Crlp/3598/2008 Of Shri. M.s.raju v. The Deputy Commissioner Of Income Tax

HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL PETITION NO.3598 OF 2008 Dated 31-03-2011 Between:M.S. RajuAnd: ……..Petitioner Deputy Commissioner of Income Tax and another ………Respondents HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL PETITION NO.3598 OF 2008 ORDER: This petition is filed under Section 482 of Cr.P.C for quashing theproceedings in C.C.No.70 of 2007 pending on the file of the SpecialJudge for Economic Offences, Nampally Criminal Courts, Hyderabad. The petitioner herein was prosecuted for the offences underSections 276C and 277 of the Income Tax Act, 1961 (for short, the Act)alleging that the accused has attempted to evade the tax by claimingbogus expenditure on account of battas, set expenses, costume andmake-up expenses and recoding expenses, difference in royaltyreceived from National Litho Printers, amount claimed to be incurred through Sri Sadiq and advance given to Sri Ranga Rao and theseunaccounted amounts would not have been disclosed in the normalcourse. Therefore, penalty under Section 158BFA(2) of Rs.16,95,006/-was levied on 22.6.2006. The accused challenged the penalty order before theCommissioner of Income Tax (Appeals)-I, Hyderabad, who vide hisorder in ITA No.0396/CC-4, Hyd/CIT(A)-I/06-07, dated 25.1.2007 haspartly allowed the appeal. Consequently, penalty levied under Section158BFA(2) was reduced. The Department has however preferredsecond appeal before the ITAT against the said appellate orderpassed by the CIT(A)-I, Hyderabad and the same is pending fordisposal before ITAT. Thus, the accused has deliberately and willfully attempted toevade the tax which would not have come to light but for the searchand seizure operation and as such the accused has committed theoffence punishable under Section 276C of the Act and the accusedhas also made a false verification in the return of income filed on29.10.2003. The learned counsel for the petitioner has pleaded thataggrieved by the said penalty order passed by the 1[st] respondent, thepetitioner has preferred an appeal before the Commissioner of IncomeTax (Appeals)-I, Hyderabad and the same was partly allowed anddeleted the penalty to an extent of Rs.9,19,617/-. The petitioner hasfiled further appeal to the Income Tax Appellate Tribunal, Hyderabadin respect of the penalty upheld by the learned Commissioner (Appeals). The Revenue also filed appeal before the Income TaxAppellate Tribunal, Hyderabad in respect of the relief granted by thelearned Commissioner (Appeals). Both the appeals are disposed ofby the Income Tax Appellate Tribunal by order dated 03.11.2008remanding the matter to the Commissioner of Income Tax (Appeals)-I,Hyderabad for fresh disposal after giving opportunity to both theparties. He further pleaded that since the matter is pending before theCommissioner of Income Tax (Appeals)-I, Hyderabad, the prosecutionagainst the same is not maintainable and hence the proceedingsbefore the Special Judge for Economic Offences, Hyderabad are liableto be quashed. He also pleaded that even otherwise also, thepetitioners are entitled for stay of the proceedings pending before theSpecial Judge for Economic Offences, Hyderabad till the disposal ofthe appeal pending before the Commissioner of Income Tax(Appeals)-I, Hyderabad. The learned counsel for the respondent No.1, on the other hand,has pleaded that there is no necessity for quashing of theproceedings or stay of the proceedings pending before the SpecialJudge for Economic Offences, Hyderabad as the petitioner want todrag on the matter by one way or the other and of the order by theCommissioner of Income Tax (Appeal), is again liable to bequestioned before the Income Tax Appellate Tribunal and thepetitioner has not taken any steps for getting the appeal disposed of. The allegations made against the petitions are that the searchand seizure action under Section 132 of the Act was conducted on The learned counsel for the respondent No.1, on the other hand,has pleaded that there is no necessity for quashing of theproceedings or stay of the proceedings pending before the SpecialJudge for Economic Offences, Hyderabad as the petitioner want todrag on the matter by one way or the other and of the order by theCommissioner of Income Tax (Appeal), is again liable to bequestioned before the Income Tax Appellate Tribunal and thepetitioner has not taken any steps for getting the appeal disposed of. The allegations made against the petitions are that the searchand seizure action under Section 132 of the Act was conducted on 21.2.2003 at the residence and office premises of the assessee andthe search proceedings were finally concluded on 21.4.2003. Duringthe course of search, it was detected that the accused had beendebiting bogus expenditures on account of set expenses, battas,earning undisclosed income on account of royalty, making paymentsto persons which is not accounted. A notice under Section 158BC ofthe Act calling for return of income for the block period was issued tothe assessee on 5.9.2003. The accused has filed the return for theblock period admitting undisclosed income of Rs.14,59,710/-. Afterconsidering the seized materials and explanation filed by the accused,the block assessment under Section 158BC was completed on21.4.2005 on total undisclosed income of Rs.41,50,195/- and the orderpassed under Section 158BC of the Act and penalty proceedings wereinitiated under Section 158BC of the Act and the petitioner haspreferred an appeal before the Commissioner, Income Tax Appeals-I,Hyderabad challenging the assessment order and the same wasdismissed. The department has imposed the penalty ofRs.16,95,006/- on 22.6.2006 and the same was challenged before theCommissioner of Appeals-I, Hyderabad vide order in ITA No.0396/CC-4, Hyd/CIT(A)-I/06-07 dated 25.1.2007 and they have partly allowedand consequently penalty was reduced. However, the department haspreferred an appeal before the Income Appellate Tribunal and thesame is pending for disposal. Now the learned counsel for the petitioner has pleaded that theIncome Tax Appellate Tribunal has disposed of the appeal pending before it and remanded the matter back to the Commission, Income Tax (Appeals)-I, Hyderabad again for fresh disposal by givingopportunity to the assessee and in view of the pendency of the appeal,the further proceedings in the C.C.No.70 of 2007 before the SpecialJudge for Economic Offences, Hyderabad are not maintainable. The present petition was filed by the petitioner on 2.5.06.1998and obtained interim stay and the appeal was said to have been disposed of on 03.11.2008 but they have not taken any steps so far forgetting the appeal disposed of and it appears only under the guise ofpendency of the appeal, they are trying to get the criminal proceedingsquashed. The learned counsel for the petitioner has further pleaded thatthey have filed letters before the Commissioner, Income Tax(Appeals)-I, Hyderabad for quick disposal but no action was taken bythe said authority. Simply filing of the letters before the said authoritywill not serve the purpose and the petitioner ought to have moved theapplication for earlier disposal of the appeals pending before it in viewof the pendency of the criminal proceedings. Therefore, the saidcontention of the learned counsel for the petitioner cannot beaccepted. The learned counsel for the petitioner has further pleaded thatthe proceedings before the Commission, Income Tax (Appeals)-I,Hyderabad are to be stayed and in support of his contention, he reliedupon a decision rendered in M.A. Quddus v. Income Tax Officer[[1]]wherein the single Judge of this Court has held: “Granted stay of the criminal proceedings before the criminal court till the disposal of the appealsfiled by the Department before the Income TaxAppellate Tribunal and after disposal of the saidappeals, the criminal court is directed to dispose ofthe cases.” The learned counsel for the petitioner has further pleaded thatthe proceedings before the Commission, Income Tax (Appeals)-I,Hyderabad are to be stayed and in support of his contention, he reliedupon a decision rendered in M.A. Quddus v. Income Tax Officer[[1]]wherein the single Judge of this Court has held: “Granted stay of the criminal proceedings before the criminal court till the disposal of the appealsfiled by the Department before the Income TaxAppellate Tribunal and after disposal of the saidappeals, the criminal court is directed to dispose ofthe cases.” Relying upon the said decision, the learned counsel for thepetitioner has pleaded that the matter has to be stayed till the disposalof the appeal pending before the Commission, Income Tax (Appeals)-I,Hyderabad. In the above said case, the appeals were pending beforethe Income Tax Appellate Tribunal and as such the stay was grantedtill disposal of the appeal. In the present case, the Income TaxTribunal has already disposed of the matter by remanding the matterback to the Commissioner, Income Tax (Appeals)-I, Hyderabad forfresh disposal and after disposal of the appeal by the Commissioner,Income Tax (Appeals)-I, Hyderabad, the petitioner again will have anopportunity to prefer an appeal before the Income Tax AppellateTribunal. Therefore, the said proceedings cannot be stayed pendingdisposal of the appeals before the Commissioner, Income Tax(Appeals)-I, Hyderabad. In view of the pendency of the appeal beforethe Commissioner, Income Tax (Appeals)-I, Hyderabad, the lowercourt can be directed to give reasonable time for getting the appealsdisposed of by the Commissioner, Income Tax (Appeals)-I,Hyderabad. Hence, the criminal petition is dismissed. However, the SpecialJudge for Economic Offences, Nampally Criminal Courts, Hyderabadis hereby directed to give reasonable time to the petitioner to get the appeals pending before the Commissioner, Income Tax (Appeals)-I,Hyderabad are disposed off. Date:31.03.2011. Gk. ______________________P.DURGA PRASAD,J. HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL PETITION NO.3598 OF 2008 Gk. [1]1998-CTR-145-271 Dated 31-03-2011