, that the prosecution is wholly unwarranted. Accordingly, we set aside the judgment and the order of the High Court and quash the proceeding pending against the Appellant in the court of the Special Judicial Magistrate (Economic Offences) Jaipur, on the basis of the complaint lodged by the income tax Officer, District Circle-II, Jaipur, on March 31, 1986. This appeal is accordingly allowed.