Order v. Income Was In 1984-85. If The Proceedings Are Reversed In The Reference Regarding Penalty, The Department Is At Liberty To Take Appropriate Action

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY THURSDAY, THE 25TH OCTOBER 2007 / 3RD KARTHIKA 1929 Crl.MC.No. 179 of 2005(B) ------------------------------------ (CC.61/1989 OF ADDL.CHIEF JUDICIAL MAGISTRATE (ECONOMIC OFFECES), ERNAKULAM). .................... PETITIONER/ ACCUSED: ----------------------------------- R.BHARATHAN, ABKARI CONTRACTOR, SIVADASA MANDIRAM, ERAVIPURAM, QUILON. BY ADV. SRI.C.KOCHUNNY NAIR, ADV. SRI.S.ARUN RAJ. RESPONDENT/ COMPLAINANT: --------------------------------------------- ASSISTANT COMMISSIONER OF INCOME TAX, INVESTIGATION CIRCLE, AAYAKAR BHAVAN, KOWDIAR, TRIVANDRUM-3. BY PUBLIC PROSECUTOR, ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES), ADV. SRI.GEORGE K. GEORGE, SC FOR I.T. THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 25/10/2007,THE COURT ON THE SAME DAY PASSED THE FOLLOWING: J.B.KOSHY, J. -------------------------------- Crl.M.C.No.179 OF 2005----------------------------------Dated 25th October, 2007 ORDER Petitioner was originally imposed with a penalty forconcealment of income and he was prosecuted on the very samecharges for offences under Sections 276C(1) and 277(1) of the IncomeTax Act. But, the penalty was set aside by order of the Commissioner ofIncome Tax (Appeals) dated 26.8..92. It was affirmed by the AppellateTribunal also. Evidence in criminal prosecution is more onerous thanimposition of penalty in the departmental adjudication. Hon'ble ApexCourt in K.C.Builders and another v. Assistant Commissioner ofIncome Tax ((2004) 265 ITR 562) held that if penalty imposed forconcealment is set aside, prosecution will not lie. Therefore, on thebasis of the above decision petitioner wants to quash the proceedings.The above decision was followed by this court in identical situation inEdayanal Constructions and anotherv. Income Tax Officer andanother((2007) 288 ITR 134 (Ker.)). In view of the above decisions, Iset aside the prosecution proceedings in C.C.No.61 of 1989 before theAdditional Chief Judicial Magistrate (Economic Offence), Ernakulam. Itis submitted by the Income Tax Department that reference from thejudgment of the Tribunal is pending. The alleged concealment of Crl.M.C.No.179/2005 income was in 1984-85. If the proceedings are reversed in thereference regarding penalty, the department is at liberty to takeappropriate action. The Crl.M.C. is disposed of accordingly. J.B.KOSHY Judge tks