JUDGMENT V.M. Kanade, J.
1. Heard learned Counsel for the petitioner. None appears for the respondents though they are served. Respondent No. 4 however was deleted from the array of parties by the petitioner.
2. The petitioner is challenging the judgment and order passed by the Additional Chief Metropolitan Magistrate, 47th Court, Esplanade, Mumbai whereby accused No. 1 to 4 were discharged from the prosecution which was launched by Income Tax Department under Section 276B read with 278B of Income Tax Act.
2A. Brief facts which are relevant for the purpose of deciding this application are as under:
Forty complaints were filed against the respondents Nos. 1 to 3 and original accused No. 4 under Section 276B read with 278B of Income Tax Act for not making the payment of tax deducted at source within prescribed time to the credit of Central Government. In these cases, application for discharge was filed by all the accused and it was contended that the amount in question was duly paid by the accused after it was brought to their notice. It is further contended that so far as payment of interest is concerned matter was remanded back to the Assessing Officer by the Income Tax Appellate Tribunal with a direction to give re-hearing in the matter and pass an order in accordance with law. It was submitted that Assessing Officer had power to condone delay in making payment and therefore there was no question of prosecuting accused under the aforesaid provisions. It was also contended that there was delay of 10 years in filing the complaint.
3. Learned Additional Chief Metropolitan Magistrate allowed the discharge application filed by the accused and discharged from the same prosecution. Trial Court has held that there was delay of 10 years in initiating prosecution and therefore, further held that no notice was issued before launching the prosecution. He further held that it was necessary to issue notice to the accused before launching prosecution and also to give personal hearing and if such personal hearing is not given prosecution would not be sustainable. He relied on the judgment of Supreme Court in the case of C.B. Gautam v. Union of India reported in 199 I.T.R. 530 (SC). Learned Counsel for the petitioner submitted that accused had continuously committed an offence in not depositing the amount and therefore question of delay did not arise as it was continuous offence. He further submitted that period of limitation would not apply to the case of prosecution where the punishment is more than three years. He further submitted that punishment prescribed for the offence punishable under Section 276B was upto seven years and therefore, provisions of Section 468 of Criminal Procedure Code would not apply to the facts of present case. He submitted that ratio of the judgment in C.B. Gautam v. Union of India (Supra) would not apply to the facts of present case since in the said case Supreme Court had construed the provisions of Income Tax Act and had observed that notice had to be issued to assessee before imposing civil liability. He further submitted that said ratio would not apply to the case where criminal prosecution was launched against the accused. He further relied on the judgment of Supreme Court in the case of Union of India v. Banwari Lal Agarwal reported in AIR 1999 SC 196 wherein Supreme Court has held that giving of prior notice or opportunity of hearing would not necessary as that could be done after the institution of proceedings. Though respondents were served, none appears for the respondents. Respondent No. 4 is deleted from the array of parties and therefore, order of discharge has been confirmed so far as respondent No. 4 is concerned.
4. I have given anxious consideration to the submissions led by the learned Counsel for the petitioner. In my view, submissions made by the learned Counsel for the petitioner will have to be accepted. Learned Additional Chief Metropolitan Magistrate has erred in holding that there was 10 years delay in filing complaint. Section 468 of Criminal Procedure Code reads as under:
468. Bar to taking cognizance after lapse of the period of limitation -
(1) Except as otherwise provided elsewhere in this Code, no Court shall take cognizance of an offence of the category specified in Sub-section (2), after the expiry of the period of limitation.
(2) The period of limitation shall be -
(a) six months, if the offence is punishable with fine only;
(b) one year, if the offence is punishable with imprisonment for a term not exceeding one year;
(c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years;
[(3) For the purposes of this section, the period of limitation, in relation to offences which may be tried together, shall be determined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment.]
5. A perusal of the aforesaid provisions clearly indicates that where the punishment prescribed under the Act is beyond three years, provisions of Section 468 of Criminal Procedure Code would not apply to such cases. In the present case, prosecution is launched under Section 276B wherein punishment prescribed is upto seven years. Learned Additional Chief Metropolitan Magistrate therefore, erred in holding that there was delay in filing complaint. He also erred in holding that notice was not issued to the respondents and on that ground, prosecution would not be sustainable. He relied on the judgment of Supreme Court in the case of C.B. Gautam v. Union of India (supra) for that purpose.
6. In my view, said view recorded by the learned Additional Chief Metropolitan is clearly erroneous. There is no provision in law which requires notice to be given to the accused before launching prosecution under Income Tax Act. In the case of C.B. Gautam v. Union of India (Supra) Supreme Court has held that before imposing any civil liability show cause notice has to be given to the person and therefore, hearing has to be given before imposing civil liability. Said observation of the Supreme Court, in my view, will not apply to the criminal prosecution which is launched under the provisions of 276-B and 278-B of Income Tax Act. Supreme Court in the case of Union of India v. Banwari Lal Agarwal (supra) has further observed that even prior notice is not necessary to offer an opportunity to the assessee to compound the matter as the Supreme Court has held that compounding of offence can be either before or after institution of proceedings. Supreme Court has observed in para 7 as under:
7. We further find that Sub-section (2) of Section 279 is a provision which enables the Chief Commissioner or the Director General to compound any offence either before or after the institution of proceeding. There is no warrant in interpreting this sub-section to mean that before any prosecution is launched either a show cause notice should be given or an opportunity afforded to compound the matter. The enabling provision cannot give a right to a party to insist on the Chief Commissioner or the Director General to make an offer of compounding before the prosecution is launched.
In my view ratio of the said judgment clearly applies to the facts of the present case.
7. Allegation against respondents are very serious. It is alleged that after having deducted tax at source, they had kept this amount with themselves and only after this fact is pointed out to them after amounts were scrutinized they thereafter paid that amount. Thus, there was delay of merely 4 years, 11 months and 24 days in making the payment. Nature of the offence is such that it is continuing offence and if amount is not paid, it would be considered fresh offence everyday and therefore, the allegations are very serious as there is failure on the party of respondents to deposit amount which belongs to the Central Government promptly as prescribed under the Act. In my view, learned Chief Metropolitan Magistrate has not taken into consideration seriousness of the offence and has proceeded to discharge the accused. It is always open for the respondents/accused to file application for compounding of offence under Section 279(1) of Income Tax Act and circulars and notifications which are issued therein from time to time for the purpose of compounding the offence and if such application is made, obviously Commissioner is duty bound to consider such application on its own merits and decide it in accordance with law.
8. In the result, criminal applications are allowed. Order of discharge passed by the Additional Chief Metropolitan Magistrate, 47th Court, Esplanade, Mumbai in all the cases so far as respondent No. 1 to 3 are concerned, is hereby set aside. Matter is remanded back to the Additional Chief Metropolitan Magistrate, who shall issue fresh notice to respondent No. 1 to 3 and proceed to prosecute the respondents in accordance with law.
Criminal revision application is allowed in above terms.