Agro Engineering Products Delhi ... vs State & Anr.
2000 Latest Caselaw 416 Del

JUDGMENT

M. S. A. Siddiqui, J.

By this petition under section 482 of the Criminal Procedure Code, the petitioners seek quashing of the complaint filed by the respondent under section 276C of the Income Tax Act, 1961.

2. Briefly stated, the facts giving rise to the petition are that the respondent filed a complaint under section 2.76C of the Income Tax Act against the petitioner on the allegations that the petitioner-company had filed false return of its income for the assessment year 1985-86 and had concealed considerable income which otherwise belonged to it. By the agreement dated 2-4-1984, the petitioner-company entered into a contract with Taj Services Ltd. to complete a project of silo-com-poultry in Tanro, Haryana, on turnkey basis for a consideration of Rs. 24,65,000. On scrutiny of the income-tax return filed by the petitioner-company for the assessment year 1985-86, it was found by the assessing officer that the petitioner-company had wrongfully debited an expenditure of Rs. 1,44,608 towards purchase of sheets, M.S. angles and plates from Sheel Swaroop Harish Chander of New Delhi. As per the terms of the contract, the cost of the said material was to be borne by Taj Services Ltd. Accordingly, the said expenditure of Rs. 1,44,608 was treated as not related to the business and was added back to the income of the petitioner-company. For furnishing inaccurate particulars of income, penalty proceedings were initiated against the petitioner-company and a penalty of Rs. 98,694 was imposed upon the company. By the order dated 9-11-1999, the Commissioner (Appeals) set aside the said order of the assessing officer imposing penalty of Rs. 98,694 holding that the petitioner-company had not filed a false return of its income for the assessment year 1985-86. The petitioners' contention in the present petition before this court is that the complaint cannot proceed as the order of the assessing officer for imposing penalty of Rs. 98,694 in respect of the income-tax return filed by the petitioner-company has been set aside by the Commissioner (Appeals).

2. Briefly stated, the facts giving rise to the petition are that the respondent filed a complaint under section 2.76C of the Income Tax Act against the petitioner on the allegations that the petitioner-company had filed false return of its income for the assessment year 1985-86 and had concealed considerable income which otherwise belonged to it. By the agreement dated 2-4-1984, the petitioner-company entered into a contract with Taj Services Ltd. to complete a project of silo-com-poultry in Tanro, Haryana, on turnkey basis for a consideration of Rs. 24,65,000. On scrutiny of the income-tax return filed by the petitioner-company for the assessment year 1985-86, it was found by the assessing officer that the petitioner-company had wrongfully debited an expenditure of Rs. 1,44,608 towards purchase of sheets, M.S. angles and plates from Sheel Swaroop Harish Chander of New Delhi. As per the terms of the contract, the cost of the said material was to be borne by Taj Services Ltd. Accordingly, the said expenditure of Rs. 1,44,608 was treated as not related to the business and was added back to the income of the petitioner-company. For furnishing inaccurate particulars of income, penalty proceedings were initiated against the petitioner-company and a penalty of Rs. 98,694 was imposed upon the company. By the order dated 9-11-1999, the Commissioner (Appeals) set aside the said order of the assessing officer imposing penalty of Rs. 98,694 holding that the petitioner-company had not filed a false return of its income for the assessment year 1985-86. The petitioners' contention in the present petition before this court is that the complaint cannot proceed as the order of the assessing officer for imposing penalty of Rs. 98,694 in respect of the income-tax return filed by the petitioner-company has been set aside by the Commissioner (Appeals).

The question for consideration is whether the prosecution against tile petitioner-company can be sustained in view of the order dated 9-11-1999, passed by the Commissioner (Appeals) exonerating the petitioner-company from the charges in question.

3. The order dated 9-11-1999, passed by the Commissioner (Appeals) shows that the order of the assessing officer imposing penalty of Rs. 98,694 has been set aside for want of evidence to prove that the petitioner-company had filed inaccurate particulars of income in respect of the assessment year 1985-86. There is nothing on the record to show or suggest that the respondent has taken any appropriate proceedings to have the aforesaid order set aside in accordance with law. That being so, the said order of the Commissioner (Appeals) has attained finality. Where the departmental authorities, whose task is to ensure strict compliance with the relevant provisions of a statute are satisfied that there is ex facie no contravention of the provisions of any Act, it would be utterly unjust to force a person to face the ordeal of a trial on the same set of facts and evidence. The least that can be said in the case is that if the department does not feel aggrieved by the order of the competent authority and accepts it as final and correct, then I fail to understand as to how on the same set of facts and evidence, the department can foist criminal liability upon a person about whom it has accepted the findings of the competent authority. Thus, in view of the fact that the petitioner-company has been exonerated by the Commissioner (Appeals), the very basis of the complaint does not exist and the petitioner's prosecution on the same set of facts and evidence cannot be sustained (P. S. Rajya v. State of Bihar (1996) SCC (Crl.) 897 ; Ramesh Kumar v. State (1985) Crl. LJ 681 ; Uttam Chand v. I T O (1982) 133 ITR 909 (SC) : S. K. Singhal v. S. K. Singhal (1987) 1 Crimes 842 (Del) ; Jewels of India v. State (1987) 3 Crimes 754 (Delhi) ; Harbhajan Kaur v. UOI (1993) JCC 447 (Del) ; G. L. Didwania v. ITO (1997) 224 ITR 687 (SC); Hi-tech Carbon Products v. Inspector, Anti-Evasion Central Excise (1999) III AD (Cr.) DHC 965 and Munna Lal Khandelwal v. B. Hazra, Enforcement Officer (2000) 83 DLT 395).

3. The order dated 9-11-1999, passed by the Commissioner (Appeals) shows that the order of the assessing officer imposing penalty of Rs. 98,694 has been set aside for want of evidence to prove that the petitioner-company had filed inaccurate particulars of income in respect of the assessment year 1985-86. There is nothing on the record to show or suggest that the respondent has taken any appropriate proceedings to have the aforesaid order set aside in accordance with law. That being so, the said order of the Commissioner (Appeals) has attained finality. Where the departmental authorities, whose task is to ensure strict compliance with the relevant provisions of a statute are satisfied that there is ex facie no contravention of the provisions of any Act, it would be utterly unjust to force a person to face the ordeal of a trial on the same set of facts and evidence. The least that can be said in the case is that if the department does not feel aggrieved by the order of the competent authority and accepts it as final and correct, then I fail to understand as to how on the same set of facts and evidence, the department can foist criminal liability upon a person about whom it has accepted the findings of the competent authority. Thus, in view of the fact that the petitioner-company has been exonerated by the Commissioner (Appeals), the very basis of the complaint does not exist and the petitioner's prosecution on the same set of facts and evidence cannot be sustained (P. S. Rajya v. State of Bihar (1996) SCC (Crl.) 897 ; Ramesh Kumar v. State (1985) Crl. LJ 681 ; Uttam Chand v. I T O (1982) 133 ITR 909 (SC) : S. K. Singhal v. S. K. Singhal (1987) 1 Crimes 842 (Del) ; Jewels of India v. State (1987) 3 Crimes 754 (Delhi) ; Harbhajan Kaur v. UOI (1993) JCC 447 (Del) ; G. L. Didwania v. ITO (1997) 224 ITR 687 (SC); Hi-tech Carbon Products v. Inspector, Anti-Evasion Central Excise (1999) III AD (Cr.) DHC 965 and Munna Lal Khandelwal v. B. Hazra, Enforcement Officer (2000) 83 DLT 395).

For the foregoing reasons, the petition is allowed and the proceedings emanating from the complaint filed by the respondent are quashed. The petitioner's bail bonds are discharged.