N.venkatachalam v. The Income Tax Officer, Ward-I, Rep. By V.kamalakannan

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 19.11.2021CORAMTHE HON'BLE MRS. JUSTICE T.V.THAMILSELVICrl.O.P.No.32804 of 2019 N.Venkatachalam ... Petitioner Vs. 1.The Income Tax Officer, Ward-I, Rep. By V.Kamalakannan, No.138/3, LMR Shopping Arcade, Salem Main Road, Namakkal-637 001. 2.Principal Commissioner of Income Tax, No.3, Gandhi Road, Salem-636 007. ... Respondents Prayer: Criminal Original Petition filed under Section 482 ofCr.P.C., praying to quash the proceedings in C.C.No.34 of 2018pending on the file of the learned Chief Judicial Magistrate,Namakkal, initiated pursuant to the complaint given by the 1[st]respondent under Section 276 C of the Income Tax Act, 1961. The petitioner has filed this petition to quash theproceedings in C.C.No.34 of 2018 pending on the file of thelearned Judicial Magistrate,Namakkal. 2. The petitioner herein is the Managing partner ofM/s.Andavar & Co., a partnership firm dealing in the business ofautomobile tyres bearing PAN No. . The petitioner hadbecome a partner of the said firm pursuant to agreement dated01.11.2003 wherein the existing partners had exited the businessand the petitioner along with his wife was inducted in theirplace. M/s.Andavar and Co. has a number of sister concerns, allstarted by the petitioner's father, uncle and other relativesfrom the same community and locality. The reconstruction of thepartnership firm was therefore mostly an arrangement between therelatives where the elders exited, and next generation took over. 3. He further submitted that a survey was conducted in thebusiness premises of M/s.Aandavar & Co. on 04.08.2005 and booksof account and various documents were impounded and swornstatements were recorded. Pursuant to the same proceedings wereinitiated against the petitioner herein in his personal capacity(PAN: ) in respect of the entries in the firm'saccounts. Subsequently, an order of assessment was passed on16.12.2008 determining the net tax payable at Rs.17,69,830/- onthe grounds of unexplained cash credits and balance in partner'sCurrent Account. The primary issue was with regard to an entryshown in the balance sheet as partner's Current Account, forRs.26,82,627/-. During the assessment proceedings, thepetitioner being unable to explain the accounting of the saidamount, which are essentially amounts due to the partnersretired from the firm, admitted that the above may be added tothe income and consequently was assessed for the above saidamount as the tax that is payable. 4. In the circumstance proceedings for penalty were alsoinitiated separately under Section 271(1)(c) of the Income TaxAct, 1961. Unsatisfied with the explanation offered by thepetitioner herein, the 1[st] respondent imposed a penalty ofRs.9,56,067/- alleging concealment of income. 4. In the circumstance proceedings for penalty were alsoinitiated separately under Section 271(1)(c) of the Income TaxAct, 1961. Unsatisfied with the explanation offered by thepetitioner herein, the 1[st] respondent imposed a penalty ofRs.9,56,067/- alleging concealment of income. 5. The petitioner submits that in the mean while a showcause notice dated 17.01.2018 was issued by the 1[st] respondentcalling upon the petitioner to show cause as to why prosecutioncannot be initiated against the petitioner under Section 276C(2)of the Income Tax Act, 1961 for default assessment year 2004-05.the petitioner submits that, he attended hearing on 29.01.2018with his auditor and the officer concerned absent. Thereforegiven a copy of the reply to the office staff herein and alsopaid the remaining penalty by amount, the same day. Copy ofreceipts are enclosed. A copy of reply was taken on record on19.03.2018. The petitioner was shocked to learn that withouttaking into account that the penalty has already been paid, the2[nd] respondent wrong commenced proceedings for prosecutiongranting u/s. 279(1) of the Income Tax Act, 1961. Though byorder dated 08.03.2018, the sanction order passed by the 2[nd]respondent is only with respect to Section 276C(2) of the IncomeTax Act, 1961, the 1[st] respondent however proceeded to give ageneral complaint under Section 276C, beyond the sanction givenby the 2[nd] respondent, before the Chief Judicial Magistrate,Namakkal on 13.06.2018, which is pending as C.C.NO.34 of 2018. 6. Heard Mr.Niranjan Rajagopalan, learned counsel for thepetitioner and Mr.T.Aravind, learned Special Public Prosecutorappearing for the respondents. 7. As per the re-assessment order, the penalty proceedingswere issued under Section 271(1)(c) of the Income Tax Act, 1961.In the said notice, the Assessor placed much realise upon by theassessee. But, he did not convence and came to the conclusionthat there is a prima facie and fit case for levying penalty.Accordingly, the penalty order was passed on 25.06.2009, levyingthe minimum penalty of Rs.9,56,067/-. Thereafter, thepetitioner / assessee has preferred an appeal before theCommissioner of Income Tax (Appeals) as well as Income TaxAppellant Tribunal, which was dismissed on 30.12.2014. Againstwhich, he has preferred TCA.No.630 of 2018 before the Hon'bleDivision Bench of this Court. On hearing both sides the saidappeal was allowed. Accordingly, the penalty imposed as per theassessment proceedings is also set aside. To that effect he hasalso furnished order copy of TCA on the side of the respondent. “ *8. Based upon the complaint, the respondent policeregistered a case for offence under Section 276(c) of the IncomeTax Act, 1961, and the case was taken on file as C.C.No.34 of2018, who has pointed out that issue notice to the accusedherein for the above said offence committed by them. Now thesaid penalty imposed by the respondent was already set aside bythe Hon'ble Division Bench of this Court. Consequently, thecomplaint in C.C.No.34 of 2018 is quashed. 9. Accordingly, this Criminal Original petition isallowed.” SD/-ASSISTANT REGISTRAR(CS) *to be substituted as per order ofthis Court dated 10.03.2022and made in crl.O.P.No.32804/2019 -s/d-Assistant Registrar(CCC) dt:10.03.2022 //True Copy// Sub Assistant Registrar rriTo1.The Income Tax Officer, Ward-I, Rep. By V.Kamalakannan, No.138/3, LMR Shopping Arcade, Salem Main Road, to be substituted Namakkal-637 001. the order already despatched on 10.01.2022 2.The Principal Commissioner of Income Tax, No.3, Gandhi Road, Salem-636 007. +4ccs to Mr.G.R.Associates for Niranjan Rajagopalan, Advocate Sr.16129 Crl.O.P.No.32804 of 2019 kv[co]srg 16/12/2021A.SK(10/03/2022)