Delhi High Court

Prem Nath Diesels Pvt. Ltd. & Anr. vs State & Anr. on 1 July, 2009

Author: Mool Chand Garg

*         IN THE HIGH COURT OF DELHI AT NEW DELHI


+      Crl.M.C.3138/2001


%                            Date of reserve : 21st May, 2009
                             Date of decision:1st July, 2009


       PREM NATH DIESELS PVT. LTD. & ANR. ...PETITIONERS
                          Through: Mr.Mohit Mathur, Advocate

                                Versus

       STATE & ANR.                    ...RESPONDENTS
                      Through: Ms.Santosh Kohli, APP for State


CORAM:
HON'BLE MR. JUSTICE MOOL CHAND GARG

1.     Whether the Reporters of local papers
       may be allowed to see the judgment?          Yes

2.     To be referred to Reporter or not?           Yes

3.     Whether the judgment should be               Yes
       reported in the Digest?


MOOL CHAND GARG, J.

1. The petitioners have filed the present petition under Section

482 Cr.P.C. read with Article 227 of the Constitution of India for

quashing of the proceedings in Criminal Complaint Case bearing

No. 18/1 of 82 titled as "Shri Hari Narain Vs. Prem Nath Diesels

and Anr." under Section 276 CC of the Income Tax Act pending

before the Court of Mr.J.P.S. Malik, ACMM, Delhi.

2. Briefly stating, the facts of this case are that on or about

20.03.1982, respondent No.2 filed a complaint against the

petitioners alleging commission of an offence under Section 276

CC of the Income Tax Act. It was alleged by the complainant that

petitioner No.2 and others were required to file the Income Tax

return of petitioner No.1 for the Assessment Year 1980-81 on

30.6.1980. However, the petitioners allegedly failed to file the

said return on or before the due date. It is further the case of

the complainant that an extension of time was allowed on

30.11.1980 but the petitioners did not file the Income Tax return

even upto the end of the Assessment Year 1981 i.e. upto

31.03.1981. It is further alleged in the complaint that on

13.05.1981, a notice under section 148 of the Income Tax Act

was issued, requiring the petitioners to file the Income Tax

return, within one month from the date of receipt of the said

Notice. It is pertinent to mention here that the company received

the said Notice on 21.05.1981 and the petitioners filed the

Income Tax return only on 19.06.1981 i.e. two days prior to the

expiry of the stipulated period. It is further the case of the

complainant that the petitioners willfully failed to furnish the

Income Tax return for the Assessment Year of 1980-81 within the

stipulated period and, therefore, committed an offence under

Section 276 CC of the Income Tax Act.

3. The complaint was filed only on 20.03.1982 alleging

commission of an offence under Section 276 CC of the Income

Tax Act and the learned ACMM after perusal of the said complaint

issued summons against the petitioners on 26.03.1982. In

compliance of the aforesaid order, the petitioners appeared

before the trial court, who after recording the pre-charge

evidence, directed the framing of charges against the petitioners

vide its order dated 15.05.1987 and the charges were formally

framed against the petitioners on 21.05.1987. Feeling aggrieved

of the aforesaid orders, the petitioners approached this Court

under its revisional jurisdiction vide Criminal Revision No.

177/1987, however, the said revision petition was dismissed by a

learned Judge of this Court vide order dated 12.02.2001.

4. During the pendency of the proceedings, the Income Tax

Officer had initiated penalty proceedings against the petitioners

under Section 271(i)(a) of the Income Tax Act, for the delay in

filing of the aforesaid Income Tax return. Against the aforesaid

finding, the petitioners herein filed an appeal before the

Commissioner of Income Tax (Appeals), who vide order dated

21.01.1988 held that in the facts of the case there was

reasonable cause for delay in filing the Income Tax return and as

such the penalty order was quashed. The Income Tax

Department being aggrieved of this order filed an appeal before

the Income Tax Appellate Tribunal, who is the final fact finding

authority under the Income Tax Act. The Tribunal vide order its

order dated 31.1.1991 confirmed the order of the Commissioner

of Income Tax (Appeals) and dismissed the appeal of the Income

Tax Department. Thereafter, against the order of the Income Tax

Tribunal the Income Tax Department filed an application under

Section 256(1) of the Income Tax Act, to refer the matter to the

High Court. The said application was also rejected by the Income

Tax Appellate Tribunal vide its order dated 6.11.1991.

5. The petitioners herein have also moved an application

before the learned trial court seeking dropping the proceedings

against them. However, the learned trial court dismissed the

application of the petitioners vide its order dated 12.07.2001. In

these circumstances, the petitioners seek the leave of this Court

to invoke its inherent jurisdiction as contained under Section 482

Cr.P.C. read with Article 227 of the Constitution of India.

6. It is the contention of the petitioners that once the order of

the Income Tax Officer imposing penalty against them under

Section 271(i)(a) of the Income Tax Act for delay in the filing of

the Income tax return was set aside by the Commissioner of

Income Tax (Appeals) vide order dated 21.1.1988 which was

upheld by the Income Tax Appellate Tribunal vide its order dated

31.1.1991 and that once the Income Tax Department has

exonerated the petitioners with respect to the order imposing

penalty upon them in having filed the income tax return

belatedly, the question of prosecuting the petitioners by the

present complaint tantamount to an abuse of process of court. It

has been submitted that the Apex Court in the judgments

delivered in the case of Uttam Chand & Ors. Vs. I.T.O. Central

Circle, Amritsar (1982) 133 ITR 909 and in the case of G.L.

Didwani & Anr. Vs. Income Tax & Anr. (1997) 224 ITR 687 has

been pleased to hold that once the departmental proceedings

exonerates the petitioner with respect to the same cause of

action for which complaints are being filed, the continuation of

the complaint proceedings should not be permitted as there is no

reason to prosecute the accused for the same offence for which

he stands exonerated by the department in the departmental

proceedings.

7. Reference has also been made to a case decided by the

Apex Court titled as M/s Bandhu Machinery Pvt. Ltd. & Ors. Vs.

Assistant Commissioner of Income Tax, New Delhi, SLP (Criminal)

3945/02, wherein it has been observed by the Apex Court,

"The question raised in this case for consideration is when penalty levied under Section 271 (1)(c) of the Income Tax Act, for concealment of income has been cancelled by the Appellate Authority whether a prosecution can be continued under Section 276 C of the Act."

8. Reference has also been placed upon a judgment delivered

by this Court in the case of Sunil Gulati Vs. R.K.Vohra & Ors. 2007

1 JCC 220, wherein it has been held,

"On the same violation alleged against a person, if adjudication proceedings as well as criminal proceedings are permissible, both can be initiated simultaneously. For initiating criminal proceedings, one does not have to wait for the outcome of the proceedings are independent in nature.

The findings in the departmental proceedings would not, amount to re-judicata and initiation of criminal proceedings in these circumstances can be treated as double jeopardy as they are not in the nature

of "prosecution".

In case adjudication proceedings are decided against a person who is facing prosecution as well and the Tribunal has also upheld the findings of the adjudicators/assessing authority, that would have no bearing on the criminal proceedins and the criminal proceedings are to be determined on its own merits in accordance with law, uninhibited by the findings of the Tribunal. It is because of the reason that insofar as criminal action is concerned, it has to be proved as per the strict standards fixed for criminal case before the criminal court by producing necessary evidence.

In case of converse situation namely where the accused persons are exonerated by the competent authorities/Tribunal in adjudication proceedings, one will have to see the reasons for such exoneration to determine whether these criminal proceedings could still continue. If the exoneration in department adjudication is on technical ground or by giving benefit of doubt and not on merits or the adjudication proceedings were on different facts, it would have no bearing on criminal proceedings. If, on the other hand, the exoneration in the adjudication proceedings is on merits and it is found that allegations are not substantiated at all and the concerned person(s) is/are innocent, and the criminal prosecution is also on the same set of facts and circumstances, the criminal prosecution cannot be allowed to continue.

The reason is obvious criminal complaint is filed by the departmental authorities alleging violation/contravention of the provision of the Act on the part of the accused persons. However, if the departmental authorities, themselves, in adjudication proceedings, record a categorical and unambiguous finding that there is no such contravention of the provisions of the Act, it would be unjust for such department authorities to continue with the criminal complaint and say that there is sufficient evidence to foist the accused persons with criminal liability when it is stated in the departmental proceedings that ex facie there is no such violation. The yardstick would, therefore, be to see as to whether charges in the departmental proceedings as well as criminal complaint are identical and the exoneration of the concerned persons in the departmental proceedings is on merits holding that there is no contravention of the provisions of the any Act."

9. Reference has also been made to a judgment delivered by

this Court in the case of M/s The Printer House Pvt. Ltd. Vs. Nishi

Singh, 2009(2) JCC 1279, wherein it has been held,

"In view of the aforesaid once a departmental adjudication exonerates the petitioners on merits and there is a finding that there was no evasion of tax the question of culpable state of mind cannot be presumed and for that reason even the complaint filed by the

petitioner which is based upon their original assumption would not survive."

10. It may also be appropriate to take note of the peculiar facts

of this case to find out as whether non-filing of return was willful

or deliberate which is the basis of filing of a criminal complaint.

In this regard, it may be observed that in accordance with the

petitioners in the instant case there was no delay in filing the said

return, as the notice under Section 148 of the Income Tax Act

was sent on 13.05.1981 and was received only on 21.05.1981

and the return was in fact filed on 19.06.1981 i.e. prior to the

expiry of the stipulated period. Further, even if the respondent's

version is to be believed to be true, then also there was only a

delay of four days in filing the return, which could not be a case

of tax evasion and which was successfully shown to be due to

reasonable cause, as is evidenced by the finding of the Income

Tax Appellate Tribunal vide its order dated 31.01.1991.

11. The respondents approached the petitioner by relying upon

the provisions of Section 278E of the Income Tax Act, 1961,

which reads as under:-

278E (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charges as an offence in that prosecution.

Explanation.-In this sub-section, "culpable mental state" includes intention, motive or knowledge of a face or belief in, or reason to believe, a fact.

(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist

beyond reasonable doubt and not merely when its existence is established by a preponderance of probability."

12. However, it is a matter of record that the said provision was

inserted in the Income Tax Act by the Taxation Laws (Amendment

& Miscellaneous Provisions) Act, 1986 with effect from 10.9.1986

and as such is not applicable to the present case because the

return which was required to be filed in this case pertains to the

Assessment Year 1981 and has been filed before the lodging of

the complaint and before insertion of the amended provisions in

the Income Tax Act. In these circumstances, I find strength in the

arguments addressed on behalf of the petitioners that in the

present case no fruitful purpose will be served in allowing

continuation of the proceedings which are based upon non-filing

of the return within time but it has been filed subsequently and