M/S Anubhuti Cold Chains Pvt. Ltd. And Others v. Assistant Commissioner Of Incometax Circle4, Chandigarh.... Responden

IN THB HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH| CRM-M-18597-2017Date of Decision: February 28, 2020 | M/s Anubhuti Cold Chains Pvt. Ltd. and others .......Petitioners Versus | Assistant Commissioner of IncomeTax Circle4, Chandigarh.... RESponden CORAM:HON’BLE MR. JUSTICK HARNAREBSH SINGH GILL Present:Ms. Radhika Suri, Sr. Advocate, with Mr. M.S. Kanda, Advocate, for the petitioners. Ms. Urvashi Dugga, Sr. Standing Counsel,for the respondent-Income Tax Department. Harnaresh Singh Gill, J. The present petition under Section 482 Cr.P.C. hasbeen filed for quashing of complaint dated 29.03.2017.(Annexure P-1) under Section 276-D read with Section 278-B ofthe Income-Tax Act, 1961 (hereafter referred to as the ‘Act’) forthe Assessment Year 2014-15, and the summoning order dated30.03.2017 (Annexure P-2) on the ground that the same doesnot disclose commission of any offence punishable under theaforesaid Sections of the Act. As per the facts of the present case, petitioner No.1filed its returns of income for the Assessment Year 2014-15 on.29.11.2014, declaring income of Rs.99,10,030/- after claiming deduction of Rs.22,97,280/- in Chapter-VI-A, but the case of thepetitioner was selected for scrutiny and a notice under Section143(2) of the Act was issued on 24.09.2015. The notice undersection 143(2) and another notice under Section 142(1) of theAct was issued on 09.11.2016 asking the petitioner to producethe cash book. The Accountant produced the same produced on.27.12.2016. It is reflected from the noting sheets dated27.12.2016 that the Accountant took back the cash book and.accordingly, summons were sent to the Managing Director toproduce the cash book on 28.12.2016, which was received byParveen, servant, as Rajinder Garg was not present andthereaiter, the Assessing Officer passed an ex-parte assessmentorder on 29.12.2016. It is further the case of the petitioner that a noticeunder Section 133(6) of the Act was issued to furnish cash bookon 17.02.2017 and the same was submitted on 21.02.2017.under due acknowledgment. Despite the assessee’s havingproduced the cash book on 27.12.2016 and again on.21.02.2017, a show cause notice for prosecution under Section2/6-D of the Act was issued on 23.02.2017 for non-production|of the cash book. A specilic reply was filed by the assessee thatthere was no reason on the part of the assessee to evadeproduction of cash book. Similar notice was issued to petitionerNo.2, Managing Director and petitioner No.3, former Directoreven though he had resigned in April 2015. As per the stand taken by the respondent-theAssistant Commissioner of Income-Tax, the summons under| section 131 of the Act were issued and were served through aperson working in the house and during assessment proceedingsunder Section 143(3) of the Act, notice under Section 142(1)dated 09.11.2016 was issued to the assessee and was dulyserved and the assessee was asked to submit the cash book. The.case was fixed for 17.11.2016 and on the said date, theAuthorized Representative (A.R.) of the assessee appeared butdid not submit the cash book and the matter was adjourned to22.11.2016 but on the said date also, none had appeared. TheAuthorizedRepresentativeoT the|ASSESSEEappearedOT)23.11.2016 but did not submit the cash book. After so manydates, the Authorized Representative of the assessee and theAccountant|appearedandproducedthecashbook|OT)27.12.2016 and it was found that the assessee had made severalpurchases, freight payments etc. of more than Rs.20,000/- in aday in cash. The assessee was also asked to show whether ornot these were covered by exception to Section 40A(3) of the Actsiven in Rule 6 DD. It is further the case of the Revenue that during theproceedings in the evening of 27.12.2016, attended by the.Authorized Representative of the assessee, he was informed thatthe cash book had been taken away by them withoutpermission. He was asked to appear on 28.12.2016 with cashbook, but nobody appeared. The Authorized Representative was_telephonically asked to return the cash book, but to no avail.Repeated attempts to contact them had failed as their phones—were found switched off. Thereafter, summons under Section| 131 were issued at 11.00 A.M. on 28.12.2016 to the ManagingDirector and The Accountant to attend office at 3.00 P.M. on the.same day, but Managing Director refused to accept notice andthe notice was accepted by one Parveen, who works in the houseof the Managing Director. Thus, the order under Sections144/143(3) of the Act was passed on 29.12.2016. Even as perthe Assessment Year 2014-15, there were two Directors of the|Company, namely, Rajinder Garg and Jai Bansh Khan. Thus,both the Directors are liable tor the acts of commission and.Omission. | I have heard the learned Senior Counsel for the.petitioner, the learned Senior Standing Counsel for the Revenueand with their able assistance, have gone through the case file.Before proceeding further, it would be just andappropriate to extract Section 276-D of the Act, as under:- HFailure to produce accounts and documents. )'76DIf a person willfully fails to produce, or cause,to be produced, on or before the date specified in|any notice served on him under sub-section (1) ofsection 142, such accounts and documents as are)referred to in the notice or wilfully fails to complywith a direction issued to him under sub-section|(2A) of that section, he shall be punishable withrigorous imprisonment for a term which mayextend to one year and with fine.” The provisions entailing the offence under Section 2/6-D would come into force if a person willfully fails to produce.the accounts and the documents. As per the record and orderdated 27.12.2016, the cash book was produced and it was notedthat the Accountant had inadvertently taken it back and again the cash book was received by the officer on 21.02.2017,whereas show cause notice under Section 276-D of the Act was.issued on 23.02.9201 7. As far as petitioner No.3 -— Jai Bansh Khan isconcerned, he had resigned as Director in April, 2015 and hadnot been involved in day to day altairs of the Company. FormDIR-12 indicates that Jai Bansh Khan had not been associated|with the Company w.e.f. 10.04.2010. section 131 of the Act is reproduced as under:- HPower regarding discovery, production of evidence,etc. 1301(1) The Assessing Officer, Deputy Commissioner(Appeals), Joint Commissioner, Commissioner (Appeals),|Principal Chief Commissioner or Chief Commissioner or|Principal Commissioner or Commissioner and the DisputeResolution Panel referred to in clause (a) of sub-section(15) of section 144C shall, for the purposes of this Act,|have the same powers as are vested in a court under the|Code of Civil Procedure, 1908 (5 of 1908), when trying a)suit in respect of the following matters, namely :— @a) discovery and inspection; @b) enforcing the attendance of any person,including any officer of a banking company and.examining him on oath; @a)} compelling the production of books of accountand other documents; and @a) issuing commissions. (1A) If the Principal Director General or DirectorGeneral or Principal Director or Director or JointDirector or Assistant Director or Deputy Director,or the authorised officer referred to in sub-section|(1) of section 132 before he takes action underclauses (1) to (1) of that sub-section, has reason to|suspect that any income has been concealed, or is)likely to be concealed, by any person or class of) @a) discovery and inspection; @b) enforcing the attendance of any person,including any officer of a banking company and.examining him on oath; @a)} compelling the production of books of accountand other documents; and @a) issuing commissions. (1A) If the Principal Director General or DirectorGeneral or Principal Director or Director or JointDirector or Assistant Director or Deputy Director,or the authorised officer referred to in sub-section|(1) of section 132 before he takes action underclauses (1) to (1) of that sub-section, has reason to|suspect that any income has been concealed, or is)likely to be concealed, by any person or class of) persons, within his jurisdiction, then, for thepurposes of making any enquiry or investigation|relating thereto, it shall be competent for him toexercise the powers conferred under sub-section (1)on the income-tax authorities reterred to in thatsub-section, notwithstanding that no proceedings|with respect to such person or class of persons are|pending before him or any other income-tax)authority. (2)HOT.thePULTPOSCoT makingallInquUIrYOT|investigation in respect of any person or class of persons|in relation to an agreement referred to in Section 90 or'section 9YOA, it shall be competent for any income-taxauthority not below the rank of Assistant Commissioner|of Income-tax, as may be notified by the Board in this|behalf, to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in|that sub-section, notwithstanding that no proceedings|with respect to such person or class of persons are|pending before it or any other income-tax authority. (3)subject to any rules made in this behalf, anyauthority referred to in sub-section (1) or sub-section (1A)or sub-section (2) may impound and retain in its custody|for such period as it thinks fit any books of account or,other documents produced before it in any proceeding.under this Act :. Provided that an Assessing Officer or an AssistantDirector or Deputy Director shall not— @a) impound any books of account or otherdocuments without recording his reasons for so.doing, or. @b) retain in his custody any such books ordocuments for a period exceeding fifteen days)(exclusiveoT holidays)withoutobtainingtheapproval of the Principal Chief Commissioner orChief Commissioner or Principal Director Generalor Director General or Principal Commissioner orCommissioner or Principal Director or Directortherefor, as the case may be.” Learned Senior Counsel appearing for the petitionerscontends that in the instant case, the facts on record do not'decipher that any order was passed or direction given forretention of the cash book. Thus, once there was no willful|failure to produce the books of accounts, the impugnedproceedings initiated are not tenable in the eyes of law. It isfurther stated that as per the settled law, when the facts onrecord do not disclose commission of any offence, theproceedings are liable to be quashed by this Hon’ble Court underits inherent criminal jurisdiction under Section 482 Cr.P.C. In support of her assertions, the learned Seniorcounsel for the petitioners has relied upon the judgment of theSupreme Court inRajeshwar Tiwari & Others Vs. Nanda KishoreRoy,Criminal Appeal No. 779 of 2007 decided on 19.8.2010; |Alpic Finance Ltd. Vs. P. Sadasivan and another, (2001)3 SCC.913;Pepsi Foods Ltd. and another Vs. Special JudicialMagistrate and others,(1998)5 SCC 749 andSom Mittal Vs.Government of Karnataka, JT 2008(2) SC 41 and the judgmentof the Delhi High Court in |shravan Gupta Vs. AssistantCommissioner of Income Tax (ACIT)*Manu/DE/1079/20105. On the other hand, learned Senior standing counselfor the respondent argues that the facts on record clearly pointout an apparent willful failure on the part of the petitioners innot producing the cash book. It is further argued that even.though the cash book had been produced on a given day, thesame had been taken back by the Accountant of the petitionerswithout any authority or consent of the officials/officers of the On the other hand, learned Senior standing counselfor the respondent argues that the facts on record clearly pointout an apparent willful failure on the part of the petitioners innot producing the cash book. It is further argued that even.though the cash book had been produced on a given day, thesame had been taken back by the Accountant of the petitionerswithout any authority or consent of the officials/officers of the respondent. It is thus, contended that there is not only noncompliance of Section 142(1) of the Act, but there is hugecontradictions in the stands taken by the petitioners at differentlevel. It is further argued that the recast and reprinted cashbook given under Section 133(6) of the Act on 21.02.2017 was_not in compliance with the provisions of Section 142(1) of theAct. In support of her contentions, learned counsel for therespondent has relied upon the judgment of the Supreme Court1n P.Jayappan Versus 8.K. Perumal, 1984 AIR SC 1963-149 ITR696; judgments of this Court inM/s Telu Ram Versus ITO,145.ITR 111 (P&H) and|eurjit Engineering Works ®& Others andVersus ITO,2010 ITR 54/7 (P&H) and the judgment of theMadhya Pradesh High Court inR.G. Aggarwal and others VersusUnion of India,QO TTR 617. InPepsi Foods Ltd.9#case (Supra) while relying uponits previous decisions in the other judgments referred to above,the Hon’ble Supreme Court while setting aside the order passedby the High Court held that if there is no substance in theallegations in the complaint, then the High Court would be wellwithin its right to quash the proceedings. The observations madeby the High Court that at the stage of taking cognizance by theMagistrate, it cannot be said that the allegations in thecomplaint are so absurd and inherently improbable on the basis_of which no prudent man can ever reach a just conclusion thatthere exists no sufficient ground for proceedings against theaccused, were set aside. | It is settled law that when in face of the facts on.record, no offence is made out, continuing with the criminalproceedings, is nothing but an abuse of process of law. | In the instant case, when cash-book was producedon 27.12.2016, no order or direction was given for its retentionunder Section 131(3) of the Act. Moreover, the prosecutionsunder Section 276-D can only be launched on willful failure toproduce the books of the accounts. In this case, the same wereproducedOT]27.12.2016andOTl21.02.2017with|dueacknowledgment. Thus, there was no violation under Section131 of the Act which entails penalty proceedings under Section2/2-A of the Act. Notice under Section 142(1) of the Act standscomplied. The petitioners were isSued a warning notice in thesummons under Section 131 of the Act with the stipulation that.non compliance will entail penalty. — Clause (d) of Section 272A(1) of the Act, which came into|effect w.e.f. 1.4.2017, reads as under:- — “S.2/2A(1). If any person, - — (d) fails to comply with a notice under sub-section (1).of Section 142 or sub-section (2) of Section 143 orfails to comply with a direction issued under sub-section (2A) of Section 142.” The case in hand did does not fall within the ambit ot|section 2/72A(1)(d) of the Act as there is no willful nonproduction of cash books. Admittedly, the cash book had been.produced on 27.12.2016 and 21.02.2017, whereas the show cause notice was issued to the petitioners on 23.02.2017. Thus,even before the said show cause notice, the cash book had been|produced. The issue that the cash book produced subsequentlywas worth reliance or not is to be seen in the assessment.proceedings, but the same cannot be made basis for initiatingcriminal prosecution against the petitioners. The judgmentsrelied upon by the learned counsel for the respondent are notapplicable to the facts of the present case. Thus, in view of the totality of the facts and circumstancesof the present case coupled with the law laid down by theHon’ble Supreme Court inPepsi Foods Ltd.‘S case(Supra), theimpugnedcomplaintandthesummoningorderdated|30.03.2017, are hereby quashed. Allowed in the above terms. cause notice was issued to the petitioners on 23.02.2017. Thus,even before the said show cause notice, the cash book had been|produced. The issue that the cash book produced subsequentlywas worth reliance or not is to be seen in the assessment.proceedings, but the same cannot be made basis for initiatingcriminal prosecution against the petitioners. The judgmentsrelied upon by the learned counsel for the respondent are notapplicable to the facts of the present case. Thus, in view of the totality of the facts and circumstancesof the present case coupled with the law laid down by theHon’ble Supreme Court inPepsi Foods Ltd.‘S case(Supra), theimpugnedcomplaintandthesummoningorderdated|30.03.2017, are hereby quashed. Allowed in the above terms. February 28, 2020.ds|Whether Speaking/ Reasoned:Whether Reportable: (HARNARESH SINGH GILL)JUDGE ~ Yes/ No)Yes/ No