M.cr.c v. O R D E R

HIGH COURT OF MADHYA PRADESH: BENCH AT INDORES.B.:Hon'ble Shri P.K. Jaiswal, J M.Cr.C. No.5980/2012SUNIL KUMAR KHANDELWAL VersusUNION OF INDIA******** M.Cr.C. No.5981/2012SUNIL KUMAR KHANDELWALVersus UNION OF INDIA******** M.Cr.C. No.5983/2012SUNIL KUMAR KHANDELWALVersusUNION OF INDIA******* M.Cr.C. No.5979/2012SUNIL KUMAR KHANDELWALVersusUNION OF INDIA******* Smt. Sudha Shrivastava, Advocate for the applicant.Ms. V. Mandlik, Advocate for respondent. ******* O R D E R (Passed on 20.7.2017 ) Per P.K. Jaiswal, J:- Since a common question of law is involved in thesepetitions, therefore they are heard together and are beingdisposed of by this common order. For the sake of conveniencethe facts are borrowed from M.Cr.C.No.5980/2012. 2.By filing these petitions, the petitioner is praying forquashment of criminal case No.16/2011, pending in the courtof Addl. / Chief Judicial Magistrate (Economic Offences), Indore. 3.In brief, the Assistant Commissioner of Income Tax 5(1),Indore, complainant filed a criminal complaint before theMagistrate (Economic Offences), Indore, for offencepunishable under Sections 276C(1), 276CC, 277, 277A, 278 ofIncome Tax Act, 1961 read with Sections 420, 467, 468, 471,120A and 120B, IPC on the ground that the petitioner ShriSunil Kumar Khandelwal, was providing and making bogus andfake bills for purchase of iron and steels to various parties ofIndore. 4.A search under Section 132(1) was conducted at theresidence of petitioner and simultaneously a survey underSection 133A was conducted on the business premises of theassessee on 30.9.2008 and has been centralized with theAssistant Commissioner of Income Tax 5(1), Indore. Duringthe course of search and survey operation, it was noticed thatthe assessee was the proprietor of Pratik Enterprises where,he has issued fake and bogus bills to different parties involvedin construction work/trade for the purpose of accommodatingsuch parties by providing to them bogus or fake bills forpurchase of iron and steel though no iron and steel was eitherpurchased or otherwise acquired or procured by the assesseenor could any iron and steel could be sold by him. The onlyobject of issuing such bogus bills was to enable the otherpersons to claim a larger than real deduction on account ofexpenditure incurred on construction work from their earningsin such construction work/trading. The assessee used to issuea bogus sale bill in favour of the named party, deposit the cheque in assessee’s own account, simultaneously withdrawthe cheque amount and handover the cash as withdrawn tothe party issuing the cheque itself. This modus-operandi hasbeen disclosed by the assessee in his statements recordedduring the course of search on 30.9.2008. Further the asseseehas filed an affidavit in which he accepted his involvement inissuing of bogus bills. The assessee has again accepted hisindulgement in issuing bogus bills and modus-operandi in hisstatement recorded under Section 131 on 19.1.2009. Alongwith the complaint copy of order passed by the Commissionerof Income Tax under Section 279, affidavit oral statements,bank account assessment order, notice under Section 153Aand return of income tax filed by the assessee were alsoenclosed. cheque in assessee’s own account, simultaneously withdrawthe cheque amount and handover the cash as withdrawn tothe party issuing the cheque itself. This modus-operandi hasbeen disclosed by the assessee in his statements recordedduring the course of search on 30.9.2008. Further the asseseehas filed an affidavit in which he accepted his involvement inissuing of bogus bills. The assessee has again accepted hisindulgement in issuing bogus bills and modus-operandi in hisstatement recorded under Section 131 on 19.1.2009. Alongwith the complaint copy of order passed by the Commissionerof Income Tax under Section 279, affidavit oral statements,bank account assessment order, notice under Section 153Aand return of income tax filed by the assessee were alsoenclosed. 5.The learned Magistrate took cognizance in the mattervide order dated 30.9.2011 (Annexure P/2). As per complaintfiled by the respondent – complainant, the aforesaid act of thepetitioner amounts to heavily attempt to evade tax punishableunder Section 276-C (1) of the Income Tax Act. The petitionerhas made false statement in verifying his income tax returnand thus, committed offence under Section 277 of the Act.The petitioner has issued bogus iron and steel sale bills, theassessee made entries, with weight and value purported assold, but no sale as ever been made and thus, the books andaccounts of the documents maintained by the petitioner isincorrect and the said act is punishable under Section 277A ofthe Act. 6.The petitioner has abetted and induced the other person involved in the construction work / trading in iron and steel tomake and deliver accounts / statements and declarationrelating to the income chargeable to tax which are false andwhich the petitioner knew to be false and did not believe to betrue and thus, committed offence under Section 276C (1) ofthe Income Tax Act. 7.Learned counsel for the petitioner has submitted that theorder by which cognizance has been taken is bad in law. Thelearned Magistrate has not applied the mind and without goinginto the allegation contained in the complaint, directly orderedthe respondent to register the case by taking cognizanceagainst the petitioner, which is wholly unjustified and withoutjurisdiction. The order passed by the Assistant Commissionerof Income Tax on 28.12.2010 is bad in law and withoutjurisdiction. 8.She further submits that an appeal was preferred againstthe aforesaid order before the Commissioner Income Tax(Appeals) on 17.1.2011 and later on the said appeal has beenallowed and thereafter, the proceedings against the applicantassessee under Section 271 (1) (c) of the Income Tax Act hasbeen dropped on 30.10.2014 and once the proceeding hasbeen dropped, it will not be appropriate in the eyes of law tolet the criminal prosecution continue in the case and prayedfor its quashment. In support of the aforesaid, she has drawnmy attention to the decision of the Indore Bench in the case ofBadri Prasad & Anr V/s.Union of India (Uoi), 1998 234ITR 136 MP, the decision of the Delhi High court in the caseof Income Tax OfficerV/s. Rajan & Co. & Ors., 2007 291 ITR 345 Delhiand the decision of the Apex Court in the caseof K.C. Builders & Anr. V/s.The Assistant Commissionerof Income Tax, reported as 2004 (2) SCC 73. 9.The question raised in this case for consideration is whenpenalty levied under Section 271 (1) (c) of the Income Tax Actfor concealment of income has been cancelled by theappellate authority, whether the prosecution can be continuedunder Section 276 (c) of the Income Tax. 10.The Apex Court in the case of Uttamchand & Ors. V/s. Income Tax Officer, Central Circle, Amritsarreported as 1982 ITR 133 Vol. Pg. 909took the view thathaving unprocessed to levy penalty it would be encourageiousto continue with the prosecution. ITR 345 Delhiand the decision of the Apex Court in the caseof K.C. Builders & Anr. V/s.The Assistant Commissionerof Income Tax, reported as 2004 (2) SCC 73. 9.The question raised in this case for consideration is whenpenalty levied under Section 271 (1) (c) of the Income Tax Actfor concealment of income has been cancelled by theappellate authority, whether the prosecution can be continuedunder Section 276 (c) of the Income Tax. 10.The Apex Court in the case of Uttamchand & Ors. V/s. Income Tax Officer, Central Circle, Amritsarreported as 1982 ITR 133 Vol. Pg. 909took the view thathaving unprocessed to levy penalty it would be encourageiousto continue with the prosecution. 11.Section 276C provides for punishment of a person whowilfully attempts to evade tax, penalty or interest chargeableor impossible under the Act, while Section 277 punishes aperson who makes a statement in any verification under theAct or rules made thereunder or delivers a statement or anaccount which is false and which he either knows or believesto be false, or does not believe to be true. 12. It is settled law, levy of penalty and prosecution underSection 276 (c) are simultaneously. Hence, once the penaltiesare cancelled on the ground that there is no concealment, thequashing prosecution under Section 276 (c) is automatic. 13. Learned counsel for the petitioner has drawn myattention to letter dated 20.5.2016 of Asstt. Commissioner,Income Tax – (3) 1 and submits that for the assessment year2003-04 to 2008-09, the assessment proceedings under Section 271(1) (c) is dropped, but she failed to file the copy oforder passed by CIT (Appeal)/IAT on the basis of whichproceeding has been dropped or the assessing officer droppedthe proceedings on merits. The letter dated 20.5.2016 isissued at the request of petitioner assessee for grant of copyof proceeding 276C, 1968. 14.Per contra, Ms. Veena Mandlik, learned counsel for therespondent / department has drawn my attention to orderdated 9.2.2016, passed by Income Tax Appellate Tribunal,Indore Bench, Indore in IT(SS)A Nos. 148 to 153 /Ind/2013,Assessment Years. 2003-04 tro 2005-06, 2007-08 and 2008-09. As per para 6 of the order, the petitioner – assesseehimself admitted the fact that he was engaged in the bogusbilling. Para 6 and 7 are relevant which reads as under :- "6.The other issue involved in these appeals isregarding estimating the commission income fromthe bogus billing of iron and steel. The assesseehimself admitted the fact that he wasengaged in the bogus billing. The quantum ofbogus billing is also well established forthese assesssment years. The only dispute iswith regard to earning thereon. We have heard both the sides. It is an admittedfact that the assessee was involved in issuing bogusbills for iron and steel and earning the commissionincome thereon. The assessee claimed that he wasearning only Rs.15/- per ton. However, theAssessing Officer adopted the rate of commission atRs.40/- per ton. After hearing both the sides, weare of the view that this estimated commission ofRs.40/- per ton comes to around 2% of the amountof bogus billing of iron and steel. It is a matter ofcommon knowledge that the persons who areindulging in such activities charge around 2% ofthe amount of bogus bills so issued. In view ofthese facts, we uphold the estimated income by therevenue authorities as reasonable estimate of ss/- commission income for providing bogus bills. We,therefore, sustain the order of the learned CIT(A)on this issue." 15.The matter was heard at length on 4.7.2017. Afterconcluding of the arguments, learned counsel for thepetitioner made a statement at Bar that, she will supply thedetails of the order passed by the authority by whichproceeding under Section 271 (1) (c) for concealment ofincome has been cancelled, but inspite of reminders, the samehas not been produced hence, the petitions filed by thepetitioner deserved to be dismissed. ss/- commission income for providing bogus bills. We,therefore, sustain the order of the learned CIT(A)on this issue." 15.The matter was heard at length on 4.7.2017. Afterconcluding of the arguments, learned counsel for thepetitioner made a statement at Bar that, she will supply thedetails of the order passed by the authority by whichproceeding under Section 271 (1) (c) for concealment ofincome has been cancelled, but inspite of reminders, the samehas not been produced hence, the petitions filed by thepetitioner deserved to be dismissed. 16.In view of the order dated 9.2.2016 passed by ITAT,Indore Bench, Indore and in absence of any orders of theAssessingOfficer/CommissionerofIncomeTax(Appeals)/Income Tax Appellate Tribunal to the effect that,penalty levied under Section 271 (1) (c) of Income Tax forconcealment of income has been cancelled by the appellateauthority, no case for quashment of proceedings on the basisof law laid down by the Apex Court in the case ofUttamchand & Ors.V/s. Income Tax Officer, CentralCircle, Amritsar(Supra) is made out. The petitions filed bythe petitioner to quash the criminal case Nos.16/2011,18/2011, 17/2011 and 15/2011, have no merit and are,accordingly, dismissed. (P.K. JAISWAL) JUDGE