Crlatr/5/2018 Of M/S. Himagiri Greenfields Pvt. Ltd v. Dy. Commissioner Of Income-Tax

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD FRIDAY THE SEVENTEENTH DAY OF JUNETWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL TRANSFER Nos: 5 and 25 OF 2018 Crl.A.(TR) No. 5 of 2018 Crl.Appeal Under Section 37a (2) of Cr P C. against the Judgmentdated 09-01-2014 in C.C.No 121 of 2011 on the file of the Court of the SpecialJudge for Economic Offences at Hyderabad Between: 1 M/s. Himagiri Greenfields Pvt Ltd., Flat No. I 02, Dhanunlaya Nest, RajivNagar, Yousufguda, Hyderabad-4s, Rep by Shri D V.S.Subba Raju, S/oLate D K. Raju, Aged about 45 years.Nagar, Yousufguda, Hyderabad-4s, Rep by Shri D V.S.Subba Raju, S/oLate D K. Raju, Aged about 45 years. 2. Shri D V.S Subba Raju, Director of M/s Himagiri Greenfields Pvt Ltd , FlatNo.102, Dhanunjaya Nest. Raliv Nagar, Yousufguda, Hyderabad-45.No.102, Dhanunjaya Nest. Raliv Nagar, Yousufguda, Hyderabad-45. 3. Shri AIluri Venkata Raghava Ralu, Director of M/s. Himagiri Greenfields PvtLtd , Flat No 102, Dhanunjaya Nest, Rajiv Nagar, Yousufguda, Hyderabad-45Ltd , Flat No 102, Dhanunjaya Nest, Rajiv Nagar, Yousufguda, Hyderabad-45 .". Appellants / Accused Nos. 1, 2, & 5 AND DyCom missioner of lncome{ax, Central Circle-8, Aayakar Bhavan, RoomNo8058'n Floor, Basheerbagh, Hyderabad-500004. ...RESPONDENT/Complainant Counsel for the Petitioner :SRl. VINOD KUMAR DESHPANDE, Sr.Counsel rep.SRl G. ASHOK REDDY Counsel for the Respondent : SRI B. NARASIMHA SARMA S.C. for l.T. CRIMINAL APPEAL TRANSFER NO: 25 OF 2018 Crl.Appeal Under Section 374 of Cr.P.C. against the Judgmentdated 09-01-2014 in C.C.No. 121 of 2011 on the file of the Court of the SpecialJudge for Economic Offences at Hyderabad. Between: 1. B Suryanarayzrna Raju, S/o. Late B. Satyanarayana Raju, ar;ed about [51]years. Drrector of M/s. Himagiri Greenfields Pvt Ltd.. Flat No. 1 02,Dhanunlaya Nest. Rajiv Nagar, Yousufguda, Hyderabad-4s.years. Drrector of M/s. Himagiri Greenfields Pvt Ltd.. Flat No. 1 02,Dhanunlaya Nest. Rajiv Nagar, Yousufguda, Hyderabad-4s. 2. Namburi Rama Raju. S/o. Venkata Ra.ju, aged about 49 years, Director ofM/s Himagiri Greenfields Pvt Ltd.. Flat No 102 Dhanunlaya Nest, RajivNagar, Yousuf3uda. Hyderabad-45. ... Appellants / Accused 3 & 4M/s Himagiri Greenfields Pvt Ltd.. Flat No 102 Dhanunlaya Nest, RajivNagar, Yousuf3uda. Hyderabad-45. ... Appellants / Accused 3 & 4 AND Dy. Commissioner of lncome-tax, Central Circle-8, Aayakar Bhavan, RoomNo.805 8th Floor, Basheerbagh, Hyderabad-SOOOCt4 ...Rt:SPONDENT Counsel for the Respondent : SRI B. NARASIMHA SARMA S.C. for l.T.Counsel for the Pr:titicner : SRl. VINOD KUMAR DESHPANDE Sr.Counsel rep.SRl 'r'. SURENDER RAO The Court delivered the following: Common Judgment THE HON'BLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL [TRl Nos.S and 25 of 2018COMMON JUDGMENT: Crl.A.(TR).No.5 of 2018 is iiled by A1, A2 and A5 i.e.,Company and its two Directors respectively, whereasCr1.A.(TR).No.25 of 2QlB is fiied by A3 and 44, who are otherDirectors of A1/company, being aggrieved by the conviction andsentence imposed by the learned Special Judge for EconomicOffences at Hyderabad in C.C.No.12l of 2011 vide Judgmentdated 09.01.2014, u,herein Accused Nos. I to 5 were found guiltyof the offences punishable under Section 276-C(21 read withSection 278-8 of the Income Tax Act, 196 1 (for short, "the Act")consequently accused No. I was sentenced to pay line ofRs. 10,000/- and in default ol payment of fine to initiateappropriate proceedingsAS required under Section 427 ofCr.P.C., whereas Accused Nos.2 to 5 were sentenced to undergorigorous imprisonment for a period of one year each and to payfine of Rs.10,OO0/- each and in default of payment of Iine byaccused Nos.2 to 5, to undergo simple imprisonment for a periodof one month each. Since the issues involved in these zLppeals are one and thesame, iroth tlre appeals are being disposed ol bv this commonjudgment. Since the issues involved in these zLppeals are one and thesame, iroth tlre appeals are being disposed ol bv this commonjudgment. 2. For r:onvenience, the parties herein are relerred to as theyaJe arraycd before the trial Court. i.e., Appellant No.1 asAccused No.17 Company and Appellant lrlos.2 to 5 as AccusedNos. 2 to 5. 3. 1'he genesis of these cases, which lead the appellar-rts-accused to prefer these appeals, are narrated in brief as under: i) Accused No.1/Company - M/s. Hemagiri GreenfieldsPrivate Lirnited, which was registered under the CompaniesAct with the Registrar of Companies at Hyderabad asPrivate Lirnited Company, was engaged in the business ofacquisition and sale of lands. Appellant Nos. 2 to 5 hereinare the Directors of Accused No. 1/ Company. ii) Accused No.l/Company has acquired lands to anextent of Ac.7.OO guntas in Sy.No.194 under the limits ofBachupally Mandal, Ranga Reddy District during thelrndircYal year 2002-2003 and developed the said lands by I incurring some arnounts during the linancial years 2002-03 to 2007-08. Accused No. 1/Company along with othercompanies, who have lands contiguous to the lands ofAccused No.1/Company, have agreed to develop the iandsjointly with M/s. Mytas Properly Private Limited. As perthe said development agreement, the built up area agreedto be given to Accused No. 1/ company, was allou,ed to besold to various buyers by M/s. Mytas Property PrivateLimited and pass on the sale proceeds to AccusedNo.1/Company. iii) For the assessment year 20OB-09, accusedNo.1/company has liled income tax returns on 30.09.2008under Ex.P1 by bifurcating the sale proceeds into long termcapital gains accrued from the sa-1e proceeds of the landsand short term capital gains accrued from the saleproceeds of the constructed area by showing gross taxableincome as Rs.7,65,64,5701-, out of which an amount ofRs.4,86,86,424 l- was shown as long term capital gain andRs.2,78,78,148/ - was shown as short term capital gains i..) Accused No.1/Company1Sexpected to pay theincome tax either by way of advalc e tax as required underSection 2O8 of the Act or at least alorrg u'ith filing oireturns in terms of Section 14O-A of the Act. As perSectior.r 143 (1) of the Act, the tax liability ol Accr.rsed No.1was arrived at Rs.2,27 ,74,267 I - by therespondt:nt/complainant and raised a demand underSection 156 read with Section 143 of the Act and issued anintimation to Accused No.1/Corrpanl' under Ex.P2.Accused No.1/companywas required to pay the taxdemanded within 30 days of service of notice, but it hascomrnitte d default. v) Respondent/complainant has issued show-causenotice dated 77.11.2OO9 under Section 221 o1'the Act(ll under Er.. P5, wherein the appellants lvere asked to shou.cause as to why penalty should not be levied forcommitting default in payment of Lax. As there was noresponse from the appellants, the complainant has issueda-nother show-cause notice dated 01.09.20iO undr:r Ex.P6under Ser:tion 221 (I\ read with Section 143-A of the Act. I Finally, one more opportunity was also give n by theDepartment by giving another show-cause notice dated16.09.2010 (Ex.P7) under Section 221 (11 read with Sectron143-A of the Act. An opportunity of being heard u,as alsogiven by the respondent/complainant to AccusedNo.1/Company fixing the date of hearing as 21.09.2010,but there was no response, on u'hich a penalty ofRs.4O,0O,O0O/-was imposed by way of order dated22.09.2O1O (Ex.PB) under Section 221 read with Section140-4.(3) of the Act and the said proceedings u,ere servedon accused No.l on 23.O9.2010. I Finally, one more opportunity was also give n by theDepartment by giving another show-cause notice dated16.09.2010 (Ex.P7) under Section 221 (11 read with Sectron143-A of the Act. An opportunity of being heard u,as alsogiven by the respondent/complainant to AccusedNo.1/Company fixing the date of hearing as 21.09.2010,but there was no response, on u'hich a penalty ofRs.4O,0O,O0O/-was imposed by way of order dated22.09.2O1O (Ex.PB) under Section 221 read with Section140-4.(3) of the Act and the said proceedings u,ere servedon accused No.l on 23.O9.2010. 4. Considering the willful evasion of payment of tax, therespondent/complainalt has decided to initiate prosecution andaccordingly a notice was issued to accused No.l/company andother Directors under Section 276-C(21 of the Act, as to whyprosecution shall not be initiated against them for willful evasionof the tax. All of them have given reply stating that there was nointention to evade payment of tax. Another notice was issued toaccused No.1/Company and its directors under Exs.P10 to P13dated 04.10.2010 asking them as to why prosecution shall not be initiated Lrnder Section 276-C(21 of the Act. Again repliesu,cre filed bl, accused No.1/company and its Directors/ accusedNos.2 to 5 under Exs.Pl4 to P17 stating that therr: was nointe n[ion of w 1lfu1 evasion of tax. 5. As Accused No. 1/Company and its Directors / accusedNos.2 to 5 h:rve not paid the tax in response to the demandnotice issued under Section 1a3 (1) of the Act and also failed topay the penalty, the respondent/complainant after obtainingsanction order dated 25.02.2011 for launching of prosecutionfiled a complaint before the Special Court for Economic Offencesagainst accused No.1 and accused Nos.2 to 5, the otherDirectors, alleging that they have committed offence punishableunder Section 276-C(21 read with Section 278-8 of the Act, asthey have u,illfully evaded tax even though they were havingsufficient resoLlrces. 6. The Special Court for Economic Offences took cognizanceof the offences against Accused No.1/Company and its [Directors]i.e., Accused I'los. 1 to 5, under Section 276-C(2\ read rvithSection 278-R cf the Act and charges wert-' framed agairLst [them]under Section 276 - C(2) read with Section 278-B(L) of the Act and all the accused have pleaded not guilty of the cl-rarges andclaimed to be tried. 7. In order to prove the charges Ieveled against theappellarrts, the respondent/complainant has examined PWs.1 to3 and got marked Exs.Pl to PlB. After closure of evidence of thecomplainant, the incriminating evidence elicitecl against theappellants was read over and explained to them under Section313 of the Cr.P.C., for which ali ol them have denied andreported that they did not choose to examine an1' u'itness ontheir behalf. However, they got marked Exs.D L to D3 on theirbehalf. B. The substance of the evidence of PWl is that after receivingof returns of income tax filed by accused No.1/company, therespondent/complainant has processed the same under Section1a3(1) of the Act and issued intimation determining the totaltaxable income as Rs.7,65,64,5701- and tax liabiiity asRs.2,50,30,160/-. The evidence of PW2/Income Tax officer is tothe extent that he has considered the annual report of accusedNo.l/company for the financial year 2OO7-OB under Ex.P3 and\lbank account statements of accused No.l/Company with the B. The substance of the evidence of PWl is that after receivingof returns of income tax filed by accused No.1/company, therespondent/complainant has processed the same under Section1a3(1) of the Act and issued intimation determining the totaltaxable income as Rs.7,65,64,5701- and tax liabiiity asRs.2,50,30,160/-. The evidence of PW2/Income Tax officer is tothe extent that he has considered the annual report of accusedNo.l/company for the financial year 2OO7-OB under Ex.P3 and\lbank account statements of accused No.l/Company with the AXIS Ilank Limited under Ex.P4 alrl found that accuscdNo.1,/6sr.,,r,rLv did not pay the tax retrrns in spite of havingsurplus ancl sufficient funds. PW3 is the Income Tax Officer,u,ho has suc<:eeded PW2. His evidence is that he has passedpenalty order under Ex.PS imposing pena1t5. of Rs.40 lakhs andraised de:na nd under Ex.P9 and the sa,me u,as served on theaccused. He aiso deposed that as there was no response fromthe accused, show cause notices under Section 276-C ol the Actu,erc issur'd aglainst all the accused through n,hich accused wereinformed t hat the department is initiating criminal proceedingsand consequently the department has fi1erl the complaint.9. After full [.fledged ]trial, on considering the entire material onrecord, the trial Court has found Accused No. 1 / Company andA.2 to A5, the Directors of A1 company, guilty of the offencespunishable under Sections 276-C(2\ and 278-B of the Act andwere sentencecl as stated supra. Aggrieverl by the said [judgment]and convictior of Special Judge for Economica-l Oflences atHyderabad, th,: present appeals are filecl originally belore theMetropolitan St:ssions Judge Court at Hyderabad. 10. T1-re erstwhile High Court for the States of Telangana andAndhra Pradesh has issued circular ROC.No.34. CriminalSectionl2OlT, dated 28.08.2017, wherein it is clarilied thatagainst aly orders passed by the Special Judge for EconomicOffences, Hyderabad, in the State of Telangana andVisakhapatnam in the State of Andhra Pradesh, the High Courthas the jurisdiction to entertain the appeals, not the SessionsCourt. In view of the said circular, these appeals iiled b), th"appellants have been transferred from Metropolilan SessionsJudge Court, Hyderabad, to the High Court for the State ofTelangana. 11. The summarJz of grounds of appeal as liled b1, theappellants in brief are as under: a) The trial Court has failed to see that accusedNo.1/company was not having funds to pay the tax on the duedate as reflected in Ex.P4-bank statements and that accusedNo.l has not received any sale proceeds from M/s. MytasProperty Private Limited, thereby the respondent/complainanthas not produced arly evidence to show that accused No. l/Company has received sale proceeds from M7 s. MytasProperty Prir.ate Limited. b) The trial court has misconstrued the presumption underSection 278 A of the Act and erred in holding that the burden ofproof is on the accused to prove that there was no willful evasionof payment of t-ax. c) The trial Court erred in holding that the accused failed toprove non-existence of culpable mental state in non-payment oftaxes on the date of filing returns and as cn the date of demandnotice ald that the trial Court failed to appreciate that in spite ofnot l-raving an'r cogent evidence to show that all the accusedhave u,-illfutIy evaded the tax, the trial Court has concluded thataccused have c,rmmitted willful evasion in payment of tal. d) The trial court fajled to see that all the assets belong toaccused No.1 /t)ompany were attached under Section 2B 1-B ofthe Act alcl due to paralyzing of financial activities of accusedNo. 1, tax could not be paid in time. The trial ccurt failed to consider the admission of PW3 thate) the amount received Accused No. is t.owardsby l/Company share application money does not attract tax liability and thatthe trial Court could not consider that accused No.1 has notreceived Rs.7 crores 65 lakhs from M/s. Mytas Property PrivateLimited. d) The trial court fajled to see that all the assets belong toaccused No.1 /t)ompany were attached under Section 2B 1-B ofthe Act alcl due to paralyzing of financial activities of accusedNo. 1, tax could not be paid in time. The trial ccurt failed to consider the admission of PW3 thate) the amount received Accused No. is t.owardsby l/Company share application money does not attract tax liability and thatthe trial Court could not consider that accused No.1 has notreceived Rs.7 crores 65 lakhs from M/s. Mytas Property PrivateLimited. l) The Trial Court should not have concluded that accusedNos.2 to 5 are responsible for day to day affairs of accusedNo. 1 / company and should have taken into consideration thenotices issued under Section 27 8-B of the Act proposing theprosecution did not refer accused Nos. 2 to 5 as principal oflicersand thereby accused Nos.2 to 5 should have been acquitted. 12. Heard Sri Vinod Kumar Deshpande, learned Senior counselfor the appellants and Sri B. Narasimha Sharma, learnedStanding counsel for the income tax department, considered theentire material on record, relevant provisions of the Act and theauthorities cited. 13. Appellant No. l/company has filed an application underSection 391 Cr.P.C., along with the appeal for receiving of tu,odocuments i.e., (i) Common order passed by the AppellateTribunal in ITA.No.1OOB of 2014, dated 22.05.2015 and (2) consequentla. order, dated 21.03.2016 passed by the AssessingOfficer, Assistant Commissioner of Income Ta-x, Centra,l Circle-3(2), HyderaL,ad, as additional evidence. As per the, commonorder of lhe Tribunal, dated 22.O5.2O1) (document No.1), theassessment order dated 02.12.2O1O on '"rrhich the prosecution isinitiated 's,as tlirected to be modified. Basing on the orders of theIncome ['l'ax ]Appellate Tribunal, the :Lssessment olficer hasmodilred the r,arlier orders dated 02.12.2t)lO by re-asse:ssing thetax liability, vrhich the appellants were [()xpected ]to pzLy for theassessmerlt year 2OO7 -2008 (document l\o.2). Considering theabove, and orr hearing both sides, this Court is of the opinionthat these tu'o documents are very relevant to consider theappeals on ha-rd, thereby these documents are received. 14. It is submitted vehemently by the learned Senior Counselfor the appellants that during the pendency of the complaintbefore thr: trial Court, the accused have paid entire tax asdemanded, including the penalty and interest and that theappellants hzLve challenged the assessment orders dated02.12.2OlO ur:der Ex.D2 before the learned CIT(A). On hearingboth sides. learned CIT(A) has found that there are no rrerits in the contentions raised by the appellants, and dismissed theappeal upholding the orders passed by the Assessing Oflicer forassessment year 20OB-09. Aggrieved by the same, theappellants have preferred appeal before the Income Tax AppellateTribunal (in short, "the Tribunal"), and on hearing both sides,learned Tribunal has partly a,llowed the appeal vide orders dated22.O5.2015 in ITA.No.943lHyd/2Ola and others finding that theAssessing Officer has committed error in calculating the tax tobe paid by the appeilants and directed the Assessing Officer tore-assess the tax by computing the income of the appellantsfrom the transfer of lands held by accused No.l/company ascapital assets by way of deveiopment agreement and subsequentto sa,le of flats ald bungalows received as consideration for suchtransferred amounts to stock in trade on conversion. Theseorders are passed alter passing conviction vide judgment dated09.O1.2014 in C.C.No.121 of 2011 by the learned Special Judge.It is also submitted bv the learned Senior counsel that theAssessing Officer has re-assessed the tax as per the directions ofthe Tribunal and passed consequential order, dated 21.03.2016,wherein the tax liability was substantially reduced and foundthat the tax, which was already paid to the tune of Rs.2,27 ,7 4,'2e,7 l- [.r ]as in excess of the revised tax thereb)', theexcess ta-x paid Rs.1,44,19,537 l- and interest of Rs.41,19,798/-the total of which was Rs. 1,85,39,335/-, \\:as ordered to berefunded ar-rd the same was also adjusted against the demandfor the accorrnting year 2009-10 vide RO.No.3O3515 dated28.O3.2016. On considering the submissions ol the learned Seniorcounsel it is clear that the appellants have not only paid the taxdemanded along with interest and penaIt1,, but also on accountol re-assessm€nt of tax, the tax already pzrid was in excess of ta-xliability, and that the same was adjusted for future tax liabilityand hence, sought for allowing of the appeals. 15. Lean-red standing counsel representing the Income TaxDepartment stated that as on the due date , the accused have notpaid the tax having sufficient funds a-nd committed willfulevasion of payment of tax. It is also submitted that AccusedNo.l/company has filed annual returns (Ex.P3), through itsChartered Accc untant for the financial year 2OO7 -O8 relevant forthe assessmenr- year 2008-09, according to u'hich Accused No. 1made profit on sale of land to a tune of Rs.7,73,94 ,149 I - and the bank statements shor,,' that Accuse d No. 1/Company has receivedpart of sale consideration in respect of "Mytas Hill County" fromtime to time, but did not choose to pay the advance tax. It isfurther submitted that the balance sheet of AccusedNo.1/Company also shows Rs.9,33,33,082/- under the headreserves and surplus, so also Rs. 11,73,97,356/- under the headcurrent assets of loans and advances. It is furtherby way submitted that accused No.1/Company having enough liquidcash during the relevant accounting year, wi1lfully evaded inpayment of tax, thereby the accused have committed the offencepunishable under Section 276-C(2) read with Section 278-8 ofthe Act and hence conviction recorded by the trial Court isproper. 16. Now, the points for determination in these appea,ls are: 1) Whether the conviction recorded based onthe assessment order dated 02. L2.2O|O can besustained, since the said assessment order dated02.\2.2O lO was subsequently revised? 2) Whether the accused have committed willfulevasion of tax? To rvhat relieP3) Point No. 1: 17. The oause of action for the respondentdepartment/complainant to file the c:omplaint against theappellar-rts is t he assessment order dated 02. l'2 .2OlO, accordingto r,r,hich the appellants were asked to pay tax ofRs.2,27 ,7.1,267 I - for the taxable income of Rs.7,65,64 ,57O I - andaccordir-rgly an intimation was sent by the Assessing ofltcer tothe appellants under Section 143 (1) of the Act. Admrttedly ason the date of initiating the prosecution against the appellants,demanded taK of Rs.2,05,08,1261- was not paid by theappellants. It is also an admitted fact that after initiating theprosecution, tl-re appellants have paid th,: entire tax demandedalong with pe:raity, interest etc. Therefrrre, as on the date ofpronouncement of the judgment by the trial Court, there was nota-x liability to be paid by the appellants. 18. It is to be noted that the Income Tax Appellant Tribunalhaving conside red the appeals of the appellants found that theassessment orrler, dated 02.l2.2OlO directing the appellants topay Rs.2,05,08,126 I - was incorrect and the Assessment Officer 18. It is to be noted that the Income Tax Appellant Tribunalhaving conside red the appeals of the appellants found that theassessment orrler, dated 02.l2.2OlO directing the appellants topay Rs.2,05,08,126 I - was incorrect and the Assessment Officer was directed to assess the income tax afresh in terms of thedirections given by the Tribunal. Accordingly, the Assessmentofficer has re-assessed the income tax and passed modifiedorders, dated 21.03.20 16 determining the tax liabiiity, which isfar less than what was assessed at the first p1ace. The basis forrespondent/ complainant to initiate prosecution against theappellants is the assessment order, dated 02.12.2010, on theground that the appellants have committed default in payment ofthe tax as per the said assessment order. When assessmentorder dated 02.l2.2OlO itself is re-assessed as per the directionsof the Tribunal which held that the assessment of tax datedO2.l2.2OlO is incorrect and the tax to be paid was substantiallyreduced, it cannot be alleged that the appellants have committeddefault in payment of tax and willfully evaded. When theassessment order dated 02.l2.2OlO itself was modified holdingthat the Assessment Officer has incorrectly assessed the tax,whatever the consequential proceedings that have been initiated,including the initiation of prosecution of the appellants by therespondent/complainant, conviction recorded by the trial Court,cannot sustain. Basing on the fresh assessment order, datedi 2L.03.20 16, it is to be examined afresh that whether the{ appellants heve committed any rviliful evasion ol tax, as definedunder Section 276-C of the Act. 19. Therefore, on considering the above discussion, it is cleartl-rat the Iindi-ig of the trial Court that the appe[lants u ere guiltyof the offences under Section 276-C(2\ read uith Sectron 278,8of the Act it; erroneous as the same is based on incorrectassessment ,rrder, dated 02.12.2010 and hence, sha11 notsustain, zmd lequired to be set aside. Considering the same, point No.1 is decided in favour ofthe appel lants; / accused. POINT No.2:- 20. The appellants have also raised other issues i.e., lhey havenot committecl any willful evasion in payrnent ol tax since, as onthe due clate there were no liquid funds in their accounts andthe appellants; - Accused Nos. 2 to 5, who are the Dire,:tors, arenot responsi'ble for the day to day activities of accusedNo.1/Company as on the date of the alleged default, the trialCourt has mis,construed the presumption under Section 27 BE ofthe Act, ti-re tlial Court failed to record admission of PW.3, that I the amount received to\\'ards share application does not attractthe tax etc. 21. This Court has already came to the conclusion [q,hile]discussing point No. I that the conviction and sentence recordedin favour of the appellants required to be set aside, on account ofthe fact that the assessment order dated O2.|2.2OIO on whichthe conviction was recorded was modilied and a freshassessment order came into force, hence, the issues raised bythe appellants, need not be answered. 22. Learned Senior Counsel for the appellants has placedreliance on the authority passed by the Hon1c1e Supreme Courtin the case of V.Srinivas Reddy Vs, State of Andhra Pradeshl,wherein it was held as foliows: .13. It was tLrcn urged bu Mr. Arunachalom that ifthe High Court .felt tLnt further euidence was necessaryfor [disposal ][of ][the ][case ][then ][it ][could ][haue exercised ][its]pou.ter under Section 391 Cr. P.C. and ouqht not to haueset aside the order of acquittal and remanded the matterfor fresh [disposal. ][This arqument ][also ][did ][not ][impress us]because the Hiqh Court instead of recording the additionaleuidence in tenns of Section 391 Cr. P.C.; prefened toremand the matter back to the trial court .for disposal inaccordance with law. It also appears from the record thatsome of the documents includinq FDRs, loan applicationsetc., should also haue been brought on record for effectiue I(1998) 9 SCC 331II t .13. It was tLrcn urged bu Mr. Arunachalom that ifthe High Court .felt tLnt further euidence was necessaryfor [disposal ][of ][the ][case ][then ][it ][could ][haue exercised ][its]pou.ter under Section 391 Cr. P.C. and ouqht not to haueset aside the order of acquittal and remanded the matterfor fresh [disposal. ][This arqument ][also ][did ][not ][impress us]because the Hiqh Court instead of recording the additionaleuidence in tenns of Section 391 Cr. P.C.; prefened toremand the matter back to the trial court .for disposal inaccordance with law. It also appears from the record thatsome of the documents includinq FDRs, loan applicationsetc., should also haue been brought on record for effectiue I(1998) 9 SCC 331II t disposat of the controuersu raised in the case and to doiLtstlce [betueen ][the ][parties. ][It ][is ][needless to ][sag that ][the]tial cL'turl will stictLu adhere to the obseruations enddirections giuen bg the High Court in its [judgment."] The rationale in the above authority of the Apex Courtsquarel.r- applicable to the facts of the case on hand. 23. Consi<lering the facts and circumstances. this Court is ofthe consr dert:d opinion that as the assessment orders dated02.12.2O1O on u,hich the prosecution was initiated itself doesnot exist and that the same was modified and fresh assessmentorder dated 2I.03.2016 came into force, the conviction andsentence recorded against the appellants basing on the incorrectassessment o:-ders dated 02.12.2OlO shail be set aside. 24 . Accorclingly, both these criminal appeals are disposed ofsetting aside the conviction arrd sent€rnce dated 09.Ol.2Ol4recorded by Special Court for Economical Offences at Hyderabadand C.C.No. 1:21 of 2011 is remanded back to the trial Court witha direction tc, consider the documents i.e., (1) Common orderpassed b5' thr' Appellate Tribunal in ITA.No.100B of 2014, dated22.O5.2O15 rmd (21 consequential orcler, dated 21.C3.20i6passerd by tlLe Assessing Officer, Assistant Commissioner of lncome Tax, Centra-l Circle 3(2), Hyderabad, filed b-v theappellants and decide the complaint afresh in accordance u,ithlaw, after giving an opportunity to both sides to adduce anyfurther evidence, if any. However, the trial Court shall not beinfluenced by the comments and observations, if any, made bythis Court touching merits of the case while passing orders. As a sequel, pending miscellaneous applications, if any,shall stand closed. ll [rRUE ][coPY ]ll sD/-K.SRINIVASA JOINT REGRwSECTION OFFICER TO 1. The Special Judge for Economic Offences at [Hyderabad]2. Dy. Commissioner of income-tax,, Central [Circle-8, ][Aayakar Bhavan, ][Room No.805']8th Floor, Basheerbagh, Hyderabad-500004.2. Dy. Commissioner of income-tax,, Central [Circle-8, ][Aayakar Bhavan, ][Room No.805']8th Floor, Basheerbagh, Hyderabad-500004.3. The Assessing Cfficer, Assistant [Commissioner ][of ][Income ][Tax, ][Central Circle ][-3 ][(2)], [Hyderabad.], [Hyderabad.]4. One CC to SRl. G ASHOK REDDY [Advocate ] 5. One CC to Sri V. SURENDER RAO, [Advocate ][(OPUC)] 6. One CC to SRI B NARASIMHA SARMA [Advocate ] 7. Two CD Copies 1- HIGH COURTDATED: 77/06/2022COMMON.IUDGMENTCRLA(TR).Nos. 5 and 25 of 2018 DtsposrNG oF ]'HE BOTH CRL AppEAL (TR) AIa44-1 P -.lisc [s][ lt]I*N22SEP 2972//