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P. Jayappan Vs. S.K. Perumal, First Income-tax Officer, Tuticorin - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberCriminal Miscellaneous Petition Nos. 8164, 8166, 8168 and 8170 of 1983
Judge
Reported in(1985)44CTR(Mad)186; [1984]149ITR692(Mad)
ActsIncome Tax Act, 1961 - Sections 273A, 276C, 277, 278 and 279(2)
AppellantP. Jayappan
RespondentS.K. Perumal, First Income-tax Officer, Tuticorin
Appellant AdvocateC. Rajan, Adv.
Respondent AdvocateSam V. Chelliah, Adv.
Excerpt:
- .....and the return of income were all false. the accused deliberately and intentionally filed false return and false statement based on fabricated account books with a view to defraud the exchequer. he wilfully made false verification in the return of income. he attempted to evade tax, penalty and interest chargeable and imposable. he intentionally fabricated account books, trading and profit and loss accounts, balance-sheet with the intention of corruptly using them as genuine evidence and corruptly used the same as genuine and thereby committed offences under ss. 277 and 276c of the i.t. act and ss. 193 and 196 of the indian penal code. it is to quash this proceeding that this petition has been filed. 3. the only contention advanced by the learned counsel for the petitioner is.....
Judgment:

1. This is a petition under s. 482 of the Code of Criminal Procedure for quashing the proceedings in C. C. No. 133 of 1983 on the file of the Additional Chief Judicial Magistrate (Economic Offences), Madurai. The accused is the petitioner.

2. The first repondents/First Income-tax Officer, Tuticorin, has launched the prosecution against the petitioner for offences under ss. 193 and 196 of the Indian Penal Code and ss. 276(1) and 277 of the I.T. Act in C. C. No. 133 of 1983. The petitioner, who is the proprietor of M/s. Rathnam Food stuff Company, Tuticorin, filed an income-tax return dated January 20, 1978, for the accounting year ending April 20, 1977 (assessment year 1977-78), admitting an income of Rs. 13,380. The return was accompanied by profit and loss account, the trial balance, income-tax adjustment and copy of the capital account of the petitioner and the return was accepted. On August 20, 1981, and August 21, 1981, a search was conducted at the residence of the petitioner under s. 132 of the I.T. Act which resulted in the seizure of several documents and account books which revealed the suppression of purchase of chicory seeds, the existence of several bank accounts, fixed deposits, investments in the names of his wife and daughters and several bank accounts not disclosed in the statements field along with the return. The trading and profit and loss account for the assessment year 1977-78 filed along with the return was false inasmuch as the purchase amount of chicory seeds was shown only at Rs. 65,797 as against Rs. 2,15,729 as per the seized accounts. The profit and loss adjustment statement and the return of income were all false. The accused deliberately and intentionally filed false return and false statement based on fabricated account books with a view to defraud the exchequer. He wilfully made false verification in the return of income. He attempted to evade tax, penalty and interest chargeable and imposable. He intentionally fabricated account books, trading and profit and loss accounts, balance-sheet with the intention of corruptly using them as genuine evidence and corruptly used the same as genuine and thereby committed offences under ss. 277 and 276C of the I.T. Act and ss. 193 and 196 of the Indian Penal Code. It is to quash this proceeding that this petition has been filed.

3. The only contention advanced by the learned counsel for the petitioner is that the prosecution is premature and ought not to have been filed before the completion of the reassessment proceedings. It is urged that under s. 279(1A) of the I.T. Act, a person shall not be proceeded against for an offence under s. 276C or s. 277 of the I.T. Act, in relation to the assessment year in respect o which penalty imposed or imposable on him under clause (iii) of sub-s (1) of s. 271 has been reduced or waived by an order under s. 273A of the Act and that the petitioner is also entitled to compound the offence with the Commissioner and, hence, the launching of the prosecution before the completion of the assessment takes away the valuable benefits that may accrue to the petitioner in the assessment proceedings. According to the petitioner, therefore, the respondent ought to have waited till the completion of the assessment proceedings before filing the criminal prosecution.

4. As pointed out by the learned counsel for the respondent there is no provision of law which prohibits the respondent-Department from launching criminal prosecution for offences under ss. 276C and 277 of the I.T. Act before the completion of the assessment proceedings. On the other hand, s. 279(2) which lays down that the Commissioner may either before or after the institution of the criminal proceedings under s. 276, 277 or 278 of the I.T. Act compound any such offence, indicates that criminal proceedings could be launched even before the composition of the offences.

5. The mere fact that the petitioner expects penalty that may be imposed against him to be reduced or waived under s. 273A or to compound the offences is no ground to stop the criminal prosecution. As pointed out by the High Court of Punjab and Haryana in Telu Ram Raunqi v. ITO , mere expectancies should not stand in the way of the criminal court from proceeding in the matter and the High Court could not stop any proceedings against an assessee in a criminal court on mere expectancy. In that case, before the High Court of Punjab and Haryana, the assessee on an application before the High Court under s. 482 of the Code of Criminal Procedure for quashing the criminal complaint against him on the ground that they were an abuse of the process of the court, because, since the order of the Tribunal was not final and an application for reference to the High Court against the order imposing penalty was pending and the penalty proceedings were open to correction in the light of the opinion that may be given by the High Court. Holding that mere expectancy could not stop any proceedings against an assessee, the High Court pointed out that if the expectations of the assessee fructify and an order was passed in its favour by the time the trial was pending, or even at the appellate and revisional stages, all these courts, in dealing with that matter, would be required to give due regard to these findings in case they were favourable to the assessee, and therefore, the proceedings against the assessee at the initial stage were not an abuse of the process of the court and the grant of stay of the proceedings would not be in the interest of justice. I respectfully agree with the view expressed by the learned judge.

6. The decision of the Supreme Court in Uttam Chand v. ITO : [1982]133ITR909(SC) , does not at all support the contention of the learned counsel for the petitioner. There, in that case the registration of the partnership firm under the I.T. Act was not genuine on the basis of the statement of one J, one of the alleged partners, The Tribunal on appeal found that J was a partner of the firm and that the firm was genuine. Meanwhile, the ITO initiated prosecution of the partners of the firm under s. 277 of the I.T. Act for having field false returns and the Punjab and Haryana High Court, in a revision petition filed for quashing the prosecution against the firm held that the Tribunal's finding was not binding on the criminal court and was not a bar to the prosecution proceedings. On appeal, the Supreme Court held that in view of the finding recorded by the Appellate Tribunal that J was a partner of the firm and that the firm was genuine, the assessee could not be prosecuted for filing false returns. The Question whether prosecution could be launched before the completion of assessment proceedings of the learned counsel for the petitioner that the Department should wait till the assessment proceedings are over to file any criminal complaint, is unfounded.

7. In the result, the petition fails and is dismissed.


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