S.b. Criminal Misc. Petition v. Deputy Commissioner, Centralcircle-1, Department Of Income Tax Jaipur And Anr

S.B. Criminal Misc. Petition No.174 of 2003Badri Narain Modi vs. Deputy Commissioner, CentralCircle-1, Department of Income Tax Jaipur and anr. ---- 8.5.2012 HON’BLE MR. JUSTICE MAHESH CHANDRA SHARMA Mr. Suresh Goyal for the petitioner Mr. Amar Singh for the respondents. --- This criminal misc. petition has been filedunder section 482 Cr.P.C. by the petitioner withthe following prayer : “It is, therefore prayed that thepetition of the petitioner may kindly beallowed and an appropriate order ordirection, Hon'ble Court may be pleased : (a) The record of the criminal case No.473/2002 Income Tax Officer, Central Circle-1, Income Tax Department Jaipur vs. BadriNarayan Modi pending in the court of SpecialJudicial Magistrate (Economic Offences, )Rajasthan, Jaipur may kindly be summoned andexamined. (b) The impugned order dated 22.11.2002passed by the learned trial court in theaforesaid criminal case vide which the non-bailable warrant were issued against thepetitioner by the Special JudicialMagistrate (Economic Offences), Rajasthan,Jaipur may kindly be set aside. (c) The complaint proceedings initiatedbythe respondent No.1 be quashed andsetasideand the accused petitioner may beordered to be discharged. (d) any other appropriate order ordirection which maybe considered just andproper in the facts and circumstances of thecase may kindly also be given in favour ofthe petitioner. Brief facts of the case are that the petitioner is carrying on the business of Gem, Stone andJewelery for more than 25 years at Jaipur. Therespondent No.1 is assessing officer of the IncomeTax Department having jurisdiction over thepetitioner. The income tax department carried outsearch and seizure operation under section 132 ofthe Income Tax Act on 10[th] July 20002 at thebusiness and residential premises belonging to thepetitioner and its family members and also at itsassociated business concerned. The said search andseizure operations were concluded on 19[th] July,2002. During the course of search, the Income TaxDepartment showed their inclination to seize thepersonal jewelery of the petitioner and theirfamily members valued at approximately Rs, 11.00lacs by provisionally determining the undisclosedjewelery to that extent. They accepted the offerof the petitioner to seize Rs. 11 lac in cash inlieu of seizing the jewelery worth Rs. 11 lacs andaccordingly the petitioner arranged the said moneyfor seizure by withdrawing the amount from theBank. Certain papers and documents were alsoseized during the course of said search operations.Thereafter the respondent No.1 issued notice undersection 158 BC of the Income Tax Act to thepetitioner on 8[th] August, 2002 by which thepetitioner was required to prepare a return ofundisclosed income of the block period and file thesame within 45 days of the service of the notice.The petitioner complied with the said notice byfurnishing the return of block period on 3[rd]October, 2002 in the prescribed form. Thepetitioner filed the said return at Rs. NIL and explained his action vide letter dated 3[rd]October, 2002 that he has opted to move to theSettlement Commission for Settlement of his caseand has offered the undisclosed income before theSettlement Commission. He has also requested thatin case the settlement application is not beingallowed to be proceeded with by the SettlementCommission then the amount disclosed in thesettlement petition be considered as hisundisclosed income for the block period. Thepetitioner filed an application for settlement ofhis case under section 245 C of the Income Taxbefore the Income Tax Settlement Commission,Principal Bench, New Delhi on 3[rd] October 2002which fact stood informed to the respondent No.2vide letter dated 3[rd] October, 2002. The Income TaxDepartment was earlier of the view that since thereis a special procedure for assessment in search andseizure cases under the Income Tax Act containedin Chapter XIV B of the Act titled as “SpecialProcedure for Assessment” and popularly known as'Block Assessment', there cannot be any'Settlement' in search and seizure cases. Onreconsideration of the issue, the Central Board ofDirect Taxes New Delhi issued an instructionnumbering 1962 dated 12.2.1999 to all the IncomeTax Authorities clarifying that the tax payers areentitled to approach the Settlement Commission evenwhere block assessment pursuant to search andseizure action is pending in cases of such taxpayers. The learned counsel appearing for thepetitioner has contended that once a tax payerfiles any settlement application under section 245 C of the Income Tax Act, he is not entitled towithdraw the same by virtue of provisions containedin Section 245 C (3) of the Income Tax Act. Oncethe settlement application is admitted by theSettlement Commission, then the petitioner has topay the admitted tax and the Income Tax Authoritiesceased of their jurisdiction and the assessment isto be finalized by the Settlement Commission andthus the whole exercise of assessment by Income TaxAuthorities becomes futile and further if thesettlement application is not admitted by theCommission then the Income Tax Authorities get theadditional time for completion of the assessment.It is further contended by the counsel for thepetitioner that the respondent No.1 issued noticeunder section 143 (2) to the petitioner forappearance on 11.10.2002 on which date, the matterwas adjourned on an oral request but therespondent No.1 kept up the pressure on thepetitioner by fixing the next date of hearing onnext working day itself i.e. 16.10.2002. Therespondent No.1 also issued a summon under section131 of the Income Tax Act to the petitioner on 10October 2002 for personal appearance before him on11[th] October, 20002. On the oral request by thepetitioner the said hearing was adjourned but thematter was posted on next working day i.e. on 16[th]October, 2002. Aggrieved by the assessingproceedings intiated by the respondent, thepetitioner submitted a writ petition before theRajasthan High Court which was registered asS.B.Civil Writ Petition No. 7270 of 2002 BadriNarayan Modi vs. Union of India. After hearing the petitioner this Court passed the following order on the stay application on 18.10.2002 : “It is contended that thesettlement application under section245 C (1) of the Income Tax Act, 1961has been filed before the SettlementCommissioner, Principal Bench, NewDelhi. Issue notice to respondents,returnable within four weeks. Noticeof stay petition be also issued. Meanwhile the respondents arerestrained from makingenquiry/investigation and the assessment untiladmission or rejection of theSettlement Application bythe SettlementCommission, Principal Bench, NewDelhi.” petitioner this Court passed the following order on the stay application on 18.10.2002 : “It is contended that thesettlement application under section245 C (1) of the Income Tax Act, 1961has been filed before the SettlementCommissioner, Principal Bench, NewDelhi. Issue notice to respondents,returnable within four weeks. Noticeof stay petition be also issued. Meanwhile the respondents arerestrained from makingenquiry/investigation and the assessment untiladmission or rejection of theSettlement Application bythe SettlementCommission, Principal Bench, NewDelhi.” On 7.2.2003, the petitioner filed thiscriminal misc. petition with the prayer mentionedabove. The learned counsel for the petitioner hasdrawn attention of this court on the cognizanceorder passed by the court below dated 22.11.2002for the offence under section 277 of the Income TaxAct. He has further prayed to this court that thepetitioner filed an application under Section 245 Cof the Income Tax for settlement of his casebefore the Income Tax Settlement CommissionPrincipal Bench, New Delhi and this fact he hasinformed to this court that the SettlementCommission of the Income Tax Department hassettled the matter, but he does not have the orderof the said court. Hence this petition should beallowed. On the other hand, Mr. Amar Singh, learnedcounsel appearing for the Income Tax Department haspreliminary objection regarding maintainability of the petition filed by the petitioner under section482 Cr.P.C. According to him the petitioner hasdirectly approached this court under section 482Cr.P.C. while there is an alternative remedyavailable to the petitioner to file a revisionpetition. He has placed reliance on the judgmentof this court in Vipin Gupta and anr. vs. State ofRaj. and another S.B.Criminal Misc. Petition No.813 of 2006 decided on 4.3.2009. He has furtherdrawn attention of this court towards section 277of the Income Tax Act, which is reproducedhereunder : Section 277. FALSE STATEMENT INVERIFICATION, ETC. If a person makesa statement in any verification underthis Act or under any rule madethereunder, or delivers an account orstatement which is false, and whichhe either knows or believes to befalse, or does not believe to betrue, he shall be punishable, - (i)In a case where the amount of tax,which would have been evaded if thestatement or account had beenaccepted as true, exceeds one hundredthousand rupees, with rigorousimprisonment for a term which shallnot be less than six months but whichmay extend to seven years and withfine; (ii) In any other case, with rigorousimprisonment for a term which shallnot be less than three months butwhich may extend to three years andwith fine. The learned counsel for the Income TaxDepartment has drawn attention of this courttowards the fact that the accused petitioner hasnot disclosed the income of Rs. 2 crore and 30 lacin his return and there is sufficient evidence and base on the basis of which offence of section 277of the Income Tax Act is prima facie made out. Hehas further contended that even if the settlementorder has been passed by the SettlementCommissioner then the petitioner is at liberty toprove it in his defence in the trial. Hence thispetition should be dismissed in limine. (ii) In any other case, with rigorousimprisonment for a term which shallnot be less than three months butwhich may extend to three years andwith fine. The learned counsel for the Income TaxDepartment has drawn attention of this courttowards the fact that the accused petitioner hasnot disclosed the income of Rs. 2 crore and 30 lacin his return and there is sufficient evidence and base on the basis of which offence of section 277of the Income Tax Act is prima facie made out. Hehas further contended that even if the settlementorder has been passed by the SettlementCommissioner then the petitioner is at liberty toprove it in his defence in the trial. Hence thispetition should be dismissed in limine. I have heard the learned counsel for theparties. Prima facie cognizance has been taken bythe Chief Judicial Magistrate Economic OffencesJaipur District Jaipur under section 277 of theIncome Tax Act in which he has specificallymentioned the fact that the petitioner has notdisclosed the income of Rs. Two crore and thirtylac in his return and he has misrepresented thefact and prima facie there is evidence against theaccused petitioner for taking cognizance undersection 277 of the Income Tax Act against him. Itis true that the petitioner can raise or submitthe order if any passed by the Income TaxDepartment regarding settlement under section 245C of the Income Tax Act by the SettlementCommissioner, Principal Bench, New Delhi and thisis not the proper stage in which this court caninterfere under section 482 Cr.P.C. Nointerference is required in the cognizance orderpassed by the court below and this criminal misc.petition stands dismissed. The trial court isdirected to proceed further and conclude the trialas early as possible. (Mahesh Chandra Sharma) J. Pareek/- All corrections made in the judgment/order have beenincorporated in the judgment/ order being emailed (O P Pareek) PS-cum JW