PSJ Finance and Investment Ltd. vs Commissioner of Income Tax

Mool Chand Garg, J.—In this case one of the grounds pressed in service on behalf of the petitioner was that since an appeal has been filed by the petitioner against the order of the Tribunal whereby it has been held that the issue as to whether the petitioner was guilty of suppressing his real income is pending, the respondents should not be permitted to prosecute the petitioner in the light of other complaint which is filed before the ACMM. They have relied upon a judgment of the Supreme Court delivered in the case of Commissioner of Income Tax Vs. Bhupen Champak Lal Dalal and Another Etc., . On the other hand the learned counsel appearing for the respondent have relied upon another judgment of the Apex Court delivered in P. Javappan v. S.K. Perumal, First income tax Officer [1984] 149 ITR 690 where it has been held.

It is true that as observed 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 276-C 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 276-C 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.

In these circumstances the best course, which can be followed is to allow the trial Court to deliver the judgment as to whether petitioners are guilty or are entitled to acquittal in this case without passing the order on sentence, as the proceedings stand concluded and only arguments are to be heard. Moreso, because the Income Tax Reference Filed by the petitioners against the order of the Tribunal has also not been decided and is still pending. The interim orders are modified to this extent.

List this matter on 23-11-2009. Copy of the order be sent to the trial Court concerned.