D.R. Khanna, J.
(1) This petition under Section 482 Cr. P.C. and Article 227 of the Constitution of India, has been moved in the following circumstances :-
(2) A complaint at present stands filed against the petitioners in the court of Mr, Bharat Bhushan Gupta, Additional Chief Metropolitan Magistrate, Delhi under Section 277 and 278 of the Income tax Act, and Sections 193 and 196 Indian Penal Code . The allegation? are that these petitioners had filed false returns of their incomes for the assessment year 1962-63, and had concealed considerable income which otherwise belonged to them. The petitioners' contention in the present petition before this Court is that the complaint cannot proceed as the assessment for this year has already been quashed, and the Income-Tax Officer has still to make a fresh assessment. It is urged that it can only be known after the completion of fresh assessment whether any concealment or falsification has, in fact, been enacted by the petitioners, and thereforee, they should be prosecuted for the offences for which they are now being proceeded against.
(3) Two returns were filed for assessment year 1962-63. One was by W.L. Kohli in his status as individual, and the other was by a firm known as W.L. Kohli & Co , of which W.L. Kohli and his son, the other petitioner, claim to be partners. The Income-tax Officer, however, came to the conclusion that the firm was fictitious, and that the income attributed to the same in reality belonged to W.L. Kohli. The incomes shown in the two returns were clubbed together in the individual assessment of W.L. Kohli, and various other additions were as well made. This assessment of the Income-tax Officer was upheld right up to the Income tax Appellate Tribunal. Fortified by these circumstances, the Income-tax Officer filed the complaint against the present two petitioners which is at present pending.
(4) What transpired in the ultimate setting aside of the assessment of this year was that earlier for assessment year 1960-61 and 1961-62, W.L. Kohli and the said firm had filed separate returns. During the course of assessments the question of genuineness of the firm came up for consideration. The Income-tax Officer negatived that and was of the opinion that the son of W.L. Kohli had no capital base with which he could claim to invest any amount in the partnership, and as such his induction in was a sort of camouflage enacted. He was of the opinion that both the incomes belonged to W.L. Kohli individually. These assessment were made on 30-3-1964 and 30-3-1966 respectively. However, in appeals the Appellate Assistant Commissioner set aside those assessments by two different orders made in April, 1968 and April, 1969 and required the Income-tax Officer to do them de novo. When the matters went back before the Income-tax Officer he accepted the genuineness of the firm. ' In this regard, he agreed with W.L. Kohli that he had made certain gifts in favor of his son on which he had already paid gift tax, and as such they provided enough capital with him to invest the same in the partnership. These fresh assessments for the years 1960-61 and 1961-62 were made on 4-6-1969.
(5) Against these assessments the Income-tax Commissioner interfered under Section 263 of the Income-tax Act observing that the orders were erroneous and prejudicial to the interest of revenue. The Income-tax Officer was required to make fresh assessment in the light of the observations made by him in his order dated 7-8-1981. Against this order of the Income-tax Commissioner, the assesseds moved the Income-tax Tribunal which 'reversed the order of the Commissioner on 29-10-1982. Thereby the fresh- assessments made by the Income-tax Officer for these years were restored. The Income-tax department sought a reference under Section 256(1) of the Act against the same which was rejected by the Tribunal on 17-3-1984. At present a petition requiring the Income-tax Appellate Tribunal to make reference is pending in the High Court under Section 256(2) of the Income-tax Act.
(6) Having succeeded to the extent as aforesaid, for assessment years 1960-61 and 1961-62, the assesseds felt encouraged to make petition for rectification of the assessment for assessment year 1962-63. They, thereforee, moved a petition under Section 254(2) of the Income-tax Act before the Tribunal which had earlier upheld the assessment for this year, holding that the firm was fictitious, and that its income in reality belonged to W.L. Kohli individually. The Income-tax Tribunal, at this stage, came to the opinion that since that assessment for assessment year 1962-63 was based upon assessments for the years 1960-61 and 1961-62, and as the latter assessments have since been effected afresh by the Income-tax Officer accepting the genuineness of the firm, there was no escape from rectifying the earlier order. The Tribunal, thereforee, by an order dated 3-6-1980 set aside its earlier order for assessment year 1962-63 and sent back the case to the Income-tax Officer for making fresh assessment in conformity with the assessments effected for the assessment years 1960-61 and 1961-62. Similarly a penalty imposed upon W.L. Kohli under Section 271(l)(c) of the Income-tax Act for concealment of income which had earlier been confirmed by the Tribunal, was set aside. The Income-tax department then moved a petition for reference under Section 256(1) which was rejected on 13-2-1981. At present a petition under Section 256(2) of the Income-tax Act is pending in this Court.
(7) With this background of the facts, Mr. Dalip Singh appearing on behalf of the petitioners, has contended that the complaint cannot proceed any longer as the assessment has still to be finalised. Till that assessment takes place, it cannot be assumed that any concealment or falsity has been enacted by the petitioners. In support he has placed reliance upon decisions reported as Jyoti Prakash Mitter v. HaramohanChowdhury, : 112ITR384(Cal) , Uttam Chand & others v. income-tax Officer, Central Circle, Amritsar : 133ITR909(SC) , and Dr. Chandra Mohan Goswami v. State of Assam and another (1984) I.T.R. 582.
(8) Mr. Satpal appearing on behalf of the Income-tax department, has on the other hand pointed out that there are certain circumstances which amply bring out that the petitioner had infact, filed false returns and they had concealed large incomes which were otherwise assessable to tax. It is urged that irrespective of the fresh assessment that may be later effected, the petitioners cannot escape from the admissions that they have made of concealment of income and those admissions can themselves be made the basis of the criminal prosecution. In this regard he points out that these admissions have as well been made the subject matter of the complaint already pending in the trial court.
(9) These purported admissions were made by W.L. Kohli in a petition addressed to the commissioner of Income-tax on 10-11-1966 in which he sought settlement of his affairs of different years. For assessment year 1962- 63, he had mentioned that he agreed to assessment of income of rupees 2 lacs in the case of the firm W.L. Kohli & Co. This according to Mr. Satpal, had resulted when he had grossly understand the extent of sale of government bonds which the firm had effected. Originally it had been brought out that the sales were to the tune of rupees 1.5 crore. By this proposed settlement, the sales were sought to be raised to rupees 2.43 crores. This circumstance, Mr. Sat Pal contends, brings out a deliberate and determined endeavor by the petitioners to conceal large chunk of their income. He also adds that the discovery of this large income was not only from what the petitioners had disclosed, but had resulted from the investigation and efforts made by the income-tax department.
(10) Mr. Dalip Singh on behalf of the petitioners, however states that the said offer was in the context of the settlement which was proposed to be arrived at. That settlement, however, was not accepted by the Commissioner of Income-tax and in the circumstances, it is urged that the offer or agreeing to be assessed ataparticularincome,shouldbetreatedasconditionaland withdrawn.
(11) The crucial question to be considered is whether at this stage when the income-tax assessment for the year 1962-63 is not completed, any deduction or inference of concealment can be made out. Perhaps what Mr. Sat Pal states may have some force. However, the criminal court, much less this court, will not embark upon making the assessment which is a special jurisdiction within the domain of the Income-tax Officer. He has still to frame assessment.. It may be that he may again come to the view that concealment has, in fact, taken place, and false returns were filed by the petitioners. However, at that stage nothing should preclude him from filing a fresh complaint. Similarly, what is the effect of the admission made by W.L. Kohli in his petition dated 10-11-1966 and whether he can resile from the same in the circumstances now sought to be urged, will be a matter for the Income-tax Officer to consider. There is no reason to suppose that respective contentions as aforesaid, will not be properly adjudicated by him while making the assessment. Without there being an assessment, it cannot be assumed much less prima facie held that a criminal liability for concealment is made out.
(12) Another difficulty to which Mr. Sat Pal made reference, was that if the department's reference petitions under Section 256(2) of the Income-tax Act succeed, and the original assessments are allowed to stand, the allowance of the present petition would gravely prejudice the department. To this extent it is clarified that if at any time the reference applications of the department under Section 256(2) are allowed, and/or the original assessment for assessment year 1962-63 which had been at the first stage confirmed by the Tribunal is up-held, the complaint pending in the trial court will be treated as subsisting, and the Income-tax Officer will be entitled to get the same revived.
(13) Subject to these observations, the petition is allowed, and the complaint pending in the trial court is quashed.