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T.S. Ramaswamy Vs. Commissioner of Income-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberCriminal Miscellaneous Petition No. 212 of 1972
Judge
Reported in[1974]93ITR598(Ker)
ActsIncome Tax Act, 1922 - Sections 28(4); Income Tax Act, 1961 - Sections 277 and 297(2); Code of Criminal Procedure (CrPC) - Sections 561A
AppellantT.S. Ramaswamy
RespondentCommissioner of Income-tax and ors.
Appellant Advocate Menon and; Pai, Advs.
Respondent Advocate M.B. Kurup and; V.M. Prabhakaran Nair, Advs.
Cases ReferredJain Brothers v. Union of India
Excerpt:
direct taxation - assessment - section 561-a of criminal procedure code and section 227 of income tax act, 1961 - petition for quashing proceedings under section 227 - whether there was legal bar for prosecution before district magistrate's court either under new act or under old act - petitioner guilty of delivering false account and statement - trial magistrate to decide whether offence been committed or not - nothing to hold prosecution barred under new act or under old act. - - 4. the jurisdiction of this court to interfere under section 561-a, criminal procedure code, is clearly laid down by the supreme court in the decision reported in r. for a better appreciation of the point involved in this case, i am extracting below those two clauses: 9. an ingenious argument was put..........ultimately, the taxable income was computed at rs. 50,206 which approximated to the taxable income returned by the assessee as per the revised return. the income-tax officer initiated penalty proceedings against the petitioner and a penalty of rs. 20,000 was imposed, which on appeal was reduced to rs. 13,000. the petitioner filed an application under section 66(1) of the indian income-tax act, 1922, hereinafter referred to as the old act, for stating a case to this court, which was, however, dismissed. thereafter, the assessee filed o.p. no. 3188 of 1969 under section 66(2) of the old act. this court directed the tribunal to state a case. while this original petition was pending, the income-tax authorities took proceedings under section 277 of the new act by filing a complaint.....
Judgment:
ORDER

Kalid, J.

1. This is a petition under Section 561-A of the Code of Criminal Procedure filed for quashing the proceedings in C.C. No. 336 of 1971 on the file of the District Magistrate's Court, Quilon, initiated at the instance of the Income-tax Officer under Section 227 of the Income-tax Act, 1961, hereinafter referred to as the new Act.

2. The facts leading to the prosecution relevant for consideration in this case are as follows : The petitioner is a partner in Union Engineering Company, Quilon, a firm registered under the new Act. On September 13, 1962, one of the partners, the father of the other partners died, and a new partnership came into being on September 18, 1962. For the assessment year 1961-62, corresponding to the accounting year ending with May 31, 1960, the petitioner herein submitted a return on May 29, 1962, showing an income of Rs. 23,947. The Income-tax Officer called for the accounts of the firm for scrutiny. On examination he detected some suppression. He found that the accounts disclosed only utilisation of two tonnes of tin plates while on May 14, 1960, there was a release of 24.5 tonnes of tin plates from the key loan at the bank. The balance of 22.5 tonnes of tin plates was not accounted for in the closing stock and. therefore, he issued notice to the assessee calling for an explanation. The assessee gave an explanation which was not acceptable to the Income-tax Officer. The Income-tax Officer finalised the assessments on the basis of a revised return submitted by the firm for the year 1961-62. Ultimately, the taxable income was computed at Rs. 50,206 which approximated to the taxable income returned by the assessee as per the revised return. The Income-tax Officer initiated penalty proceedings against the petitioner and a penalty of Rs. 20,000 was imposed, which on appeal was reduced to Rs. 13,000. The petitioner filed an application under Section 66(1) of the Indian Income-tax Act, 1922, hereinafter referred to as the old Act, for stating a case to this court, which was, however, dismissed. Thereafter, the assessee filed O.P. No. 3188 of 1969 under Section 66(2) of the old Act. This court directed the Tribunal to state a case. While this original petition was pending, the income-tax authorities took proceedings under Section 277 of the new Act by filing a complaint before the District Magistrate's Court, Quilon. The gist of the charge against him was that he delivered on May 29, 1962, to the Income-tax Officer, Quilon, a profit and loss account and a balance-sheet showing the value of the closing stock at Rs. 9,450 and a total income at Rs. 23,947 which was false and which he knew to be false or did notbelieve it to be true and has, therefore, committed an offence punishable under Section 277 of the new Act. On receipt of notice of this complaint, the petitioner filed O.P. No. 6468 of 1971 to quash that notice. The O.P. was dismissed in limine by this court. A writ appeal filed against that decision also met with the same fate but the Division Bench directed that the petitioner will be at liberty to move this court with an application under Section 561-A, Criminal Procedure Code. Hence this petition.

3. Various contentions were raised before this court by the learned counsel for the petitioner. I am here concerned only with the question whether there is any legal bar for the prosecution before the District Magistrate's Court either under the new Act or under the old Act.

4. The jurisdiction of this court to interfere under Section 561-A, Criminal Procedure Code, is clearly laid down by the Supreme Court in the decision reported in R.P. Kapur v. State of Punjab, A.I.R. 1960 S.C. 866.. I am extracting below the relevant portion from that judgment:

'.....The inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. It is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction.

Some of the categories of cases where the inherent jurisdiction to quash proceedings can and should be exercised are : (1) Where it manifestly appears that there is a legal bar against the institution or continuance of the criminal proceedings in respect of the offence alleged. Absence of the requisite sanction may, for instance, furnish cases under this category. .....'

5. Therefore, what is necessary in this case is to examine whether this prosecution comes within one or the other categories enumerated in the above decision.

6. The main contention raised by the learned counsel for the petitioner before me is the one based on the protection given to an assessee from prosecution contained in Section 28(4) of the old Act, which reads asfollows:

'No prosecution for an offence against this Act shall be instituted in respect of the same facts on which a penalty has been imposed under thissection.'

7. The question therefore which falls for consideration is whether the petitioner is entitled to this protection and whether his case comes within Section 28(4) of the old Act. The return in this case was submitted onlyon May 29,1962, that is, after the coming into force of the new Act on April 1, 1962. Provision is made in the new Act. for the procedure to be adopted in assessment proceedings for the period before the coming into force of the new Act depending upon the date of submission of the return. Section 297(1) of the new Act repeals the old Act. Section 297(2) contains the saving clause. Under Clause (a) of Section 297(2) it is provided that where a return of income had been filed before the commencement of the new Act, proceedings for the assessment of that person might be taken and continued under the old Act and Clause (b) provides that where a return of income is filed after the commencement of the new Act for the assessment year ending 31st day of March, 1962, or any earlier year, the assessment of the person shall be in accordance with the procedure specified in the new Act Provision is also made in the new Act for taking penalty proceedings against an assessee and a distinction has been made basing on the date on which the assessment was completed. Section 297(2)(f) and (g) are the relevant provisions relating to penalty. For a better appreciation of the point involved in this case, I am extracting below those two clauses:

'(f) any proceeding for the imposition of a penalty in respect of any assessment completed before the first day of April, 1962, may be initiated and any such penalty may be imposed as if this Act had not been passed;

(g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier year, which is completed on or after the 1st day of April, 1962, may be initiated and any such penalty may be imposed under this Act.'

8. It can be seen from the above that for the purpose of penalty proceedings, the assessees have been classified into two groups: the first group is of those whose assessments have been completed before April 1, 1962, and it is provided that in such cases the penalty will be imposed under the old Act. The second group of assessees is of those whose assessment is completed on or after 1st day of April, 1962. and in their cases the imposition of penalty has to be under the new Act. In this case, the return itself was submitted only on May 29, 1962, and therefore, it is Clause (g) of Section 297(2) that is attracted for the imposition of penalty on the petitioner. Section 28(4) of the old Act gives relief to an assessee from prosecution only if penalty is imposed under the old Act because the expression used in Section 28(4) is 'a penalty has been imposed under this section'. It is dear that in view of Section 292(2)(g), the penalty proceedings can be taken only under the new Act and. therefore, Section 28(4) of the old Act cannot be invoked by the petitioner. The new Act does not contain any provision corresponding to Section 28(4) of the old Act and. therefore, when the penalty is imposed under the relevant provisions of the new Act there isno bar for a prosecution on the same facts. As observed in Jain Brothers v. Union of India, [1970] 77 I.T.R. 107; [1970] 3 S.C.R. 253 (S.C.) one of the departures in the new Act from the old Act is that, while no prosecution could be launched in respect of the same facts on which a penalty has been imposed under the old Act, under the new Act a penalty can be imposed and a prosecution launched on the same facts.

9. An ingenious argument was put forward by the learned counsel for the petitioner that the prosecution is bad in as much as Section 277 of the new Act cannot be attracted in his case. The basis of the argument is that the statement made by him in a verification, which is the subject-matter of the prosecution, was not under the new Act or any rule made thereunder but under the old Act. This contention does not take into account the various acts mentioned in Section 277 of the new Act, which reads as follows:

'If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement, which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with rigorous imprisonment for a term which may extend to two years......'

10. The offence is therefore not only in making a statement but also in delivering an account of statement which is false. The account and statement made in this case by the petitioner are false, according to the prosecution. Whether an offence has been committed or not has to be decided by the trial Magistrate-I. It cannot be said that the prosecution is barred under any of the provisions of either the old Act or the new Act. There is, therefore, no merit in this petition.

11. In the result, the criminal miscellaneous petition is dismissed.


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