Calcutta High Court
Dilip Kumar Agarwal vs Union Of India And Ors on 26 September, 2022
OD -3
ORDER SHEET
WPO/2518/2022
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
DILIP KUMAR AGARWAL
VS
UNION OF INDIA AND ORS
BEFORE:
The Hon'ble JUSTICE MD. NIZAMUDDIN
Date: 26th September, 2022.
Appearance:
Mr. J.P. Khaitan, Sr.Adv.
Mr. Pratyush Jhunjhunwala, Adv.
Mr. Mrigank Kegriwal, Adv.
Mr. Indranil Banrjee, Adv.
Mr. Samit Rudra, Adv.
...For the Petitioner
Mr. Om Narayan Rai, Adv.
...For the Respondents
The Court: Heard learned counsel appearing for the parties.
Affidavit of service filed in Court be kept with the records.
By this writ petition, petitioner has challenged the impugned show
cause notices dated 17th August, 2022 under Section 279(1) read with
Section 2(35) of the Income Tax Act, 1961 for prosecution under Section
276C(1), 277 and 277A of the Income Tax Act, 1961 relating to assessment
year 2021-2022 and further making prayer for stay of impugned penalty
proceeding on the basis of notice dated 31st March, 2022 under Section 274
read with Section 271AAB of the Income Tax Act, 1961.
Mr. Khaitan, learned senior counsel submits that the impugned
penalty proceeding initiated on the basis of assessment order is already
subject matter of challenge before the Appellate Authority and the assessing
officer should not proceed with the penalty proceeding till the final outcome
of the appeal in question and in support of his such submission he
relies on Section 275(1) (a) of the Act.
So far as show cause notice against criminal prosecution is
concerned, Mr. Khaitan submits that criminal prosecution should be waited
and should not be initiated till the final outcome of the appeal against the
assessment order in question out of which the appeal in question is
pending. In support of his contention he relies on a decision of the Hon'ble
Supreme Court in the case of "Commissioner of Income Tax vs. Bhupen
Champak Lal Dalal and Anr." reported in 248 ITR 830.
On perusal of the aforesaid decision of the Hon"ble Supreme Court I
am of the view that the said judgment is not applicable in the facts and
circumstances of this present case for the reason that in that case
prosecution was already lodged before the Metropolitan Magistrate and it
was held in the said decision that High Court had already stayed the
proceedings and the Hon'ble Supreme Court did not interfere with such
order of the High Court staying criminal proceeding which was pending
before the Metropolitan Magistrate. But in this case factual and legal
position as of today is that no criminal prosecution has been initiated before
the learned Magistrate and as such this case is premature for invoking
constitutional writ jurisdiction of this Court.
Mr. Rai, learned counsel appearing for the respondent Income Tax
Authorities opposes this writ petition by contending that the criminal
proceeding before the Magistrate is independent of any assessment or
adjudication proceeding and both can run simultaneously and in support of
his contention he relied on a decision of the Hon'ble Supreme Court in the
case of "Radheshyam Kejriwal vs. State of West Bengal and Anr."
reported in (2011) 3 SCC 581, particularly paragraphs 37 and 38 of the said
case which are quoted as hereunder :
"37 We find substance in the submission of Mr. Sharan. There may
appear to be some conflict between the views in Standard Chartered Bank
and L.R. Melwani holding that adjudication proceedings and criminal
proceeding are two independent proceedings and both can go on
simultaneously and finding in the adjudication proceedings is not binding
on the criminal proceeding and the judgments of ths Court in Uttam Chand,
G.L. Didwania and K.C. Builders wherein this Court had taken a view that
when there is categorical finding in the adjudication proceedings
exonerating the person which is binding and conclusive, the prosecution
cannot be allowed to stand. The judgments of this Court are not to be read
as a statute and when viewed from that angle there does not seem any
conflict between the two sets of decisions. It will not make any difference on
principle that latter judgments pertain to cases under the Income Tax Act.
38. The ratio which can be culled out from these decisions can
broadly be stated as follows :
i) Adjudication proceedings and criminal prosecution can be
launched simultaneously;
ii) Decision in adjudication proceedings is not necessary before
initiating criminal prosecution;
iii) Adjudication proceedings and criminal proceedings are
independent in nature to each other;
iv) The finding against the person facing prosecution in the
adjudication proceedings is not binding on the proceeding for
criminal prosecution;
v) Adjudication proceedings by the Enforcement Directorate is not
prosecution by a competent court of law to attract the
provisions of Article 20(2) of the Constitution or Section 300 of
the Code of Criminal Procedure;
vi) The finding in the adjudication proceedings in favour of the
person facing trial for identical violation will depend upon the
nature of finding. If the exoneration in adjudication proceedings
is on technical ground and not on merit, prosecution may
continue; and
vii) In case of exoneration, however, on merits where the allegation
is found to be not sustainable at all and the person held
innocent, criminal prosecution on the same set of facts and
circumstances cannot be allowed to continue, the underlying
principle being the higher standard of proof in criminal cases."
Mr. Rai further on instruction submits that in this case sanction for
prosecution has already been granted.
Mr. Rai also relies on a decision of the Supreme Court in the case of
"Sasi Enterprises vs. Assistant Commissioner of Income Tax" reported in
(2014) 5 SCC 139, particularly paragraph 30 of the said decision which is
quoted hereunder :
"30. We also find no basis in the contention of the learned Senior
Counsel for the appellant that pendency of the appellate proceedings is a
relevant factor for not initiating prosecution proceedings under
Section 276-CC of the Act. Section 276-CC contemplates that an offence is
committed on the non-filing of the return and it is totally unrelated to the
pendency of assessment proceedings except for the second part of the
offences for determination of the sentence of the offence, the Department
may resort to best judgment assessment or otherwise to past years to
determine the extent of the breach. The language of Section 276-CC, in our
view, is clear so also the legislative intention. It is trite law that as already
held by this Court in B. Premanand v. Mohan Koikal that :
"19. '19. It is well-settled principle in law that the court cannot read
anything into a statutory provision which is plain and unambiguous. The
language employed in a statute is the determinative factor of legislative
intent......."
If it was the intention of the legislature to hold up the prosecution
proceedings till the assessment proceedings are completed by way of appeal
or otherwise the same would have been provided in Section 276-CC itself.
Therefore, the contention of the learned Senior Counsel for the appellate
that no prosecution could be initiated till the culmination of assessment
proceedings, especially in a case where the appellant had not filed the
return as per Section 139(1) of the Act or following the notices issued under
Section 142 or Section 148 does not arise."
Considering the facts and circumstances of the case as appears from
record and submissions of the parties and relevant provisions of law
wherefrom nowhere it appears that there is a specific bar under the Income
Tax Act in initiating criminal proceedings/prosecution case during the
pendency of an appeal against the assessment order. As such I am not
inclined to interfere with the impugned show cause notices for initiation of
prosecution which according to me is premature at this stage.
So far as the impugned penalty proceeding is concerned, in view of
Section 275(1) of the Income Tax Act, 1961, the said proceedings should be
stayed and should be waited till the final outcome of the Appeal in question
which arises from the assessment order in question.
With these observations and directions, this writ petition being WPO
2518 of 2022 stands disposed of.
(MD. NIZAMUDDIN, J.)
TR/
