Shri.ssm Ahmad Hussain v. The Income Tax Officer Non-Corporate Ward 3(1) Aayahkar Bhavan Wanaparthy Block Vi Floor Room

THE HIGH COURT OF JUDICATURE AT MADRAS Reserved onDelivered on12~01~202227~01~2022 CORAM: THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Crl.O.P.Nos.4202 to 4208 and 4263 of 2017and Crl.M.P.Nos.3107 to 3122, 3185 and 3186 of 2017 SHRI.H.AMEERDEEN ...PETITIONER in CRL OP No.4202 of 2017 / ACCUSED SMT.K.S.M.AMINATH SHARIFA ...PETITIONER in CRL OP No.4203 of 2017 / ACCUSED SHRI.SSM AHMAD HUSSAIN ...PETITIONER in CRL OP No.4204 of 2017 / ACCUSED SMT.RAHMATH ALIYA ...PETITIONER in CRL OP No.4205 of 2017 / ACCUSED SMT.S.A.NOORUL AMEENA ...PETITIONER in CRL OP No.4206 of 2017 / ACCUSED SMT.ZULAIHA BANU ...PETITIONER in CRL OP No.4207 of 2017 / ACCUSED SMT.SITHI BASHEERA ...PETITIONER in CRL OP No.4208 of 2017 / ACCUSED SMT.N.D.S.SITHIQUA ...PETITIONER in CRL OP No.4263 of 2017 / ACCUSEDVS THE INCOME TAX OFFICER NON-CORPORATE WARD 3(1) AAYAHKAR BHAVAN WANAPARTHY BLOCK VI FLOOR ROOM NO.623D 121 MAHATMA GANDHI ROAD CHENNAI-600 034. ...RESPONDENT / COMPLAINANT IN ALL CRL.O.Ps https://hcservices.ecourts.gov.in/hcservices/ Prayer:- CRL OP No.4202 of 2017Petition filed under Section 482 of Crpc to call forrecords and quash the proceedings in E.O.C.C.No.75/2016 pendingon the file of the Additional Chief Metropolitan Magistrate (EO-II), Allikulam, Chennai. CRL OP No.4203 of 2017Petition filed under Section 482 of Crpc to call forrecords quash the proceedings in E.O.C.C.No.76/2016 pending onthe file of the Additional Chief Metropolitan Magistrate (EO-II), Allikulam, Chennai. CRL OP No.4204 of 2017Petition filed under Section 482 of Crpc to call forrecords quash the proceedings in E.O.C.C.No.77/2016 pending onthe file of the Additional Chief Metropolitan Magistrate (EO-II), Allikulam, chennai. CRL OP No.4205 of 2017Petition filed under Section 482 of Crpc to call for records andquash the proceedings in E.O.C.C.No.78/2016 pending on the fileof the Additional Chief Metropolitan Magistrate (EO-II),Allikulam, Chennai. CRL OP No.4206 of 2017Petition filed under Section 482 of Crpc to call forrecords quash the proceedings in EOCC No.79/2016 pending on thefile of the Additional Chief Metropolitan Magistrate (E.O.II),Allikulam, Chennai CRL OP No.4207 of 2017Petition filed under Section 482 of Crpc to call forrecords quash the proceedings in E.O.C.C.No.80/2016 pending onthe file of the Additional Chief Metropolitan Magistrate(E.O.II), Allikulam, Chennai CRL OP No.4208 of 2017Petition filed under Section 482 of Crpc to call forrecords quash the proceedings in E.O.C.C.No.81/2016 pending onthe file of the Additional Chief Metropolitan Magistrate(E.O.II), Allikulam, Chennai CRL OP No.4263 of 2017Petition filed under Section 482 of Crpc to call forrecords and quash the proceedings in E.O.C.C.No.82/2016 pendingon the file of the Additional Chief Metropolitan Magistrate (EO-II), Allikulam, Chennai. These Criminal Original Petitions have been filed to quashthe proceedings initiated by the Respondent for the offencesunder Section 276C and 277 of the Income Tax Act, 1961 pendingon the file of the Additional Chief Metropolitan Magistrate(EO),Egmore, Chennai in E.O.C.C.No.75 of 2016. 2. The crux of the allegation in each case is as follows: 2.a. Crl.O.P.No.4202 of 2017 : [E.O.C.C.No.75 of 2016] The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.5,90,239/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.2,07,21,676/- and the Long Term Capital Gains ofRs.1,53,94,194/- was not offered to tax by claim of exemptionunder Section 54B of Rs.1,60,00,000/-. 2. The crux of the allegation in each case is as follows: 2.a. Crl.O.P.No.4202 of 2017 : [E.O.C.C.No.75 of 2016] The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.5,90,239/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.2,07,21,676/- and the Long Term Capital Gains ofRs.1,53,94,194/- was not offered to tax by claim of exemptionunder Section 54B of Rs.1,60,00,000/-. 2.b. Crl.O.P.No.4203 of 2017 : [E.O.C.C.No.76 of 2016]The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.5,14,970/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.1,06,35,625/- and the Long Term Capital Gains ofRs.97,65,620/- was not offered to tax by claim of exemptionunder Section 54 of Rs.1,00,00,000/-. 2.c. Crl.O.P.No.4204 of 2017 : [E.O.C.C.No.77 of 2016] The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.7,31,554/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.2,19,691,043/- and the Long Term Capital Gains ofRs.1,89,97,630/- was not offered to tax by claim of exemptionunder Section 54B of Rs.1,90,00,000/-. https://hcservices.ecourts.gov.in/hcservices/ 2.d. Crl.O.P.No.4205 of 2017 : [E.O.C.C.No.78 of 2016] The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.11,64,684/-. Duringthe Financial Year 2009-10 relevant to assessment year 2010-11the assessee sold lands at Neelangarai for a total considerationof Rs.1,15,01,811/- and claimed exemption under Section 54 ofRs.80,00,000/-. 2.e. Crl.O.P.No.4206 of 2017 : [E.O.C.C.No.79 of 2016] The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.82,870/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.57,67,728/- and the Long Term Capital Gains of Rs.54,97,837/-was not offered to tax by claim of exemption under Section 54Bof Rs.55,00,000/-. 2.f. Crl.O.P.No.4207 of 2017 : [E.O.C.C.No.80 of 2016] The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.6,93,540/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.1,85,13,217/- and the Long Term Capital Gains ofRs.1,68,31,442/- was not offered to tax by claim of exemptionunder Section 54 of Rs.1,70,00,000/-. 2.g. Crl.O.P.No.4208 of 2017 : [E.O.C.C.No.81 of 2016]The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.4,59,240/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.2,00,48,875/- and the Long Term Capital Gains ofRs.1,61,39,833/- was not offered to tax by claim of exemptionunder Section 54B. 2.g. Crl.O.P.No.4208 of 2017 : [E.O.C.C.No.81 of 2016]The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.4,59,240/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.2,00,48,875/- and the Long Term Capital Gains ofRs.1,61,39,833/- was not offered to tax by claim of exemptionunder Section 54B. 2.h. Crl.O.P.No.4263 of 2017 : [E.O.C.C.No.82 of 2016]The allegation in the complaint are that the petitioner hasfiled Return of Income for the Assessment Year 2010-11 on29.03.2012 returning a total income of Rs.6,44,587/-. During theFinancial Year 2009-10 relevant to assessment year 2010-11 theassessee sold lands at Neelangarai for a total consideration ofRs.1,93,45,922/- and the Long Term Capital Gains ofRs.1,60,00,000/- was not offered to tax by claim of exemptionunder Section 54F of the Income Tax Act, 1961. 2.i. Survey under Section 133A was conducted on 13.09.2012at the business premises of the firms M/s. Alpha Commercials andM/s. Alpha Realty which are family concerns managed by theassessees. As per the statement recorded during the course ofsurvey from the assessees, it was confirmed that the claims ofdeduction against Capital Gains made by all the family membersin their respective returns of income are incorrect. Therefore,the assessment was reopened under Section 147 for AssessmentYear 2010-11 by issuing of Notice under Section 148 on25.10.2012. 2.j. The assessees have filed a revised return of income on27.12.2012 after excluding the incorrect claim of deductionunder Section 54B/54F. The act of withdrawal of deductionundere Section 54B/54F was not voluntarily undertaken by theassessees and it was done consequent to the survey under Section133A. The assessment was completed under Section 143(3) on08.03.2014 by assessing the taxable income. 2.k. It is the case of the complaint that but for theSurvey, the incorrect claim of deduction would have been allowedunnoticed and exemption was claimed in the return of incomefiled on 29.03.2012 with mala-fide intention and the assesseehad concealed taxable income and provided inaccurate particularsof income. Therefore, penalty proceedings under Section 271(1)(c) was initiated and penalty was ordered on 26.09.2014 whichwas challenged before CIT (Appeals)-4, Chennai, which was alsodismissed confirming the penalty imposed under Section 271(1)(c). Consequent to the order of Commissioner of Income Tax(appeals) confirming the order of penalty for the AssessmentYear 2010-11, a show cause notice was issued on 29.01.2016 as towhy proseuction proceedings should not be initiated for wilfulattempt to evade tax/penalty as enumerated under Section 276C ofthe Act. Hence, prosecution has been launched under Sections276C and 277 of the Income Tax Act, by a private complaint bythe Income Tax officers. 3. The learned Senior Counsel Mr.S. Ashok Kumar appearingfor the Petitioners submitted that prosecution has beeninitiated without application of mind. The assessees are co-owners of the property, they sold the property which was anagricultural property and thereafter sought an exemption underSection 54B of the Income Tax Act. They have also filed revisedReturn on 27.12.2012 and paid differential amount. Though theAssessment was ordered on 08.03.2014 amount of tax has been paidprior to that, however, penalty proceedings also initiated. Thepenalty Order was passed on 26.09.2014. The Assessees challengedthe Assessment Orders as well as penalty proceedings before theAppellate Authority CIT(Appeals). As the appeals filed againstthe Assessment Orders, were not suited on the ground of delay, 3. The learned Senior Counsel Mr.S. Ashok Kumar appearingfor the Petitioners submitted that prosecution has beeninitiated without application of mind. The assessees are co-owners of the property, they sold the property which was anagricultural property and thereafter sought an exemption underSection 54B of the Income Tax Act. They have also filed revisedReturn on 27.12.2012 and paid differential amount. Though theAssessment was ordered on 08.03.2014 amount of tax has been paidprior to that, however, penalty proceedings also initiated. Thepenalty Order was passed on 26.09.2014. The Assessees challengedthe Assessment Orders as well as penalty proceedings before theAppellate Authority CIT(Appeals). As the appeals filed againstthe Assessment Orders, were not suited on the ground of delay, which was challenged before the Income Tax Appellate Tribunal(ITAT). The Appellate Tribunal set aside the Orders anddirected the Appellate Authority to hear the appeal afresh andpass orders on merits. 4. As against the penalty proceedings, it is his contentionthat though Appellate Authority confirmed the orders of theAssessing Officer, the Tribunal has set aside penalty imposed bythe authorities for claiming exemption under Section 54B andheld that it is not the case of Assessing Officer that assesseesclaims are false or bogus, neither the Assessing Officer orCommissioner of Income Tax Appeals examined the claim of theassessees that whether the assessees have given money toM/s.Alpha Commercials for the purpose of investment in theproperty and observed that the assessing officer has not foundthe claim of the Assessee that the Assessee has not handed overthe money to M/s. Alpha Commercials for investment inproperties. The Assessing Officer has not examined the recordsof M/s. Alpha Commercials to find out whether the claim of theAssessee is genuine or not. Without making investigation theAssessing Officer cannot presume that the explanation given bythe Assessee is false or bogus. The detailed explanationsubmitted before the Assessing Officer was not examined by himand set aside the entire penalty proceedings. The AppellateTribunal has also recorded a finding that the Assessee hasoriginally disclosed the details of receipts from sale ofproperty at Neelankarai and also claimed deduction undersections 54F/54B of the Act. The amount is also paid by theAssessees. Taking note of the fact that without anyinvestigation A.O. cannot presume the explanation is false orbogus. Hence it is his submission that once the penaltyproceedings are set aside prosecution cannot be initiated. TheAppellate Tribunal in its finding held that there was no falseclaim or bogus such claim is binding on the revenue and hiscontention is that there is no appeal whatsoever filed againstthe Income Tax Appellate Tribunal order. Hence submitted thatthe prosecution in this case is nothing but abuse of process oflaw. 5. He has also placed much reliance of the judgment of thiscourt in Karti P. Chidambaram and another vs. Deputy Director ofIncome Tax [(2021) 1 MLJ (Crl.) 193] and the judgment of theApex Court in K.C. Builders and Another vs. AssistantCommissioner of Income Tax [(2004) 2 Supreme Court Cases 731] 6. Whereas the learned Special Public Prosecutor (IncomeTax) Mr.L. Muralikrishnan appearing for the Respondent submittedthat Section 54 of the Income Tax Act required two conditions tobe satisfied by the Assessees to claim exemption. The land soldmust be agricultural property and the same has to be invested 5. He has also placed much reliance of the judgment of thiscourt in Karti P. Chidambaram and another vs. Deputy Director ofIncome Tax [(2021) 1 MLJ (Crl.) 193] and the judgment of theApex Court in K.C. Builders and Another vs. AssistantCommissioner of Income Tax [(2004) 2 Supreme Court Cases 731] 6. Whereas the learned Special Public Prosecutor (IncomeTax) Mr.L. Muralikrishnan appearing for the Respondent submittedthat Section 54 of the Income Tax Act required two conditions tobe satisfied by the Assessees to claim exemption. The land soldmust be agricultural property and the same has to be invested for the purchase of the property. Whereas the statement of theone of the assessees recorded by the Income Tax officer underSection 133A makes it very clear that there is no agriculturalactivities in the land and no property has also been purchased.Therefore, it is his contention that but for the survey underSection 133A the assessee would have evaded the tax. Therefore,merely the payment of tax and revised return subsequent to thesurvey will not absolve the petitioner from criminalprosecution. Hence, submitted that the statement of theAssessee recorded by the Income Tax officer itself shows that heclaimed the exemption due to ignorance and land is not anagricultural land. Therefore, submitted that the prosecutioncannot be quashed and the assessment order is still in theappeal. Merely because the penalty proceedings is set aside theprosecution cannot be quashed. 7. Learned counsel placed much reliance on the judgment ofthe Apex Court in Radheshyam Kejriwal vs. State of West Bengaland Another [(2011) 3 Supreme Court Cases 581] and StandardChartered Bank and Others vs. Directorate of Enforcement andothers [(2006) 4 Supreme Court Cases 278] to contend thatadjudication proceedings and prosecution are distinct andseparate and the Adjudication proceedings would not bind on thecriminal case. He has also submitted that the judgment in K.C.Builders and Another vs. Assistant Commissioner of Income Tax[(2004) 2 Supreme Court Cases 731] not approved by the ThreeJudges Bench. He has also relied upon the Judgment of this courtin N. Athimoolam v. Income Tax Officer [[2010] 327 ITR 603(Madras)]. 8. I perused the entire materials. 9. Paragraph 8 of the complaint makes it very clear thatthe prosecution itself is initiated on the basis of the penaltyproceedings. The show cause notice was issued after the penaltyproceedings were confirmed by the Commissioner of Income Tax inappeals. Show Cause Notice dated 29.01.2016 was issued to theassessees to show as to why prosecution proceedings should notbe initiated against them for wilful attempt to evadetax/penalty as enumerated u/s276C of the Act. In nutshell onlythe penalty proceedings triggered the initiation of theprosecution as per the complaint. It is not in dispute that theSurvey under Section 133 was conducted on 13.09.2012 wherein oneof the assessee said to have given a statement that he has filedreturn claiming exemption because of his ignorance about thelaw and the incorrect advice given by the auditor. The land isroughly 3.9 Acres owned by 13 members. Land is urban land andthere was no agricultural activities carried out on that land.Such statement recorded by the Income Tax Officer triggered theprosecution for the wilful evasion of the tax. It is not disputed by the Respondent that sale consideration has beenproperly set out in their original returns. However, theyclaimed exemption under Section 54B of the Income Tax Acttowards capital gain. It is also not disputed that the Surveywas conducted under Section 133A of the Act on 13.09.2012 andthe notice was issued on 25.10.2012. Thereafter revised returnwas filed by the assessee on 27.12.2012. Revised return ofincome filed after excluding the incorrect claim of deductionunder Section 54B. It is also not disputed that thedifferential amount of tax has been paid by the assessee.Assessment order was subsequently passed and the same waschallenged before the Commissioner of Income Tax (Appeals) withdelay. However, the same was dismissed. Thereafter AppellateTribunal set aside the above order and remitted the matter forconsideration by CIT (Appeals). 10. In the meanwhile the penalty proceedings under Section271(1)(c) of the Act has also initiated and the penalty wasimposed. Both proceedings were challenged before theCommissioner of Income Tax Appeals. Both appeals weredismissed. Consequent upon the dismissal of the appealchallenging the penalty proceedings, a show cause notice wasissued as per the complaint as to why the prosecution should notbe initiated against the assessee for wilful attempt to evadetax/penalty as enumerated under Section 27C of the Act. Asagainst the order dismissing the appeal and also assessmentappeal, an appeal was filed before the Income Tax Tribunal 'C'Bench Chennai. The appeal challenging Assessment Order was setaside and the matter was remanded to the Commissioner of IncomeTax for deciding the appeal on merits. However, the appealsfiled against the penalty proceedings in ITA Nos.237, 238, 239,240, 241, 242, 243, 244 and 251 the Appellate Tribunal allowedthe appeal and set aside the penalty proceedings. These factsare not disputed. The review filed against the order is alsodismissed. No further appeal is till now filed by the Revenue. 11. While allowing the appeal in para 17 of the order ofthe Appellate Tribunal has recorded its finding as follows: “17. .................. We findthat the Assessing Officer failed to understandthat the assessee has originally disclosed thedetails of receipts from sale of property atNeelankarai and also claimed deduction u/s.54F/54Bof the Act, and it is also not disputed that theassessee has paid the money to M/S. AlphaCommercials, where one of the co-owners of theproperty was a partner therein. The assessee had abona fide belief that M/S Alpha commercials,according to mutual agreement, invested the moneyin residential property so as to facilitate the 11. While allowing the appeal in para 17 of the order ofthe Appellate Tribunal has recorded its finding as follows: “17. .................. We findthat the Assessing Officer failed to understandthat the assessee has originally disclosed thedetails of receipts from sale of property atNeelankarai and also claimed deduction u/s.54F/54Bof the Act, and it is also not disputed that theassessee has paid the money to M/S. AlphaCommercials, where one of the co-owners of theproperty was a partner therein. The assessee had abona fide belief that M/S Alpha commercials,according to mutual agreement, invested the moneyin residential property so as to facilitate the assessee to have benefit u/s.54F/54B of the Act.However, the Assessing Officer has not consideredthe explanation offered by the assessee as bonafide and he simply rejected the explanation bysaying that the assessee has made a wrong claim inthe original return of income and failed todisclose all material facts truly and wholly.According to the AO, had it been there is nosurvey, the assessee’s claim would have been goneun-noticed. However, it is not the case of the AOthat the assessee’s claim was false or bogus.Neither the AO nor the Commissioner of Income-tax(Appeals) examined the claim of the assessee thatwhether the assessee has given money to M/S AlphaCommercials for the purpose of investment inresidential property. The AO observed that justbecause the assessee has remitted the demandraised by the Department, it cannot be a reasonfor levying the penalty. However, he has not foundthe claim of the assessee that the assessee hashanded over the money to M/S Alpha Commercial forinvestment in residential property. Further, whenthe assessee has given explanation that he hasgiven money to Alpha Commercials for the purposeof investment in residential house, it is the dutyof the AO to examine the records of M/S AlphaCommercials to find out whether, the claim of theassessee is genuine or not. The AO without makinginvestigation, cannot presume that the explanationgiven by the assessee is false or bogus. In thepresent case, the assessee submitted a detailedexplanation before the AO. Thereafter, it is theduty of the AO to establish that the assessee hasconcealedincomeor furnishedinaccurateparticulars of income. In the present case, the AOhas accepted the amount offered by the assessee ashis income and levied penalty without making anyenquires and investigation to disprove that theexplanation given by assessee is either false orbona fide. Therefore, in our opinion, the penaltycannot be levied in the present case....... .........” 12. Above finding makes it very clear that it is not thecase of the A.O.that the Asssessees claim were false or bogus.Excess amount was also paid by the Assessees. Thereafter penaltyalso levied. It is not in dispute that the above order hasreached finality and the same has not been challenged.Therefore, any finding recorded by the ITAT in the similar https://hcservices.ecourts.gov.in/hcservices/ .........” 12. Above finding makes it very clear that it is not thecase of the A.O.that the Asssessees claim were false or bogus.Excess amount was also paid by the Assessees. Thereafter penaltyalso levied. It is not in dispute that the above order hasreached finality and the same has not been challenged.Therefore, any finding recorded by the ITAT in the similar https://hcservices.ecourts.gov.in/hcservices/ allegations certainly binding on the Revenue. It is relevant tonote that in K.C.Builders' case (supra) the Apex Court has heldthat penalty proceeding under Section 271(1)(c) and prosecutionunder Section 276C are simultaneous. When the penalties werecancelled by ITAT on the ground that there was no concealment,quashing of the prosecution was automatic. However, the abovejudgment was not approved by the subsequent three judges benchjudgment in Standard Chartered Bank's case (supra) whereinmatter arising out of Foreign Exchange Regulation Act, the ApexCourt has held that adjudication and prosecution are distinctand separate and held that ratio of the above decision is notapplicable. Further it is also held that the view taken inK.C.Builders' case (supra) may require for reconsideration asthe reasoning appears to run counter to the one adopted by theConstitution Bench. It is relevant to note that the above threeJudges Bench [Standard Chartered Bank's case (supra)] the matterarising out of the FERA, only in considering the scheme of theFERA Act, the Apex Court has held that Adjudication andProsecution are distinct and separate. 13. In Radheshyam Kejriwal vs. State of West Bengal andAnother [(2011) 3 Supreme Court Cases 581] though it is a threejudges bench majority judges have held that even under ForeignExchange Regulation Act finding of fact in adjudicationproceedings is relevant in criminal proceedings and theprosecution would be unjust and an abuse of process of thecourt. 14. In G.L. Didwania & Another vs. Income Tax Officer andAnother [1995 Supp (2) SCC 724] the Honourable Supreme Court hasheld as follows: "4. In the instant case, the crux of thematter is attracted and whether the prosecution canbe sustained in view of the order passed by theTribunal. As noted above, the assessing authorityheld that the appellant-assessee made a falsestatement in respect of income of Young India andTransport Company and that finding has been setaside by the Income-tax Appellate Tribunal. If thatis the position then we are unable to see as to howcriminal proceedings can be sustained." 15. In Commissioner of Income Tax, Mumbai vs. BhupenChampal Lal Dalal & Another [(2001) 3 SCC 459] the Apex Courthas held as follows: "3. The prosecution in criminal law andproceedings arising under the Act are undoubtedlyindependent proceedings and, therefore, there is noimpediment in law for the criminal proceedings toproceed even during the pendency of the proceedingsunder the Act. However, a wholesome rule will haveto be adopted in matters of this nature wherecourts have taken the view that when theconclusions arrived at by the appellate authoritieshave a relevance and bearing upon the conclusionsto be reached in the case necessarily one authoritywill have to await the outcome of the otherauthority. 15. In Commissioner of Income Tax, Mumbai vs. BhupenChampal Lal Dalal & Another [(2001) 3 SCC 459] the Apex Courthas held as follows: "3. The prosecution in criminal law andproceedings arising under the Act are undoubtedlyindependent proceedings and, therefore, there is noimpediment in law for the criminal proceedings toproceed even during the pendency of the proceedingsunder the Act. However, a wholesome rule will haveto be adopted in matters of this nature wherecourts have taken the view that when theconclusions arrived at by the appellate authoritieshave a relevance and bearing upon the conclusionsto be reached in the case necessarily one authoritywill have to await the outcome of the otherauthority. 4. This Court in G.L.Didwania & Anr. vs.Income Tax Officer & Anr., 1995 Supp.(2) SCC 724,dealt with the similar situation where there is aprosecution under the Act for making a falsestatement that the assessee had intentionallyconcealed his income and the Tribunal ultimatelyset aside the assessment holding that there is nomaterial to hold that such income belong to theassessee and the petition was filed before theMagistrate to drop the criminal proceedings andthereafter an application was filed before the HighCourt under Section 482 Cr.P.C. to quash thosecriminal proceedings. This Court held that thewhole question is whether the appellant made afalse statement regarding the income whichaccording to the assessing authority has escapedassessment and this issue was dependent on theconclusion reached by the appellate Tribunal andhence the prosecution could not be sustained. InUttam Chand & Ors. vs. Income Tax Officer, CentralCircle, Amritsar, 1982 (2) SCC 543, this Court heldthat in view of the finding recorded by theTribunal on appraisal of the entire material on therecord that the firm was a genuine firm and theassessee could not be prosecuted for filing falsereturns and, therefore, quashed the prosecution. InP.Jayappan vs. S.K.Perumal, First Income-TaxOfficer, Tuticorin, 1984 Supp. SCC 437, this Courtobserved that the pendency of the reassessmentproceedings under the Act cannot act as a bar tothe institution of the criminal proceedings andpostponement or adjournment of a proceedings forunduly long period on the ground that another proceedings having a bearing on the decision wasnot proper. 16. In Radheshyam Kejriwal vs. State of West Bengal andAnother [(2001) 3 SCC 581] the Honourble Apex Court has held asfollows: "38.The ratio which can be culled out fromthese decisions can broadly be stated asfollows :-(i) Adjudication proceeding and criminalprosecutioncanbelaunchedsimultaneously; (ii)Decision in adjudication proceedingis not necessary before initiatingcriminal prosecution; (iii)Adjudication proceeding and criminalproceeding are independent in nature toeach other; (iv)The finding against the person facingprosecutionintheadjudicationproceeding is not binding on theproceeding for criminal prosecution; (v) Adjudication proceeding by theEnforcementDirectorateisnotprosecution by a competent court of lawto attract the provisions of Article 20(2) of the Constitution or Section 300 ofthe Code of Criminal Procedure; (vi)The finding in the adjudicationproceeding in favour of the person facingtrial for identical violation will dependupon the nature of finding. If theexoneration in adjudication proceeding ison technical ground and not on merit,prosecution may continue; and (vii) In case of exoneration, however, onmerits where allegation is found to benot sustainable at all and person heldinnocent, criminal prosecution on thesame set of facts and circumstances cannot be allowed to continue underlying principle being the higher standard ofproof in criminal cases." (v) Adjudication proceeding by theEnforcementDirectorateisnotprosecution by a competent court of lawto attract the provisions of Article 20(2) of the Constitution or Section 300 ofthe Code of Criminal Procedure; (vi)The finding in the adjudicationproceeding in favour of the person facingtrial for identical violation will dependupon the nature of finding. If theexoneration in adjudication proceeding ison technical ground and not on merit,prosecution may continue; and (vii) In case of exoneration, however, onmerits where allegation is found to benot sustainable at all and person heldinnocent, criminal prosecution on thesame set of facts and circumstances cannot be allowed to continue underlying principle being the higher standard ofproof in criminal cases." 17. Considering the above postion, when the Tribunal hasheld that “the Assessing Officer has presumed that the claim isbogus or false without making any enquiry. It is not the caseof the Assessing Officer that the Claim is false or bogus. TheAssessing Officer has not examined the claim of assessee andfound whether they have given money to M/s. Alpha Commercialsfor the purpose of investment in the property. In the absenceof any materials the Assessing Officer has presumed that theassessee claiming exemption is false or bogus.” When theAppellate Tribunal has factually recorded the finding that therewas no suppression of facts and the assessee has originallydisclosed the receipt of the sale property, merely claimeddeduction it cannot be said that there was wilful evasion ofTax. 18. As recorded by the Appellate Tribunal the disclosure hasbeen made. There is no suppression of facts. Therefore, itcannot be said that merely exemption is claimed to the propertyand the investment has not been made, the wilful evasion cannotbe presumed as the Appellate Tribunal has found that there wasno suppression. Therefore, initiation of prosecution on thesimilar allegations is nothing but futile exercise.Accordingly, considering the judgments of Apex Court this Courtis of the view that the prosecution on the similar groundswould not serve any purpose, only lead to the unnecessaryharassment. The tax has already been paid which has not beendisputed. In N. Athimoolam vs. Income Tax Officer [[2010] 327ITR 603 (Madras) this Court has refused to quash the proceedingsmainly on the ground that substantial portion of witnesses havebeen examined. Therefore the same is not applicable. 19. It is also to be noted that the land in questionmeasuring around 3.9 acres. Merely on the statement it issituated in urban area and the agriculture was not carried outat the relevant point of time, it cannot be said that there wassuppression. At any event considering the factual aspects whichwas dealt by the Income Tax Appellate Tribunal, this Court is ofthe view that the continuation of the prosecution is waste oftime and futile exercise. Accordingly, the proceedingsinitiated in E.O.C.C.75 of 2016 to E.O.C.C.82 of 2016 pendingon the file of the of the Additional Chief MetropolitanMagistrate (E.O.II), Allikulam, Chennai, are quashed. 20. In view of the same Criminal Original Petition Nos.4202to 4208 and 4263 of 2017 are ordered. Consequently, connectedMiscellaneous Petitions are closed. Sd/- Assistant Registrar(CS VIII) //True Copy// Sub Assistant Registrar ggs To The Additional Chief Metropolitan Magistrate (EO-II), Allikulam, Channai. +3ccs to Mr.M.Deivanandam, Advocate, S.R.No.4967+1cc to Mr. L. Muralikrishnan, Advocate, S.R.No.4685 Crl.O.P.Nos.4202 to 4208 and 4263 of 2017andCrl.M.P.Nos.3107 to 3122, 3185 and 3186 of 2017 SRA[co]NSK 09/02/2022