Andm.p v. The Assistant Commissioner,Income Tax,Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 04 / 03 / 2011 CORAM: THE HON'BLE MR.JUSTICE C.S.KARNAN Crl.O.P.No.27158 of 2007 andM.P.No.1 of 2007 Smt. Vijayashanthi .... Petitioner/Accused Vs. The Assistant Commissioner,Income Tax,Chennai. .... Respondent/Complainant Prayer : Criminal Original Petition filed under Section 482 of theCode of Criminal Procedure, to call for the records in E.O.C.C.117 of2007, on the file of the Additional Chief Metropolitan MagistrateEconomic offences I, Egmore, Chennai – 8, and to quash the same. For Petitioner : Mr.I. David Singh For Respondents : Mr.K. Ramasamy Senior Counsel for Income-Tax Cases. O R D E R The above criminal original petition has been filed by thepetitioner/accused to call for the records to dispense with herpersonal appearance in the E.O.C.C.117 of 2007, on the file of theIst Additional Chief Metropolitan Magistrate Economic offences,Egmore, Chennai - 8. 2.The summarised facts of the prosecution case are as follows:The prosecution case filed by the Complainant/AssistantCommissioner of Income Tax, media Circle II, Chennai – 34,which are as follows: (ii)The complainant has filed on the sanction of theCommisioner of Income-tax, Chennai-IV within the meaning ofSec.279(1) of the Income-tax Act, 1961 dated 28.02.2007.The said sanction order under Section 279(1) is submittedalong with this complaint before this Hon'ble Court. https://hcservices.ecourts.gov.in/hcservices/ (iii)The Complaint is in respect of the Assessment year1992-1993, the relevant accounting year being the year ended31.03.1992. (iv)The accused is presently assessed by Income-tax inMedia Circle – II in the Jurisdiction of the complainant. (v)Notices and processes may be issued to the Accusedat the address noted above. (vi)The Accused is a Cine Artiste by profession. (vii) The accused has filed her returns of income-taxup to the Assessment Year 1990-1991. For the Assessmentyear 1991-1992, the return was filed on 25.05.1993, whichwas beyond the time limit laid down even for a belatedreturn. As such she is aware of her duties andresponsibilities under the Income-Tax Act, 1961. Theostensible sources of income of the accused are income fromhouse property, income from business of profession andagricultural income. (viii) For the Assessment year 1992-1993, relevant tothe previous year ended on 31.03.1992, the accused had thefollowing incomes: (a) Income from House Property (b) Income from business/Profession (c) Agricultural income (ix) The accused ought to have filed her Return ofincome for the Assessment year 1992-1993 on or before31.08.1992 as required under section 139(1) of Income-TaxAct, 1961. However, the accused did not file her return ofincome within the due date prescribed by the Statute. Thus,the accused has wilfully and deliberately contravened theprovisions of section 139(1) of Income-Tax Act, 1961 by notfurnishing her return of income on or before the due dateprescribed by the Statute, i.e., 31.08.1992, without anyvalid reason and thereby committed an offence punishableunder section 276CC of the Income-Tax Act, 1961. Even aftersearch, the accused did not file her return deliberatelyinspite of having substantial income. (x) As there was no voluntary compliance of filing thereturn of income within the due date, and as the failure infiling the said return of income still persisted, a noticeunder section 148 of the Income-Tax Act, 1961 was issued to https://hcservices.ecourts.gov.in/hcservices/ (x) As there was no voluntary compliance of filing thereturn of income within the due date, and as the failure infiling the said return of income still persisted, a noticeunder section 148 of the Income-Tax Act, 1961 was issued to https://hcservices.ecourts.gov.in/hcservices/ the accused on 02.02.1994, calling upon her to file thereturn of income within 30 days from the date of receipt ofthe notice which was served on 04.04.1994. The accusedneither sent any reply in response to the said statutorynotice issued to her nor filed her return of income.Therefore, a notice under section 142(1) dated 20.07.1994,was issued to the accused requiring her to file the returnof income. Again, there was no response from the accusedand not even a reply was sent giving reasons why she ispersisting in delaying the filing of the said return ofincome even after the statutory due date and inspite ofreceiving the statutory notice under section 148. Byanother letter dated 18.01.1996, the accused was againreminded of her obligation of filing of her return ofincome. Another show cause letter dated 04.03.1996, wasissued to the accused drawing her attention to theprosecution proceedings that will be initiated in the eventof non-filing of return within the stipulated time as perthe Act and also informing her that exparte assessment willbe framed resulting in penalty proceedings that will beinitiated in the event of non-filing of return withinstipulated time as per the Act and also informing her thatexparte assessment will be framed resulting in penaltyproceedings and the launching of prosecution proceedings fornon-compliance of furnishing of return within due date andfor concealment of income. The accused filed her return ofincome for the Assessment year 1992-1993 on 25.03.1996admitting total income of Rs.5,19,830/- besides agriculturalincome of Rs.1,75,000/- after an inordinate delay of morethan 24 months. (xi) The complainant submits that the accuseddeliberately did not file her return of income even withinthe time limit prescribed under section 139(4) of Income-TaxAct, 1961, which expired on 31.03.1994, in this case.Thus,there was inordinate delay of more than 24 months infiling of return by the accused. In order to conductinquiry to complete the assessment, statutory notices undersection 143 (2) dated 14.06.1996, notices under section 142(1) dated 30.08.1996, 06.11.1996, 29.11.2006, 27.12.2006 and04.02.1997 were issued to the accused requiring the accusedto furnish the following information. (i)Books of Accounts(ii)Year wise breakup of income, cash flow andcorrelation of investment including movables withadequate source. (iii)Bank Pass Books with copies of Bank Statements. The case was posted on 06.01.1997, for furnishing theaforesaid information and inquiry. In response to notice ofhearing, assessee's representatives appeared on variousdates. Seized books of accounts were perused. Statementand other documents furnished by the assessee were alsoperused. The assessment was completed under section 143(3)of the Income0Tax Act, 1961 on 26.03.1997, on a total incomeof Rs.6,98,110/- (and agricultural income of Rs.1,75,000/-)and determining tax of Rs.11,52,176/- for the assessmentyear 1992-1993 (including the interest of Rs.7,73,554/-)Theassessee, Ms.Vijaya Shanthi filed a petition requesting forrevision under section 154, to give credit to advance taxpayment made by her on 27.10.1991. The assessment made wasrevised under section 154 on 30.08.2000, determining thetaxable income at Rs.7,13,820/- and the tax payable wasdetermined at Rs.5,66,244/- inclusive of interest ofRs.1,78,825/-). The said tax demand was duly remitted bythe accused. (xii) The complainant states that as the accusedwillfully failed to furnish her return of income anddeliberately delayed in filing of the return for theAssessment year 1992-1993 inspite of receiving statutorynotice and despite giving of opportunities, show causenotice dated 22.02.2001 were issued to the accused askingher to explain why prosecution proceedings under section276CC of Income-Tax Act, 1961 should not be initiatedagainst her. In response to the show cause notice, theaccused filed a reply dated 13.03.2001. In her reply, theaccused has stated that at that point of time there was nofull time Accountant to look after the affairs and had torely upon the part time employees who had no regularity inattending to the duties and was always delaying thecompletion of books. As adequate taxes were already paidand subsequent tax demanded together with interest undersection 234A,B and C were completely paid, the non filing ofthis Return had not caused any loss of revenue. Hence thepetitioner requested that the prosecution proceedings bewaived as this would not bring in any benefit tangible orintangible to the Department. After considering therelevant facts and circumstances, the sanctioning Authorityaccorded sanction under section 279(1) of the Income-TaxAct, 1961 on 28.02.2007. (xiii) The complainant submits that the return was notfiled within the due date (i.e. 31.08.1992). It was also notfiled in response to notice under section 148 issued on02.02.1994. It was also not filed within the time limitprescribed under section 139(4) i.e., before 31.03.1994. The reason given by the accused for such an inordinate delay arenot valid in the eyes of law in compliance with statutoryrequirement. Thus inspite of having substantial taxableincome, the assessee did not file her return of income on orbefore the due date, willfully and deliberately but filedonly after the issue of notice under section 148 and othermaterials mentioned earlier. The presumption relating toculpable mental state under section 278E of the I.T. Act,squarely applies to this case. (xiv) The above facts clearly establish that theaccused was bent upon deliberately not filing her return ofincome for the A.Y.1992-1993 within the stipulated time asrequired under section 139(1) and inspite of receiving thestatutory notice issued under section 148 of the I.T. Act,1961. (xv) Therefore the accused had wilfully anddeliberately failed to furnish in due time the return ofincome for the assessment year 1992-1993 as required undersection 139(1) of Income-tax Act, 1961 and she has filed thesaid return of income only after an inordinate delay of morethan 24 months after receiving the statutory notices issuedto her under section 148 and 142(1) of Income-Tax Act, 1961and despite giving several opportunities as narrated supraand has thus committed an offence punishable under section276 of Income-Tax Act, 1961. (xvi) The above offence has been committed within thejurisdiction of this Hon'ble Court (xvii) In the above circumstance, it is expedient andin the interest of justice that a charge be made against theaccused on the above offence and the accused to be dealtwith according to law. (xviii) The complainant therefore, prays that thisHon'ble Court may graciously be pleased to take thecomplaint on file, issue process to the accused to be dealtwith according to law." SANCTION ORDER FOR PROSECUTION UNDER SECTION 279(1) OFTHE INCOME-TAX ACT,1961 Whereas the assessee, Ms.Vijaya Shanthi, is assessed toIncome-Tax in Media Circle II in PAN NO.AAMPS 7090J, atChennai. 2.Whereas the assessee Ms.Vijaya Shanthi, failed tofurnish her return of income for the Assessment year 1993- https://hcservices.ecourts.gov.in/hcservices/ 1994 on or before 31.10.1993, the due date as per Section139(1) of the Income-Tax Act, 1961. (xviii) The complainant therefore, prays that thisHon'ble Court may graciously be pleased to take thecomplaint on file, issue process to the accused to be dealtwith according to law." SANCTION ORDER FOR PROSECUTION UNDER SECTION 279(1) OFTHE INCOME-TAX ACT,1961 Whereas the assessee, Ms.Vijaya Shanthi, is assessed toIncome-Tax in Media Circle II in PAN NO.AAMPS 7090J, atChennai. 2.Whereas the assessee Ms.Vijaya Shanthi, failed tofurnish her return of income for the Assessment year 1993- https://hcservices.ecourts.gov.in/hcservices/ 1994 on or before 31.10.1993, the due date as per Section139(1) of the Income-Tax Act, 1961. 3.Whereas the assessee, Ms.Vijaya Shanthi,failed tofurnish her return of income for the assessment year 1993-1994 even with the time limit stipulated under section 139(4) viz., on or before 31.03.1995. 4.Whereas Ms.Vijaya Shanthi, failed to file the returnof income due voluntarily as required under section 139(1)139(4) of the Income -Tax Act, 1961 notice 148 was issued tothe assessee on 22.07.1994, requiring her to file the returnof income for the assessment year 1993-1994. 5.Whereas no compliance was forthcoming from Ms.VijayaShanthi,for filing return of income for the assessments year1993-1994 in response to notice under section 148 issued,reminder letters dated 18.01.1996, and 04.03.1996 wereissued to her reminding her about the non filing of thereturn of income and the penal consequences for such failureincluding the provision of Sec.276CC. 6.Whereas the assessee, Ms.Vijaya Shanthi filed herreturn of income on 25.03.1996, with a delay of more than 20months from the date of issue of notice under section 148admitting taxable income of Rs.31,43,490/- besidesagricultural income of Rs.1,68,000/-. 7.Whereas the tax and interest payable on the admittedincome was Rs.25,38,683/- assessee has not remitted anyadvance tax but remitted the same by way of self assessmenttax under section 140A on 23.03.1996. 8.Whereas the assesee, Ms.Vijaya Shanthi's assessmentwas completed on 26.03.1997 for the assessment year 1993-1994 and the total income was determined at Rs.32,58,310/-and agricultural income at Rs.1,68,000/- under section 143(3) of the Income-Tax Act and tax of Rs.35,88,024/- wasdetermined as payable (including interest of Rs.21,40,845/-) 9.Whereas the assessee willfully failed to furnish herreturn of income voluntarily and also after issue ofstatutory notice calling for the return of income, and afterissue of letters reminding her about failure to file thereturn of income and requiring her to file the return ofincome, return of income was ultimately filed by theassessee on 25.03.1996, while the return was due for filingon 31.08.1993. 10.Whereas, the Assessing Officer issued a show causenotice dated 22.02.2001, asking the assessee to show causewhy she should not be prosecuted for willful failure tofurnish her return of income within the stipulated timewhich she was required to furnish under section 139(1). 11.Whereas the assessee Ms.Vijaya Shanthi in her replyon 13.03.2001 has stated at that point of time there was nofull time Accountant to look after the affairs and had torely upon the part time employees, who had no regularity inattending to the duties and were always delaying thecompletion of books. As adequate taxes were already paid andsubsequent tax demanded together with interest under Section234A, B and C were completely paid, the non filing of thisReturn had not caused any loss of revenue. Hence theassessee requested that the prosecution proceedings bewaived as this would only bring the hard earned image of thepetitioner in disrepute neither would it bring in anybenefit tangible or intangible to the Department. 12.Whereas the reply of the assessee dated 13.03.2001was carefully considered along with the following records ofthe case indulging. 12.Whereas the reply of the assessee dated 13.03.2001was carefully considered along with the following records ofthe case indulging. (a) Notice issued under section 148 of theIncome-Tax Act, 1961 dated 22.07.1994 which was served on27.07.1994. (b) Reminder letter issued and served on 18.01.1996reminding the assessee of non filing of return and provisionof Sec.276CC. (c) Show cause letter dated 04.03.1996 served on05.03.1996 (d) Return of income filed on 25.03.1996 admittingtotal income of Rs.3143,490/- and agricultural incomeRs.1,78,000/-. (e) Notice under section 142(1) was issued on30.08.1996, 06.11.1996, 29.11.1996, 27.12.1996, 20.01.1997,04.02.1997 and 14.02.1997. (f) Order under section 143(3) dated 26.03.1997 (g) Notice of demand under section 156 of the I.T Act,1961. 13.Whereas the reasons given by the assessee are notvalid in the eyes of law for complying with statutoryrequirement, thus inspite of having substantial taxableincome she did not file the return of income on or beforethe due date willfully and deliberately but filed only aftera search under section 132 of I.T. Act in the residence ofthe assessee on 14.07.1993 and after the issue of noticeunder section 148 and other reminders mentioned earlier. https://hcservices.ecourts.gov.in/hcservices/ 14.Now, on a careful consideration of the facts andcircumstances of the case, I am satisfied that the failureof Ms.Vijaya Shanthi to furnish the return of income withinthe due time as required under section 139(1) and within thetime stipulated in the notice issued under section 148 iswillful. In the light of the facts that she is not onlyassessed to tax for several years, notice under section 148was also issued requiring her to file the return of income,she deliberately postponed the filing of return of incomeand since the explanation of the assessee regarding thedelay to furnish the return is not acceptable, being notbased on sound reasoning , I am of the opinion that a primafacie case is made against the said Ms.Vijaya Shanthi, forprosecution under section 276CC of the Income-Tax Act, 1961. 15. Now, therefore, in exercise of the powers conferredupon me under section 279(1) of the Income-TaxAct, 1961, I,Ramesh Chandra Mishra, Commissioner of Income-Tax, Chennai-IV, Chennai, having jurisdiction over the assessee herebyaccord sanction for filing of the complaint against theaforesaid Ms.Vijaya Shanthi, cine Actress, No.16,Parthasarathypuram, T.Nagar, Chennai – 600 017 for theoffence under section 276CC of the Income-Tax Act, 1961 forthe Assessment year 1993-1994 and authorise and directShri.D.Albert Manohar, ACIT, Media Circle-II, Chennai -34 tofile the complaint in the Court of the Additional ChiefMetropolitan Magistrate (Economic Offences), Egmore, Chennai– 8 or such other Court having competent jurisdiction. 3.Aggrieved by the said complaint the accused/petitioner hasfiled the above Criminal Original Petition to call for the records inEOCC.No.117 of 2007, on the file of Additional Chief MetropolitanMagistrate Economic Offences, Egmore, Chennai. The learned counselfor the petitioner raised the below mentioned points in the petitionwhich are as follows:- "The petitioner submits that she was charged for analleged above offence under section 276 C.C.(2) of theIncome Tax Act, 1961 for non-filing of Income Tax Returnsfor the Assessment year 1992-1993, 1993-1994,1994-1995 inE.O.C.C.No.117 of 2007, E.O.C.C.118 of 2007 and E.O.C.C.119of 2007 before the learned E.O.M.M-1, Egmore, Chennai – 8.She further submits that the above offence under section 279(2) of the Income Tax Act 1961. She had filed petitionunder section 279(2) of the Income Tax Act for compoundingthe offence before the Chief Commissioner of Income TaxChennai. "The petitioner submits that she was charged for analleged above offence under section 276 C.C.(2) of theIncome Tax Act, 1961 for non-filing of Income Tax Returnsfor the Assessment year 1992-1993, 1993-1994,1994-1995 inE.O.C.C.No.117 of 2007, E.O.C.C.118 of 2007 and E.O.C.C.119of 2007 before the learned E.O.M.M-1, Egmore, Chennai – 8.She further submits that the above offence under section 279(2) of the Income Tax Act 1961. She had filed petitionunder section 279(2) of the Income Tax Act for compoundingthe offence before the Chief Commissioner of Income TaxChennai. She further submits that she is a film artiste byprofession and have been acting in the films from the age of13 years and hence she had been assessed to Income Tax andWealth Tax even though she was a minor and paying regularlythe Income Tax to the Department. While so she wassubjected to proceedings under section 132 of the Act on14.07.1993. Consequent to which all the relevant materialsrelating to the professional earnings and expendituredetails were seized by the department and in fact they arestill under the custody of the department due to the seizureand the learned Commissioner has given the approval forrelease of documents only in the month of August 2006, butshe yet to receive the documents. She further submits there has been delay in filing thereturn of Income Tax under Section 139(1) for the followingyears. The respective due dates and the date of filing areas under. S.No Assmt.Yrs Due Date Date of filing1. 1992-1993 31.10.1992 25.03.19952. 1993-1994 31.10.1993 25.03.19963. 1994-1995 31.10.1994 02.09.1997 She further states that the proceedings under section132 on 14.07.1993 and subsequent seizure of relevantdocument and materials, she was prevented from doing herlegal obligation of filing the returns as she could notfurnish any details of her income and expenditure to herauditor as a result she could not comply with the requiredtime limit under the provisions of the Income Tax Act in asmuch as the required information and supporting documentswere under seizure. She further submits despite all the legal hurdlesefforts were made to obtain copies of the records andreturns were complied with on the limited personal knowledgeand information and eventually the returns were filed. Shealso submits that since the professional income was inexcess of Rs.10 lakhs in relevant period, her auditor wasnot willing to sign the accounts unless all the relevantinformation was produced in the required manner. Hencethere was a delay in filing the returns for no fault ofmine. The delay in filing the income tax returns is neitherwillful nor wanton of negligence on her part. She further submits that for all the above mentionedyears the assessment has been completed under section 143(3) r/w Section 147 of the Act and the assessment was appealed against and relief granted by CIT (A) and thecorresponding taxes have been completely paid by herincluding interest under section 243A,B and C. She further submits that during the relevant threeassessment years it was observed by the Department there wasno concealment of income by her except the delay in filingthe returns which was mainly on account of non-availabilityof information and supporting documents as all the recordswere under seizure consequent to proceedings under Section132. She further submits that for all the above mentionedyears the assessment has been completed under section 143(3) r/w Section 147 of the Act and the assessment was appealed against and relief granted by CIT (A) and thecorresponding taxes have been completely paid by herincluding interest under section 243A,B and C. She further submits that during the relevant threeassessment years it was observed by the Department there wasno concealment of income by her except the delay in filingthe returns which was mainly on account of non-availabilityof information and supporting documents as all the recordswere under seizure consequent to proceedings under Section132. She further submits that no penalty is exigible formere delay in filing returns after 01.04.1989. It issubstituted by interest under section 234-A. The questionof prosecution cannot ordinarily lie, where there is noscope even for penalty. However explanation 3 to Section271 (1) (iii) would provide for concealment penalty forthose who do not file return in time. But then, allegedoffence relates to Assessment year 1992-1993 to Assessmentyear 1994-1995 when penalty was exigible only against personwho has not previously been assessed under this Act. Thesewords were omitted by the finance Act 2002, only with effectfrom 01.04.2003. This amendment therefore is extending thescope of penalty for all assesses is only with effect from01.04.2003,i.e. For assessment year 2003-2004. CircularNo.204 dated 24.07.1976 explaining the insection ofexplanation 3 does not state, why assesses who were notpreviously assessed alone were made available for penalty.As mentioned in the commentary on the provision in TaxCompendium Vol.50 at page 60 reads as under. "Probably the proviso was considered necessary becausea person who is already in the records of the Income TaxDepartment cannot avoid filing return sooner or later, whilea new assessee can avoid filing return so that assessmentsget time barred if the I.T. Department is unable to locatehim within time permissible for invitation of action undersection 148". She further submits that whatever the circumstances ofthe case, she had given a petition under section 279(2) ofthe Income Tax Act 1961, for compounding the offence and thesame is pending before the Chief Commissioner of Income Tax,Chennai. She further submits that there is no arrears of incometax to the respondents and also she is ready to pay thecompounding fee. She further submits that there cannot be two parallelproceedings one before the Income Tax Department forcompounding the offence and another before the E.O. Court –1, Egmore, Chennai in E.O.C.C.117 of 2007, for prosecutionunder section 276 C.C. Of the Income Tax Act. She further submits that she will be greatly prejudicedif the Court, proceedings are continued and her valuableright to compound offence will be defeated and she will beput to untold hardship and which will affect her reputation. She further submits that her right under section 279(2)will be prejudiced if the proceedings are continued in theCourt." 4. The learned counsel for the petitioner cited the Judgmentssupporting his case namely;1. Commissioner of Income Tax, Mumbai Vs.Bhupen ChempakLal Dalal and another, AIR 2001, Supreme Court 1896. 2.Income Tax Officer Vs. Rajan and Company and another(2007) 291 ITR 345 (Delhi), and 3.Uttam Chand Vs. Income Tax Officer, (1982) 133 TRR 909 (SC) She further submits that she will be greatly prejudicedif the Court, proceedings are continued and her valuableright to compound offence will be defeated and she will beput to untold hardship and which will affect her reputation. She further submits that her right under section 279(2)will be prejudiced if the proceedings are continued in theCourt." 4. The learned counsel for the petitioner cited the Judgmentssupporting his case namely;1. Commissioner of Income Tax, Mumbai Vs.Bhupen ChempakLal Dalal and another, AIR 2001, Supreme Court 1896. 2.Income Tax Officer Vs. Rajan and Company and another(2007) 291 ITR 345 (Delhi), and 3.Uttam Chand Vs. Income Tax Officer, (1982) 133 TRR 909 (SC) Twelve cases were lodged against the respondents underthe Income-tax Act, 1961 (hereinafter referred to as'the Act') before the Metropolitan Magistrate foroffences punishable under the Act. In relation to theassessments arising under the Act, appeals had beenpreferred either before the Commissioner of Income-tax(Appeals)ortheIncome-tax-AppellateTribunal(hereinafter referred to as 'the Tribunal'). On thebasis that the appeals were pending the respondentsfiled applications for stay of the proceedings arisingbefore the Criminal Court. Several decisions were citedbefore the Court to support the contention that thedecision of the appellate authorities in the income-taxproceedings would be relevant to the criminalprosecution instituted against the respondents. Thelearned Magistrate, after examining the position inlaws as to whether the findings of the appellateauthorities are relevant for the purpose of the criminalproceedings and to avoid conflicting decisions of thecriminal Court and the appellate authorities, felt thatit would be appropriate to grant an interim order of thefollowing nature. However, passing of order about framing of charge,discharge of the accused or acquittal of the accused shall bestayed during pendency of the appeals by the accused before theIncome-tax appellate authorities. These orders will be passedafter the appeals filed by the accused before the Income-taxauthorities are finally decided.' 2. Against that order, revision petitions were filedbefore the Sessions Court. The Sessions Court did notinterfere with the order made by the learned Magistrate anddismissed the same. Thereupon, the matter was carriedfurther to the High Court, while entertaining a writpetition noticing several decisions of that High Court andof this Court, issued rule in the matter and granted aninterim order staying the proceedings in the criminal casesfiled before the learned Magistrate. It is against thisorder that these special leave petitions have been filed. 3. The prosecution in criminal law and proceedingsarising under the Act are undoubtedly independentproceedings and, therefore, there is no impediment in lawfor the criminal proceedings to proceed even during thependency of the proceedings under the Act. However, awholesome rule will have to be adopted in matters of thisnature where Courts have taken the view that when theconclusions have a relevance and bearing upon conclusions tobe reached in the case necessarily one authority will haveto await the outcome of the other authority. 3. The prosecution in criminal law and proceedingsarising under the Act are undoubtedly independentproceedings and, therefore, there is no impediment in lawfor the criminal proceedings to proceed even during thependency of the proceedings under the Act. However, awholesome rule will have to be adopted in matters of thisnature where Courts have taken the view that when theconclusions have a relevance and bearing upon conclusions tobe reached in the case necessarily one authority will haveto await the outcome of the other authority. 4. This Court in G.L. Didwania V. In-Come-tax Officer,1995 supp (2) SCC 724 dealt with the similar situation wherethere is a prosecution under the Act for making falsestatement that the assessee had intentionally concealed hisincome and the Tribunal ultimately set aside the assessmentholding that there is no material to hold that such incomebelonging to the assessee and the petition was filed beforethe High Court under section 482, Cr.P.C to quash thosecriminal proceedings. This Court held that the wholequestion is whether the appellant made a false statementregarding the income which according to the assessingauthority has escaped assessment and this issue wasdependent on the conclusion reached by the appellat Tribunaland hence the prosecution could not be sustained. In UttamChand V. Income-tax Officer, Central Circle, Amritar, (1982)2 SCC 543 this Court held that in view of the findingrecorded by the Tribunal on appraisal of the entire materialon the record that the firm was a genuine firm and theassessee could not be prosecuted for filing false returnsand, therefore, quashed the prosecution. In P. Jayappan V. S.K. Perumal, First Income-tax officer, Tuticorin, 1984,SUPP scc 437: (air 1984 sc 1693 : 1984 Tax LR 1197) thisCourt observed that the pendency of the reassessmentproceedings under the Act cannot act as a bar to theinstitution of the criminal proceedings and postponement oradjournment of a proceedings for an unduly long period onthe ground that proceedings having a bearing on thedecision was not proper. 5. In the present case, there is no claim of quashingof the proceedings. When ultimately the result to come outof the proceedings before the appellate authorities have adefinite bearing on the cases alleged against therespondents, we find that the High Court is justified ingranting the interim order it did not think that such aninterim order calls for interference at our hands. Thelearned counsel on either side relied on several decisions,but in the view we have taken it is unnecessary to refer tothose decisions. 6. The petitions are, therefore, dismissed. No costs.OFFENCES-CRIMINAL PROSECUTION -FILING OF FALSE RETURNS-FIRNBEING ASSESSED AS REGISTERED FIRM-ONE PARTNER DENYING THATSHE WAS PARTNER -REGISTRATION CANCELLED AND PARTNERSPROSECUTED FOR FILING FALSE RETURN FINDING BY TRIBUNAL, INAPPEAL, THAT FIRM WAS GENUINE-PROSECUTION MUST BE QUASHED-INCOME-TAX ACT, 1961, s.277. "2. Heard counsel, special leave granted. In view ofthe finding recorded by the Income-tax Appellate Tribunalthat it was clear on the appraisal of the entire material onthe record that Shrimathi Janak Rani was a partner of theassessee-firm and that the firm was a genuine firm, we donot see how the assessee can be prosecuted for filing falsereturns. We accordingly, allow this appeal and quash theprosecution. OFFENCES AND PROSECUTION -WILFUL ATTEMPT TO EVADE TAX-PENALTY BASED ON SAME FACTS DELETED DELETION UPHELD BY HIGHCOURT-PROSECUTION NOW VALID -INCOME-TAX ACT, 1961, ss271,276C, 277. "2. Heard counsel, special leave granted. In view ofthe finding recorded by the Income-tax Appellate Tribunalthat it was clear on the appraisal of the entire material onthe record that Shrimathi Janak Rani was a partner of theassessee-firm and that the firm was a genuine firm, we donot see how the assessee can be prosecuted for filing falsereturns. We accordingly, allow this appeal and quash theprosecution. OFFENCES AND PROSECUTION -WILFUL ATTEMPT TO EVADE TAX-PENALTY BASED ON SAME FACTS DELETED DELETION UPHELD BY HIGHCOURT-PROSECUTION NOW VALID -INCOME-TAX ACT, 1961, ss271,276C, 277. 2. Held, dismissing the petition , that while theAdditional Sessions Judge had terminated the criminalproceedings on the basis of the order passed by the Income-tax Appellate Tribunal, the Department had continued theproceedings further by filing an appeal before the Court. ADivision Bench of the Court upheld the deletion of thepenalty by the Income-tax Appellate Tribunal afterconsidering all the relevant circumstances. A finding had been recorded by the Division Bench that in the present casethe Assessing Officer had not recorded any satisfaction withregard to the penalty associated with the disallowance ofcommission. The prosecution under sections 276C and 277 wasnot valid. 3. The question raised in this case for considerationis when penalty levied under section 271(1)(c) of theIncome-tax Act, for concealment of income has been cancelledby the appellate authority whether a prosecution can becontinued under section 276C of the Act. In somewhat similar circumstance this court in UttamChand V. ITO (1982) 133 ITR 909 took the view that havingnot proceeded to levy penalty, it would be incongruous tocontinue with the prosecution. Therefore, we are of the viewthat the proceedings should not have been proceeded with andthe prosecution should have been quashed. Therefore, we setaside the order of the High Court and quash the proceedings. The appeal is allowed accordingly. 5. The learned counsel for the petitioner argued that thepetitioner was subjected to proceedings under section 132 of theIncome-Tax Act, on 14.07.1996, consequent to which all the relevantmaterials relating to the professional earnings and expendituredetails were seized by the department and infact they are all stillunder the custody of the department due to the seizure under thelearned income tax Commissioner who has given the approval for therelease of documents only, in the month of August 2006. Hence therehas been delay in filing the return of income tax under section 139(1) for the assessment year 1992-1993, for filing the return ofincome tax, the due date was 31.10.1992 but the date of filing was25.03.1996. The learned counsel further argued that she was preventedfrom doing a legal obligation or filing the returns as she could andfurnish any details of her income and expenditure to her auditor, asa result she could not comply within the required time limit underthe provision of the income tax Act, inasmuch as the requiredinformation and supporting documents were under seizure by the incometax authorities. Despite all the legal hurdles she went through togive clarity to the officials, her auditor opined that theparticulars were in adequate, as such the delay in submission isaccounted for, which is neither willful nor negligent on her part. 6.The learned counsel further argued that the petitioner hasgiven a petition under section 279(2) of the income tax Act formcompounding the offence and the same is pending before the ChiefCommissioner of income tax, Chennai. In the mean while the CriminalProceedings initiated by the department in E.O.C.C.117 of 2007, forprosecution under section 276 CC of the income tax Act. This is a 6.The learned counsel further argued that the petitioner hasgiven a petition under section 279(2) of the income tax Act formcompounding the offence and the same is pending before the ChiefCommissioner of income tax, Chennai. In the mean while the CriminalProceedings initiated by the department in E.O.C.C.117 of 2007, forprosecution under section 276 CC of the income tax Act. This is a parallel proceeding on the same cause of action. added further thelearned counsel, the sanction order for prosecution under section 279(1) of the income tax Act, 1961, dated 28.02.2007. After a lapse ofaround 15 years the prosecution case was initiated against thepetitioner. There is no valid reason for the inordinate delay forfiling the Criminal case, even though there is no limitation. Hencethe learned counsel for the petitioner prays to quash the CriminalProceedings on the file of Additional Chief MetropolitanMagistrate,in E.O.C.C.117 OF 2007. 7.The learned counsel for the respondent has submitted writteninstructions on behalf of the respondent/complainant, which are asfollows:- 1.The petition filed by the petitioner to call for therecords and to stay the criminal proceedings before the TrialCourt is neither maintainable on law nor sustainable on facts. 2.The respondent filed three complaints against thepetitioner for offece under Section 276CC of Income Tax Act,1961 for wilful failure to furnish the return of income forthe A.Ys.1992-93, 1993-94 and 1994-95 on or before thestatutory due date as required u/s.139(1) and in response tothe statutory notices issued u/s.142(1) and 148 of Income TaxAct, 1961. The due date, the date of filing of the return andthe period of delay are sated as hereunder:- AssessmentDue DateStatutory NoticeReturnPeriod ofyearissuedu/s. filed on delay139(1)1992-93148 notice issued on2.2.1994, Crl.O.P.No.3 years 142 (1) on 20.07.1994,27158/200731.08.19925.03.19966 monthsin2Show cause Noticedated 04.03.1996EOCCNo.117/20071993-94148 notice issued on22.7.1994 ,Crl.O.P.No.2 years reminder dated27160/200731.10.19925.03.19965 months18.01.1996, in EOCC No.3show cause notice118/2007dated 22.02.2001 From the above table, it is made clear that the petitionerdid not file her return of income either voluntarily on or beforethe statutory due dates as required u/s.139(1) of Income Tax Act,1961 or in response to the statutory notices and the remindersissued to her. The petitioner did not even file her returns atthe outer limited prescribed u/s 139(4) of Income Tax Act, 1961,inspite of having taxable income of Rs.7,13,820/- for A.Y.1992-93, Rs.35,88,024 for A.Y 1993-1994 and Rs.18,56,020/ forA.Y.1994-95. Therefore, the petitioner inspite of having taxableincome has willfully and deliberately failed to file her returnof income for the A.Ys. 1992-93 to 1994-95 and thereby committedan offence u/s. 276CC of Income Tax, 1961. The complaints in EOCCNo.117 of 2007 to 119 of 2007 was filed in March, 2007 upon thesanction of the Commissioner of Income Tax. 3.The respondent further submits that the petitioner afterreceiving the process from the Trial Court did not personallyappear before the Trial Court she invoked the inherentjurisdiction of this Hon'ble Court by filing the aboveCrl.O.P.No.27158 to 27160 of 2007. This Hon'ble Court has stayedall further proceedings before the Trial Court pending disposalof the above Crl.O.Ps. 3.The respondent further submits that the petitioner afterreceiving the process from the Trial Court did not personallyappear before the Trial Court she invoked the inherentjurisdiction of this Hon'ble Court by filing the aboveCrl.O.P.No.27158 to 27160 of 2007. This Hon'ble Court has stayedall further proceedings before the Trial Court pending disposalof the above Crl.O.Ps. 4.The petitioner has interalia stated in her affidavit that,she has filed a petition for compounding u/s.279(2) of Income TaxAct, 1961 and there cannot be parallel proceedings before theDepartment and before the Trial Court. Further the petitioner hasstated that, there was a search on 14.07.1993 and the departmenthas seized vital documents which prevented her from filing thereturn. The contention of the petitioner cannot be accepted sincethe search was after the statutory due date viz., 31.08.1992 forA.Y.1992-93. Further it is in the exclusive knowledge of thepetitioner as to how much she has derived as income from herprofession as film artist. From the receipt of her income thepetitioner could have easily filed the return of income on or before the statutory due dates. The petitioner did not take anysteps to obtain copies of her seized records from the department.Therefore, the points raised for failure to file the returncannot be valid reasons in eye of law. However, the petitionerhas to establish her defence by evidence in the course of trialof the above cases. 5.The respondent most humbly submits that the petitionsfiled by the petitioner are not maintainable in law in view ofthe following decisions of the Hon'ble Supreme Court and HighCourts. (i)2006 ITR 1 (SC) Prakash Nath Khanna and another vs.C.I.T. and another, the Hon'ble Supreme Court has ruled asfollows:- "One of the significant terms used in Section 276CC(offence of failure to furnish return of income) of theIncome Tax Act, 1961, is "in due time". The time withinwhich the return of income is to be furnished isindicated only in sub-section (1) of Section 139 and notin sub-section(4). Even if a returns is filed underSection 139(4) that would not dilute the interaction innot furnishing the return within the time as prescribedunder sub-section (1) of section 139"."Section 276CC refers to "due time" in relation tosub-sections(1) and (2) of Section 139 and not subsection (4). It cannot be said that the Legislaturewithout any purpose or intent specified only the sub-sections (1) and (2) and the conspicuous omission of sub-section(4) has no meaning or purpose behind it. Sub-section (4) of section 139 cannot control the operationof sub-section(1) wherein a fixed period for furnishingthe return is stipulated. The mere fact that for thepurposes of assessment and carry forward and set off oflosses the return filed under sub-section(4) is treatedas on filed within sub-section (1) or (2) would notamount to the return having being filed within due time.""Whether there was failure to furnish the return isa matter which is to be adjudicated factually by theCourt which deals with the prosecution case." "There is a statutory presumption prescribed inSection 278E: the court has to presume the existence ofculpable mental state and absence of such mental statecan be pleaded by an accused as a defence in respect ofthe act charged as an offence in the prosecution." (ii)149 ITR 696 (SC) – P.Jayappan vs. S.K.Perumal."A mere expectation of success in some proceedingin an appeal or a reference under the I.T.Act cannot come in the way of the institution of criminalproceedings under s. 276C and s. 277 of the Act."It does not, however, mean that the result of aproceeding under the Act would be binding on thecriminal court. The criminal court has to judge the caseindependently on the evidence placed before it." (iii)157 ITR 330(SC) – Maya Rani Punj vs. C.I.T. at page 340& 341. "There is a statutory presumption prescribed inSection 278E: the court has to presume the existence ofculpable mental state and absence of such mental statecan be pleaded by an accused as a defence in respect ofthe act charged as an offence in the prosecution." (ii)149 ITR 696 (SC) – P.Jayappan vs. S.K.Perumal."A mere expectation of success in some proceedingin an appeal or a reference under the I.T.Act cannot come in the way of the institution of criminalproceedings under s. 276C and s. 277 of the Act."It does not, however, mean that the result of aproceeding under the Act would be binding on thecriminal court. The criminal court has to judge the caseindependently on the evidence placed before it." (iii)157 ITR 330(SC) – Maya Rani Punj vs. C.I.T. at page 340& 341. "........ non-compliance with the obligation ofmaking a return was an infraction as long as the defaultcontinued" Therefore, failure to furnish the return itis a continuing offence. (iv)199 ITR 307 (MAD) K.Jagadeesan vs. I.T.O. "Merely charging interest for delay in filingreturns – Does not