[Cites 9, Cited by 0]
Punjab-Haryana High Court
M/S Ambey Const. Co. And Ors. vs Dc Of It, Central Circle, Bathinda on 18 April, 2026
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
CRM-M No.8916 of 2023
Reserved on: 09.04.2026
Pronounced on: 18.04.2026
Uploaded on: 20.04.2026
Whether only operative part of the judgment is
Pronounced or the full judgment is pronounced: operative part/full judgment
M/s Ambey Construction Co. and others
...Petitioners
Versus
Deputy Commissioner of Income Tax, Bathinda
...Respondent
CORAM: HON'BLE MS. JUSTICE MANDEEP PANNU
Argued by:- Ms. Radhika Suri, Sr. Advocate, assisted by
Ms. Parnika Singla and Mr. Abhinav Narang, Advocates
for the petitioners.
Mr. Vaibhav Gupta, Advocate
for Income Tax Department.
*****
MANDEEP PANNU, J.
1. The present petition has been filed under Section 482 of the
Code of Criminal Procedure, 1973 for quashing of Complaint No.
COMA2223 of 2018 dated 21.05.2018 (Annexure P-5) pending in the Court
of learned Judicial Magistrate First Class, Bathinda under Section 276(c)(2
of the Income Tax Act, 1961, and further for setting aside the impugned
order dated 03.01.2023 (Annexure P-10) passed in Criminal Revision
No.CRR-81 of 2022, whereby the petitioners were not discharged and were
ordered to face trial.
authenticity of this order/judgment
2. Briefly stated, the facts of the case are that the complainant,
Deputy Commissioner of Income Tax, Central Circle 1, Bathinda, filed a
complaint against the partnership firm M/s Ambey Construction Company
through its partners namely Puneet Garg, Rajni Singla and Murti Devi in
their individual capacity under Section 276(c)(2) of the Income Tax Act,
1961 for the assessment year 2011-12, alleging that they had willfully
attempted to evade payment of tax, penalty or interest. The accused were
summoned to face trial vide summoning order dated 22.05.2018 and the case
was fixed for pre-charge evidence. Thereafter, the accused moved an
application under Section 245(2) Cr.P.C. on the ground that the assessment
order had already been set aside vide order dated 21.09.2019 passed by the
Income Tax Appellate Tribunal, Amritsar. However, the said application was
dismissed by learned Chief Judicial Magistrate, Bathinda vide order dated
11.05.2022, against which the petitioners preferred a revision petition.
3. Learned Additional Sessions Judge, Bathinda, after hearing
both sides and examining the record, dismissed the revision petition vide
order dated 03.01.2023. The revisional Court, in brief, held that the
complaint under Section 276(c)(2 of the Income Tax Act is independent of
the assessment proceedings and merely because the reassessment
proceedings were set aside by the Income Tax Appellate Tribunal on
technical grounds, the same would not absolve the accused from criminal
liability. It was further held that there is prima-facie material on record to
show that the accused had willfully attempted to evade tax by showing
receipt of Rs.15 crores from PACL as business income, whereas the same
authenticity of this order/judgment
was found to be income from other sources. The revisional Court also
observed that the setting aside of reassessment proceedings did not amount
to a clean chit to the accused and there was no legal bar to continue the
criminal prosecution. It was further held that the contention regarding
prosecution of a dissolved firm is without merit in view of the provisions of
the Income Tax Act, which provide for joint and several liability of partners.
The plea regarding invalid sanction was also rejected by holding that proper
sanction had been accorded by the competent authority. Consequently,
finding no illegality or perversity in the order passed by learned trial Court,
the revision petition was dismissed.
4. It has been contended on behalf of the petitioners that the
primary and foremost contention raised before this Court is that once the
Income Tax Appellate Tribunal has quashed/set aside the assessment
proceedings for the assessment year 2011-12, the very basis of the complaint
under Section 276(c)(2 of the Income Tax Act, 1961 stands extinguished
and, therefore, the continuation of criminal prosecution for alleged willful
attempt to evade tax cannot be sustained and amounts to abuse of the process
of law. It is argued that the assessment order giving rise to the alleged tax
liability having been set aside, no offence survives against the petitioners. It
is further contended that learned Courts below have failed to appreciate this
legal position in its correct perspective. Learned counsel for the petitioners
has also relied upon the judgment of the Hon'ble Supreme Court in K.C.
Builders vs. Assistant Commissioner of Income-Tax, reported as (2004)
135 Taxman 461 (SC), to contend that once the basis of levy of penalty or
authenticity of this order/judgment
assessment is set aside, the prosecution under Section 276(c) of the Act
cannot continue. It is specifically argued that the said binding precedent was
not properly considered by learned revisional Court while dismissing the
revision petition, thereby rendering the impugned orders unsustainable in the
eyes of law.
5. It is contended on behalf of the respondent-Income Tax that the
present petition is devoid of merit and has been filed with an attempt to take
undue advantage of the order passed by the Income Tax Appellate Tribunal,
which had merely set aside the assessment proceedings on technical grounds
and not on merits. It is submitted that the prosecution against the petitioners
has been validly instituted under Section 276(c)(2 of the Income Tax Act,
1961 on the basis of material collected during survey proceedings, which
prima-facie discloses a willful attempt to evade payment of tax by showing
fictitious transactions and misrepresenting receipts. It is further argued that
the criminal proceedings are independent of assessment proceedings and
merely because the assessment order has been set aside would not ipso facto
result in the termination of prosecution. Reliance has been placed upon P.
Jayappan vs. S.K. Perumal (1984) 149 ITR 696 (SC) to contend that
criminal liability under the Income Tax Act is distinct and can proceed on the
basis of independent evidence, irrespective of the fate of assessment
proceedings. It is also contended that sanction for prosecution was duly
granted by the competent authority and the complaint has been properly
instituted, and therefore, no ground for quashing is made out.
6. I have heard the learned counsel for the petitioners as well as
authenticity of this order/judgment
the respondent and have gone through the record of the case along with the
judgments relied upon by the parties.
7. The principal contention raised on behalf of the petitioners is
that since the Income Tax Appellate Tribunal has set aside the reassessment
proceedings for the assessment year 2011-12, the very basis of the complaint
under Section 276(c)(2 of the Income Tax Act, 1961 stands obliterated and,
therefore, continuation of the criminal proceedings would amount to abuse
of the process of law. In support of the said contention, reliance has been
placed upon the judgment of the Hon'ble Supreme Court in K.C. Builders
(supra).
8. This Court has carefully considered the aforesaid submission.
However, the reliance placed upon K.C. Builders (supra) is misconceived
and the said judgment is clearly distinguishable from the facts of the present
case. In K.C. Builders (supra), the Hon'ble Supreme Court was dealing with
a situation where the penalty proceedings under Section 271(1)(c) of the Act
had been set aside on merits with a categorical finding that there was no
concealment of income. It was in those circumstances that the Hon'ble
Supreme Court held that once the very foundation, i.e, concealment of
income, stood negated, the prosecution under Section 276(c) could not be
sustained.
9. In the present case, however, the reassessment proceedings
have been set aside by the Income Tax Appellate Tribunal only on technical
grounds and not on merits. There is no finding recorded by the Tribunal that
the petitioners did not indulge in any act amounting to willful attempt to
authenticity of this order/judgment
evade tax. Rather, as is evident from the material placed on record, including
the survey proceedings, there is prima-facie material suggesting that the
petitioners had shown receipts of Rs.15 crores from PACL as business
income through fictitious or non-genuine transactions with an intent to
evade tax liability. Thus, unlike K.C. Builders (supra), there is no clean
exoneration of the petitioners on merits so as to demolish the very
substratum of the prosecution.
10. It is well settled that criminal proceedings under Section 276(c)
of the Income Tax Act are independent of the assessment proceedings and
can proceed on the basis of material collected during investigation. In this
regard, reliance can be placed upon the judgment in P. Jayappan (supra),
wherein it has been held by the Hon'ble Supreme Court that there is no legal
bar to the institution or continuation of criminal proceedings merely because
assessment proceedings are pending or have not attained finality. Similarly,
in Kalyan Rice and General Mills vs. ITO (1989) 180 ITR 41 (P&H), it has
been held by this Court that criminal prosecution cannot be dropped merely
because the assessment order has been set aside, particularly when there is
independent material indicating attempted evasion of tax.
11. Furthermore, as noticed by learned revisional Court, the order
passed by the Income Tax Appellate Tribunal does not grant any clean chit to
the petitioners but merely sets aside the reassessment proceedings on
technical grounds, and therefore, the same cannot be construed as a finding
of absence of culpability. The revisional Court has rightly observed that
there exists prima-facie material to proceed against the petitioners and that
authenticity of this order/judgment
the criminal Court is competent to independently assess the evidence led
before it.
12. In view of the aforesaid discussion, this Court is of the
considered opinion that the petitioners have failed to make out any case for
interference in exercise of inherent jurisdiction under Section 482 Cr.P.C.
The impugned order passed by learned Additional Sessions Judge, Bathinda,
dated 03.01.2023, does not suffer from any illegality or perversity
warranting interference by this Court.
13. Accordingly, finding no merit in the present petition, the same
is hereby dismissed.
14. All pending applications, if any, also stand disposed of.
(MANDEEP PANNU)
18.04.2026 JUDGE
neetu
Whether speaking/reasoned: Yes/No
Whether Reportable: Yes/No
authenticity of this order/judgment
