Laxmi Stores vs Union of India (UOI)

Jagat Singh, J.—Heard learned counsel for the parties.

Petitioner M/s Laxmi Stores, Udaipur carries on business as dealer of cigarettes at Udaipur. A search of the petitioner-firm was conducted on 9th Jan., 1986 by the authorities of the respondent-Department, in which certain incriminating record was seized relating to charging of ''premium on money'' from the retailers. The petitioner-firm had not paid any tax on the above amount nor had shown that income in their return for the asst. yrs. 1985-86, 1986-87, therefore, not only penalty u/s 271(1)(c) was imposed against the petitioner but prosecution u/s 276C of the IT Act was also sanctioned vide orders Annexs. 11 and 12 dt. 8th Feb., 1990. Accordingly, complaint Annex. 13 was filed before the learned Chief Judicial Magistrate (Economic Offences), Jaipur. Hence this petition.

This Court, after hearing learned counsel for the petitioner, on 22nd Feb., 1991, stayed the prosecution proceedings referred above.

Learned counsel for the petitioner submits that against orders Annexs. 6 and 7, the CIT(A) dismissed its appeal vide Annex. 8 dt. 7th March, 1990, however, learned Tribunal has accepted the second appeal vide order dt. 11th Dec., 1997, for both the assessment years, deleting the penalty referred above. A copy of the order dt. 11th Dec., 1997 has been filed today, with the prayer that when penalty itself has been quashed criminal prosecution should also be set aside. It is further submitted that a Division Bench of this Court in Union of India v. Shree Singhvi Bros. (SAW No. 128 of 1990 dt. 14th Nov., 2002) has held that if penalty is quashed, prosecution need not continue.

Learned counsel for the Department is not in a position to controvert the Division Bench judgment referred to hereinabove.

Consequently, there is merit in this petition and the same is accepted and Annexures 11, 12 and 13 to the writ petition are hereby quashed.