Raja Corporation and others vs Income Tax Officer

Arunachalam, J.—In these petitions filed u/s 482 of the Code of Criminal Procedure, the prayer is to call for the records and to quash the

proceedings pending against Messrs. Raja Corporation and others in C. C. Nos. 135 to 140 of 1986, on the file of the Judicial First Class

Magistrate, Coimbatore ,as not maintainable. These prosecutions have been initiated u/s 276C, section 276C read with sections 278B, 277,

section 277 read with section 278B of the Income Tax Act, 1961, and sections 193, 196 and 420 of the Indian Penal Code, 1860. A survey u/s

133A of the Income Tax Act was conducted and the accounts of Messrs. Raja Corporation for the years 1977-78 to 1982-83 were called for.

The respondent who is the Income Tax Officer, circle-III(3), Coimbatore, found, on examination that there were mistakes in the gross totalling

closing stock which was therefore, obviously, undervalued. The explanation of the firm was that the mistake had occurred admittedly due to the

negligence of the accountant and the firm itself was not aware of it.

Four contentions have been raised before me by learned counsel appearing for the petitioner. The first contention is that the totalling was a

mistake completely bona fide, and therefore, ingredients of the offence will not be attracted. This is a matter of evidence and cannot be gone into at

this stage in exercise of the inherent powers. The second contention was that, before survey, proper notice as contemplated under law was not

given. This again would relate to the realm of appreciation of evidence and cannot be readily accepted at this stage before material is brought on

record and the possible prejudice, if any, caused to the petitioners in view of such alleged non-service. The third contention strenuously urged was

that the assessment order has been set asides in revision and, therefore, these prosecutions will not be maintainable. I am afraid this contention

cannot be accepted at this stage, for, setting aside of the assessment order does not always affect the prosecution, unless there is a specific finding

that the statements made by the assessee were true. Such a finding is not apparent in the order in revision and if any advantage is to enure in favour

of the petitioners, it will be open to them to get on record such evidence as may be helpful to them substantiate this aspect. The last contention

which has also to be necessarily negatived relates to the non-feasibility of these prosecutions in view of penalty proceedings having been initiated.

The law permits a prosecution to co-exist. None of these grounds help the petitioners. I find no merit in these petitions which are, accordingly,

dismissed. However, it will be open to the petitioners to urge these contentions after evidence is brought on record for a proper consideration by

the trial magistrate.