S.j.surya v. The Deputy Commissioner Of Income Tax, Central Circle Ii (4), Chennai – 34

THE HON'BLE MR. JUSTICE G.CHANDRASEKHARAN Crl.O.P.No.29914, 29915, 29916, 29917, 29918 & 29919 of 2015and M.P.Nos.1 & 2 of 2015 In all Crl.O.P.'s:- S.J.Surya...Petitioner/AccusedVs.The Deputy Commissioner of Income Tax,Central Circle II (4),Chennai – 34....Respondent/Complainant Common Prayer:- Criminal Original Petitions are filed under Section 482 ofCode of Criminal Procedure, to call for the entire records inE.O.C.C.Nos.101, 102, 103, 104, 105 & 106 of 2015 on the file ofAdditional Chief Metropolitan Magistrate (E.O.I) Chennai,Alikulam Road and quash all further proceedings against thepetitioner. https://hcservices.ecourts.gov.in/hcservices/ Additional Chief Metropolitan Magistrate (E.O.I) Chennai,Alikulam Road and quash the same. 2.Respondent filed these complaints against the petitionerfor the violation of provisions under Income Tax Act, 1961,which are punishable under the Act. The allegations made in thecomplaint, in brief, are extracted here,Complaint in E.O.C.C.No.101 of 2015: Petitioner/accused is a cine actor and Director derivingincome from remuneration for acting in movies and also directingmovies. He ought to have filed his return of income for theassessment year 2002-2003 on or before 31.07.2002. However, hedid not filed his return of income within the due dateprescribed by the statute and thus contravened the provisions ofSection 139 (1) of the Income Tax Act, 1961. It is an offencepunishable under Section 276 CC of Income Tax Act, 1961. Heought to have paid the advance tax within the prescribed datesof 15.09.2001, 15.12.2002 and 15.03.2002 and filed the relevantreturn for the assessment year 2002-2003 on or before31.07.2002. Petitioner did not pay advance tax and failed tofile return of income within the statutory due date. Thus,committed the offence under Section 276 CC of the Income TaxAct, 1961 by concealing true the correct income by not filingthe return of income and committed an offence under Section 276C (1) Income Tax Act, 1961. The survey operations under Section133 A were conducted on 04.09.2003 and a search was conducted on26.10.2005. It revealed unaccounted receipt of money by thepetitioner towards remuneration for directing movies. Astatutory notice under Section 148 of Income Tax Act, 1961 dated30.03.2004 was issued to the petitioner to prepare a true andcorrect return of total income including the undisclosed incomeassessable for the assessment year 2002-2003 within 30 days fromthe date of service of the notice. Notice was acknowledged on05.04.2004. Petitioner ought to have filed the return of incomeon on or before 05.05.2004, which he failed. Through a letterdated 03.05.2005, he requested time to file return till15.06.2004. But he did not file the return of income even after15.06.2004. Therefore, a show cause notice dated 22.07.2004 wasissued. Petitioner filed the return of income for assessmentyear 2002-2003 only on 15.09.2004. He admitted a total income ofRs.40,00,000/- in the covering letter. It is stated thatpetitioner received gross remuneration of Rs.50,00,000/- fordirectorial service of the film ''KHUSHI'' (Hindi). A sum ofRs.10,00,000/- was claimed as expenditure. Assessment wascompleted under Section 143 (3) on 30.03.2005 assessing histotal income at Rs.1,68,38,410/-. Apart from these, a sum ofRs.30,00,000/- was added as unexplained deposit in his bankaccount in Dena Bank, T. Nagar Branch. Gross tax and interestdemand worked out to Rs.85,82,780/-. After giving credit to payments made of Rs.13,00,000/-, net demand was raised atRs.72,82,780/-. Penalty proceedings under Section 271 (1) (C)were initiated simultaneously. Petitioner filed petition beforethe Joint Commissioner of Income Tax, Media Range on 12.05.2005,requesting for stay of collection of demand till the disposal ofappeal by the Commissioner. This petition was rejected on08.08.2005. Petitioner filed a letter dated 23.11.2005 beforethe Income Tax Officer, requesting a time for payment of taxestill the search issues are resolved. It was observed by theCommissioner of Income Tax, that “As soon as PO is lifted onBank Account, Assessee is required to pay the installments”.However, petitioner did not pay the taxes though the PO on bankaccount was lifted. Since, the petitioner has not paid theamount as per demand notice under Section 156 served along withthe assessment order under Section 143 (3), notice under Section226 (5) dated 12.08.2005 was issued to M/s.Prasad Film Lab andM/s.Gemini Colour Lab to realize the garnishee amounts.Agricultural lands and the flats belonging petitioner wereplaced under provisional attachment under Section 281 B of theIncome Tax Act. Original assessment was confirmed in appeal on31.03.2014. Even, thereafter, petitioner has not paid thearrears. A notice under Section 153 (A) of Income Tax Act, dated07.07.2006 was issued to the petitioner to prepare a true andcorrect return of total income including undisclosed income forthe assessment year 2002-2003, within 45 days from the date ofservice of the notice. It was acknowledged on 22.07.2006.Petitioner ought to have filed return of income on or before05.09.2006, he failed. Again a show cause notice dated26.10.2006 was issued to the petitioner to show cause why theprosecution under Section 276 CC of the Income Tax Act, 1961should not be initiated. It was acknowledged on 11.01.2007. Areminder dated 11.01.2007 was issued. There was no reply fromthe petitioner. Assessment under Section 153 A r/w. Section 144was completed on 24.09.2008 on a total income ofRs.2,00,56,592/-. Based on the materials seized a sum ofRs.1,70,56,592/-representing the money received for theremuneration of the film ''Nani'' and another sum ofRs.30,00,000/- for the remuneration towards the film ''New''were added. Total gross demand was determined atRs.1,50,02,522/-. After giving credit to self assessment taxpaid at Rs.10,00,000/-, net demand payable was determined atRs.1,50,02,522/-. Penalty proceedings for concealment of incomewere initiated under Section 271 (1) (c) simultaneously. Appealwas dismissed by a common order dated 31.03.2014 and theassessment was confirmed. Notice under Section 226 (3) to DenaBank, HDFC Bank, Indian Bank, Sri Ramesh Babu, Smt.Mallika Devi,M/s.Geetha Arts and M/s.Kanakarathina Media Pvt. Ltd were issuedto realize the garnishee amounts. As the amounts could not becollected by a letter dated 22.05.2014, the outstanding demandswere certified to the tax recovery officer. The tax recovery officer issued notices in ITCP-1 to the petitioner on11.06.2014. It was served on the petitioner on 13.06.2014.However, there was no response from the petitioner. Petitionerfiled stay petition before Income Tax Appellate Tribunal,Chennai and the stay petition was dismissed. Thus, there isgross disobedience in complying with the statutory requirementsunder Section 139 (1), 148 and 153 A of Income Tax Act, 1961,which amounts to an offence punishable under Section 276 CC ofIncome Tax Act, 1961. Petitioner did not file the return ofincome voluntarily, did not pay the advance tax and it isoffence punishable under Section 276 C (2) of Income Tax Act,1961. Petitioner concealed his true and correct income by notfiling return of income, not paying the advance tax and thedemand tax. Thus, committed offence under Section 276 (C) (1),276 C (2), 276 CC and 277 of the Income Tax Act, 1961.Petitioner made false statement and signed false verificationand it is an offence punishable under Section 277 of the IncomeTax Act. 3.The general allegations remain the same in other cases anddetails of the specific violation under Income Tax Act, 1961 areextracted in other cases as follows,Complaint in E.O.C.C.No.102 of 2015: Petitioner failed to file the return of income for theassessment year 2003-2004. He also did not pay advance tax andconcealed true and correct income by not filing the return ofincome on or before the statutory due date. Petitioner filedreturn of income for the assessment year 2003-2004 only on15.09.2004. A notice under Section 153 (A) of income Tax Act wasissued on 07.07.2006 to prepare a true and correct return oftotal income including the undisclosed income and that wasacknowledged by the petitioner on 22.07.2006. Petitioner did notfile the return of income and therefore a show cause noticedated 26.10.2006 was issued. Assessment was completed on24.09.2008 on a total income of Rs.1,93,82,227/-, taking intoconsideration, the material seized. Total gross demand wasdetermined at Rs.1,26,05,955/-. The appeal filed by thepetitioner was dismissed by a common order on 31.03.2014. Taxrecovery officer issued notices in ITCP – 1 to the petitioner on11.06.2014. Stay petition filed by the petitioner was dismissedby Income Tax Appellate. Petitioner willfully failed to filereturn of income for the assessment year 2003-2004 and violatedthe provisions of Section 139 (1), 148 and 153 A of Income TaxAct, 1961, punishable under Section 276 CC of Income Tax Act;did not pay the advance tax and the demand raised under Section144 r/w 153A, which amounts to commission of offence underSection 276 C (2) of Income Tax Act; willfully and deliberatelyconcealed his true and correct income by not filing return ofincome and not paying advance tax, demand tax. Thus, committed offence punishable under Section 276 C (1); has not made a trueand complete disclosure of a real income, and made a falsestatement and signed false verification punishable under Section277 of the Income Tax Act, 1961. 4.Complaint in E.O.C.C.No.103 of 2015: offence punishable under Section 276 C (1); has not made a trueand complete disclosure of a real income, and made a falsestatement and signed false verification punishable under Section277 of the Income Tax Act, 1961. 4.Complaint in E.O.C.C.No.103 of 2015: Petitioner has not filed income return for the assessmentyear 2004-2005 within the due date prescribed by the statute,did not pay the advance tax and failed to file the return ofincome and thus concealed the true and correct income.Petitioner filed return of income for assessment year 2004-2005on 15.09.2004 showing only NIL income. Based upon theinformation and materials gathered during search, statutorynotice under Section 153 (A) of Income Tax Act, 1961, dated07.07.2006 was issued to the petitioner to prepare a true andcorrect return of total income including the undisclosed incomefor the assessment year 2004-2005. It was acknowledged on22.07.2006. Petitioner did not file the return of income andtherefore, a show cause notice dated 26.10.2006 was issued.Based on search, assessment was completed determining the netdemand payable at Rs.2,11,32,637/-. Penalty proceedings forconcealment of income were initiated simultaneously. Appeal wasdismissed by a common order on 31.03.2014 and the assessment wasconfirmed. Tax Recovery Officer issued notices in ITCP-1 to thedefaulter on 11.06.2014. Stay petition filed by the petitionerwas dismissed by Income Tax Appellate Tribunal, Chennai.Petitioner willfully failed to file return of income for theassessment year 2004-2005, willfully and deliberately did notpay the advance tax and demand raised under Section 144 r/w. 153A, willfully and deliberately concealed his true and correctincome, made false statement and signed false verification.Thus, petitioner committed the offences punishable under Section276 C (1), 276 C (2), 276 CC and 277 of the Income Tax Act, 1961. 5.Complaint in E.O.C.C.No.104 of 2015: Petitioner did not file return of income for the assessmentyear 2005-2006 within the due dates prescribed by the statute.He did not pay the advance tax and concealed true and correctincome by not filing the return of income. He filed return ofincome for assessment year 2005-2006 on 28.10.2005, showing lossof Rs.2crores. Petitioner is entitled to claim of carry forwardloss only if the return is filed on or before the statutory duedate. The return of income was treated as defective andpetitioner was directed to rectify the defects. However,petitioner did not rectify the defects. The defective returnfiled on 28.10.2005 is non-est in law. Based upon informationand material gathered during search, statutory notice underSection 153 A of Income Tax Act, 1961 dated 07.07.2006 was issued calling the petitioner to prepare a true and correctreturn of total income including the undisclosed income, for theassessment year 2004-2005. It was acknowledged on 22.07.2006.Petitioner did not file the return of income and therefore, ashow cause notice under Section 153 A dated 26.10.2006 wasissued. There was no reply. Based on the materials seized, theassessment was completed determining the total gross demand atRs.1,32,63,662/-. Penalty proceedings for concealment of incomewere initiated simultaneously. Tax Recovery Officer issuednotices in ITCP – 1, to the petitioner on 11.06.2014. Staypetition filed by the petitioner was dismissed by Income TaxAppellate Tribunal. Petitioner willfully failed to file return,did not pay advance tax, demand raised under Section 144 r/w.153 (A) of the Income Tax Act, concealed his true and correctincome, made false statement and signed false verification, thushe is liable to be prosecuted for the offences punishable underSection 276 C (1), 276 C (2), 276 CC and 277 of the Income TaxAct, 1961. Petitioner did not file his return of income for theassessment year 2006-2007 within the due date prescribed by thestatute. He did not pay the advance tax and concealed true andcorrect income by not filing the return of income. A noticeunder Section 153 (A) of Income Tax Act, dated 07.07.2006 wasissued to the petitioner calling upon him to prepare true andcorrect return of total income including undisclosed income forassessment year 2006-2007. It was acknowledged on 22.07.2006.But the petitioner did not file the return and therefore showcause notice under Section 153 (A) was issued. Based on thematerial seized, the gross amount payable was determined atRs.68,70,578/-. Penalty proceedings and concealment of incomewere initiated. Appeal filed by the petitioner was dismissed bya common order on 31.03.2014. Tax Recovery officer issuednotices in ITCP – 1, to the petitioner on 11.06.2014. The staypetition filed was dismissed by Income Tax Appellate Tribunal.Petitioner violated statutory requirements under Section 139 (1)and 153 A of Income Tax Act, by not filing return of income, didnot pay the advance tax, demand raised under Section 144 r/w.153 A, deliberately concealed true and correct income by notfiling the return of income, not paid the advance tax and demandtax. Thus, he is liable to be prosecuted for the offences underSection 276 C (1), 276 C (2), 276 CC and 277 of the Income TaxAct, 1961. 7.Complaint in E.O.C.C.No.106 of 2015:Petitioner has not filed income tax return for the assessment year 2009-2010 and concealed true and correct incomeby not filing the return of income. During the course ofassessment proceedings, the authorized representatives of thepetitioner by a letter dated 21.10.2011, requested thepetitioner to disallow the expenses in proportion. Theassessment was completed on a total income Rs.21,69,157/-against the admitted income of Rs.10,61,680/-. A net demand ofRs.7,81,980/- was raised. Dis-allowance of various expensesclaimed could not be substantiated by the petitioner. Petitionerdid not pay the amount raised. Tax Recovery Officer issuednotices in ITCP – 1 to the petitioner. Petitioner is an affluentperson deriving income from acting and direction of films. Hewillfully and deliberately attempted to evade tax and interest.Thus, he is liable to be prosecuted for the offence underSection 276 C (1), 276 C (2), 276 CC and 277 of the Income TaxAct, 1961. 8.Challenging these petitions, the aforesaid criminaloriginal petitions have been filed for quashing the proceedings. 9.Learned counsel for the petitioner assailed the takingcognizance of these cases on the grounds that, i)the complaint is pre-mature, when the proceedings beforethe department are yet to conclude and reach finality. ii)The assessment order passed by the Assessing Officer,confirmed by the CIT (A) have been set aside by the Income TaxAppellate Tribunal declaring the Assessment orders as null andvoid. iii)the Income Tax Appellate Tribunal makes it clear thatthe petitioner is not liable to pay any tax penalty or interestthat could be chargeable or imposable under the Income Tax Actby the department. iv)When that be the case, and when there is no tax, penaltyor interest chargeable or imposable under the Act, prosecutionunder Section 276 C (1) of the Act, cannot be sustained. v)when there is no tax, penalty or interest payable by thepetitioner, the allegation of attempting to evade payment ofsuch tax, penalty or interest under Section 276 C (2) of theAct, cannot be sustained. ii)The assessment order passed by the Assessing Officer,confirmed by the CIT (A) have been set aside by the Income TaxAppellate Tribunal declaring the Assessment orders as null andvoid. iii)the Income Tax Appellate Tribunal makes it clear thatthe petitioner is not liable to pay any tax penalty or interestthat could be chargeable or imposable under the Income Tax Actby the department. iv)When that be the case, and when there is no tax, penaltyor interest chargeable or imposable under the Act, prosecutionunder Section 276 C (1) of the Act, cannot be sustained. v)when there is no tax, penalty or interest payable by thepetitioner, the allegation of attempting to evade payment ofsuch tax, penalty or interest under Section 276 C (2) of theAct, cannot be sustained. vi)No prosecution under Section 276 CC of the Act, could beinitiated for non filing income tax return when the tax thatcould have become payable is less than Rs.3000/-. In this case,petitioner would not be liable to be pay even a rupee andtherefore, prosecution under Section 276 CC cannot be maintained.vii)Filing of false statement of verification cannot besustained in this case as the petitioner had not filed anyreturn of income or has made a statement which could be calledas false. Thus, continuation of the proceedings against thepetitioner would only be an abuse process of law and therefore, learned counsel for the petitioner prayed for quashing theproceedings in E.O.C.C.Nos.101, 102, 103, 104, 105 & 106 of2015. 10.In response, learned Special Public Prosecutor appearingfor the respondent submitted that all these petitions are notmaintainable and these petitions are filed abusing process ofCourt. These complaints have been filed as an offshoot of surveyand search proceedings. But for the survey and searchproceedings, the violations committed by the petitioner wouldnot have come to light and it would have resulted in suppressionof income and loss of revenue to the Government. These petitionshave been filed mainly on the reason that Income Tax AppellateTribunal have held assessments are null and void. However, it issubmitted by the learned Special Public Prosecutor forrespondent that the Income Tax Appellate Tribunal has notadjudicated or given a finding on any of the grounds raised inthe complaint. The order was passed solely on technical groundthat the assessments were time barred. When the order was notpassed on merits or grounds raised in the criminal complaint,the quashment of the proceedings cannot be prayed. It has beenconsistently held by the Courts that order of assessment by theAppellate authority, will not be a bar for criminal prosecution,especially when no finding was given by the Appellate Authorityon the merits of the case. When the ingredients of offence areclearly made out in the complaint to establish that the accusedhas committed the offence, the complaint cannot be quashed. 11.Learned counsel for respondent relied on the followingjudgments reported in 1984 AIR SC 1693 P.Jayappan Vs.S.K.Perumal, I.T.O, 1995 214 ITR 778 Mad, Tip Top PlasticIndustries Pvt. Ltd. Vs. ITO, (2011) 3 SCC 581 RadheshyamKejriwal Vs. State of West Bengal and another in support of hersubmissions. 12.Considered the rival submissions and perused the records. 11.Learned counsel for respondent relied on the followingjudgments reported in 1984 AIR SC 1693 P.Jayappan Vs.S.K.Perumal, I.T.O, 1995 214 ITR 778 Mad, Tip Top PlasticIndustries Pvt. Ltd. Vs. ITO, (2011) 3 SCC 581 RadheshyamKejriwal Vs. State of West Bengal and another in support of hersubmissions. 12.Considered the rival submissions and perused the records. 13.It is seen from the submission made by the learnedcounsel appearing for the parties, especially, learned counselfor petitioner that petitions for quashing the proceedings inE.O.C.C.Nos.101, 102, 103, 104, 105 & 106 of 2015 have beenfiled mainly on the grounds that the proceedings before thedepartment have not come to conclusion and therefore, the filingof the complaint is pre-mature and that the Income Tax AppellateTribunal declared the assessment orders as null and void andtherefore, the prosecution of criminal cases would be an abuseprocess of law. Learned counsel for respondent pressed intoservice the judgment reported in (2011) 3 SCC 581 RadheshyamKejriwal Vs. State of West Bengal and another, when a similarissue arose under Foreign Exchange Regulation Act, 1973 for the consideration of Hon'ble Supreme Court, as to the continuance ofcriminal proceedings after completion of adjudicationproceedings. It was observed as follows, 26.We may observe that standard of proof in acriminal case is much higher than that of theadjudication proceeding. The Enforcement Directoratehas not been able to prove its case in theadjudication proceeding and the appellant has beenexonerated on the same allegation. The appellant isfacing trial in the criminal case. Therefore, in ouropinion, the determination of facts in theadjudication proceeding cannot be said to beirrelevant in the criminal case. In the case of B.N.Kashyap (Supra), the full Bench had not considered asto the effect of a finding of fact in a civil caseover the criminal cases and that will be evident fromthe following passage from the said judgment : "I must, however, say that in answering the question,I have only referred to civil cases where the actionsare in personam and not those where the proceedingsor actions are in rem. Whether a finding of factarrived at in such proceedings or actions would berelevant in criminal cases, it is unnecessary for meto decide in this case. When that question arises fordetermination, the provisions of Section 41, EvidenceAct, will have to be carefully examined." 28.Mr. Malhotra submits that finding recorded in theadjudication proceeding is not binding on the criminalproceeding as both the cases have to be decided on thebasis of the evidence therein. Reliance has beenplaced on a decision of this Court in the case ofIqbal Singh Marwah v.Meenakshi Marwah (2005) 4 SCC370, relevant portion whereof reads as follows :- "32. Coming to the last contention that an effort shouldbe made to avoid conflict of findings between the civiland criminal courts, it is necessary to point out thatthe standard of proof required in the two proceedingsare entirely different. Civil cases are decided on thebasis of preponderance of evidence while in a criminalcase the entire burden lies on the prosecution and proofbeyond reasonable doubt has to be given. There isneither any statutory provision nor any legal principlethat the findings recorded in one proceeding may betreated as final or binding in the other, as both the cases have to be decided on the basis of the evidenceadduced therein...." "32. Coming to the last contention that an effort shouldbe made to avoid conflict of findings between the civiland criminal courts, it is necessary to point out thatthe standard of proof required in the two proceedingsare entirely different. Civil cases are decided on thebasis of preponderance of evidence while in a criminalcase the entire burden lies on the prosecution and proofbeyond reasonable doubt has to be given. There isneither any statutory provision nor any legal principlethat the findings recorded in one proceeding may betreated as final or binding in the other, as both the cases have to be decided on the basis of the evidenceadduced therein...." 32.There are authorities of this Court in relation tothe Income-tax Act in this regard. The first in theseries is the judgment of this Court in the caseof Uttam Chand and others vs. Income Tax Officer,Central Circle, Amritsar (1982) 2 SCC 543 in whichregistration of firm was cancelled on the ground that itwas not genuine and prosecution initiated for filingfalse return. However, in appeal, the Income TaxAppellate Tribunal reversed the finding and held thefirm to be genuine. Relying on that, this court quashedthe prosecution inter alia observing as follows : "1. Heard counsel, special leave granted In view ofthe finding recorded by the Income Tax AppellateTribunal that it was clear on the appraisal of theentire material on the record and Shrimati Janak Raniwas a partner of the assessee firm and that the firmwas a genuine firm, we do not see how the assessee canbe prosecuted for filing false returns. We,accordingly, allow this appeal and quash theprosecution. 2. There will be no order as to costs." 33.In the case of G.L. Didwania and Another vs. IncomeTax Officer and Another 1995 Supp (2) SCC 724, onsetting aside the order of the assessing authoritywhich led to the prosecution of the assessee by theIncome-Tax Appellate Tribunal, this Court held theprosecution not permissible and while doing soobserved as follows : "4. In the instant case, the crux of the matter isattracted and whether the prosecution can be sustainedin view of the order passed by the tribunal. As notedabove, the assessing authority held that theappellant-assessee made a false statement in respectof income of M/s. Young India and Transport Companyand that finding has been set aside by the Income TaxAppellate Tribunal. If that is the position then weare unable to see as to how criminal proceedings canbe sustained." 38.The ratio which can be culled out from thesedecisions can broadly be stated as follows :- (i) Adjudication proceeding and criminal prosecutioncan be launched simultaneously; (ii)Decision in adjudication proceeding is notnecessary before initiating criminal prosecution; (iii)Adjudication proceeding and criminal proceedingare independent in nature to each other; (iv)The finding against the person facing prosecutionin the adjudication proceeding is not binding on theproceeding for criminal prosecution; (v) Adjudication proceeding by the EnforcementDirectorate is not prosecution by a competent court oflaw to attract the provisions of Article 20 (2) of theConstitution or Section 300 of the Code of CriminalProcedure; (vi)The finding in the adjudication proceeding infavour of the person facing trial for identicalviolation will depend upon the nature of finding. Ifthe exoneration in adjudication proceeding is ontechnical ground and not on merit, prosecution maycontinue; and (vii) In case of exoneration, however, on merits whereallegation is found to be not sustainable at all andperson held innocent, criminal prosecution on the sameset of facts and circumstances can not be allowed tocontinue underlying principle being the higherstandard of proof in criminal cases. (v) Adjudication proceeding by the EnforcementDirectorate is not prosecution by a competent court oflaw to attract the provisions of Article 20 (2) of theConstitution or Section 300 of the Code of CriminalProcedure; (vi)The finding in the adjudication proceeding infavour of the person facing trial for identicalviolation will depend upon the nature of finding. Ifthe exoneration in adjudication proceeding is ontechnical ground and not on merit, prosecution maycontinue; and (vii) In case of exoneration, however, on merits whereallegation is found to be not sustainable at all andperson held innocent, criminal prosecution on the sameset of facts and circumstances can not be allowed tocontinue underlying principle being the higherstandard of proof in criminal cases. 39.In our opinion, therefore, the yardstick would beto judge as to whether allegation in the adjudicationproceeding as well as proceeding for prosecution isidentical and the exoneration of the person concernedin the adjudication proceeding is on merits. In caseit is found on merit that there is no contravention ofthe provisions of the Act in the adjudicationproceeding, the trial of the person concerned shall bein abuse of the process of the court. 14.The reading of this judgment makes it clear thatadjudication proceedings and criminal proceedings can belaunched simultaneously and they are independent in nature toeach other. The adjudication proceedings is not binding on theproceedings for criminal prosecution. It may be relevant, if theadjudication proceedings in favour of person facing the trialdecided on merits and in favour of him. However, if theexoneration in adjudication proceedings is on technical groundand not on merit, the prosecution may continue. 15.In the judgment reported in 1984 AIR 1693 P.Jayappan Vs.S.K.Perumal, it is observed that, pendency of re-assessmentproceedings cannot act as bar to the institution of criminalproceeding and it cannot in such circumstances amount to abuseof process of Court. 15.In the judgment reported in 1984 AIR 1693 P.Jayappan Vs.S.K.Perumal, it is observed that, pendency of re-assessmentproceedings cannot act as bar to the institution of criminalproceeding and it cannot in such circumstances amount to abuseof process of Court. 5.At the outset it has to be stated that there is noprovision in law which provides that a prosecution forthe offences in question cannot be launched untilreassessment proceedings initiated against theassessee are completed. Section 279 of the Actprovides that a person shall not be proceeded againstforanoffencepunishableunder section276C or section 277 of the Act except at the instanceof the Commissioner. It further provides that a personshall not be proceeded against for an offencepunishable under those provisions in relation to theassessment for an assessment year in respect of whichpenalty is imposed or imposable on him under clause(iii) of sub-section (1) of section 271 has beenreduced or waived by an order under section 273A. TheCommissioner has the power either before or after theinstitution of proceedings to compound any suchoffence. In this case it is not claimed that theCommissioner has not initiated the proceedings forinstituting the complaints. No other legal bar for theinstitution of the proceedings is urged except statingthat in the event of the petitioner being exoneratedin the reassessment proceedings, the prosecutions mayhave to be dropped. It is true that as observed bythis Court in Uttam Chand & Ors. v. Income-tax officer, Central Circle, Amritsar(1) theprosecution once initiated may be quashed in the lightof a finding favourable to the assessee recorded by anauthority under the Act subsequently in respect of therelevant assessment proceedings but that decision isno authority for the proposition that no proceedingscan be initiated at all under section 276C and section277 as long as some proceeding under the Act in whichthere is a chance of success of the assessee ispending. A mere expectation of success in someproceeding in appeal or reference under the Act cannotcome in the way of the institution of the criminalproceedings under section 276C and section 277 of theAct. 16.It is observed in 1995 214 ITR 778 Mad, Tip Top PlasticIndustries Pvt. Ltd. Vs. ITO, that assessment order inassessment proceedings is not a bar to launch prosecution. Whenthe records seized disclosed short statement of stocks, ITO is entitled to proceed against the petitioners according to law,for assessment afresh and also for prosecution. Setting asidethe order of the ITO by the Tribunal and remanding the matterfor adequate opportunity to the company, in the absence ofdefinite finding by the Tribunal as to the correctness of thereturns submitted by the company, is not a bar for criminalprosecution. 16.It is observed in 1995 214 ITR 778 Mad, Tip Top PlasticIndustries Pvt. Ltd. Vs. ITO, that assessment order inassessment proceedings is not a bar to launch prosecution. Whenthe records seized disclosed short statement of stocks, ITO is entitled to proceed against the petitioners according to law,for assessment afresh and also for prosecution. Setting asidethe order of the ITO by the Tribunal and remanding the matterfor adequate opportunity to the company, in the absence ofdefinite finding by the Tribunal as to the correctness of thereturns submitted by the company, is not a bar for criminalprosecution. 7...............As stocks to the value of Rs.4,93,177 are alleged to have been concealed, thefirst respondent would allege that the income to theabovesaid value has been suppressed and this willattract punishment under sections 276C and 277 of theAct. But learned senior counsel for the petitioners,Mr. V. Ramachandran, would argue that only if theincome-tax authorities find that the real income wasconcealed and the return of income is false, thecriminal court can find the petitioners guilty of theoffence and, therefore, the assessing authority hasto find out whether the original assessment submittedin October, 1981, for the period ended with March 31,1981, is not correct. ….....Therefore, when therecords seized discloses short statement of stock,certainly the Income-tax Officer is entitled toproceed against the petitioners-assessees accordingto law, for the fresh assessment and also forprosecution. Hence, the above decisions cited bylearned senior counsel do not help the petitioners toavoid the criminal prosecution.8. The next line of argument of learned seniorcounsel for the petitioners is that as the assessmentorder of the Income-tax Officer has been set aside bythe Income-tax Appellate Tribunal and theCommissioner of Income-tax (Appeals) also hascancelled the penalty order of the Income-taxOfficer, the prosecution against the petitioners isnot sustainable and the same has to be quashed. 17.From the reading and understanding of the judgmentsaforesaid, it is made clear that pendency of re-assessmentproceedings are remanding matter for adequate opportunity andthat adjudication by Tribunal through adjudication proceedingsare not a bar for launching a criminal prosecution. Even if theadjudication proceedings ended in favour of assessee, it can betaken in favour of assessee only if the adjudication proceedingsdiscussed all the issues raised in the complaint on merits andgave its findings. If the adjudication proceedings were disposedon technical ground and not on merits, prosecution can continueand assessee/accused cannot take advantage of the order passedin adjudication proceedings. 17.From the reading and understanding of the judgmentsaforesaid, it is made clear that pendency of re-assessmentproceedings are remanding matter for adequate opportunity andthat adjudication by Tribunal through adjudication proceedingsare not a bar for launching a criminal prosecution. Even if theadjudication proceedings ended in favour of assessee, it can betaken in favour of assessee only if the adjudication proceedingsdiscussed all the issues raised in the complaint on merits andgave its findings. If the adjudication proceedings were disposedon technical ground and not on merits, prosecution can continueand assessee/accused cannot take advantage of the order passedin adjudication proceedings. 18.In the case before hand, common order passed inI.T.A.Nos.1858 to 1862/Mds/2014 for the assessment years 2002-2003 to 2006-2007 relatable to E.O.C.C.Nos.101, 102, 103, 104,105 of 2015, respectively is filed for the consideration of thisCourt. The main ground taken before the Income Tax AppellateTribunal was that the assessment order was barred by limitation.The Income Tax Appellate Tribunal after considering thesubmission of the counsel appearing for the parties concludedthat “We are of the opinion that assessments made by theAssessing Officer for all these five assessment years, uniformlyon 24.09.2008 are bad in law for the reason that direction ofthe Assessing Officer for special audit was served on theassessee on 25.01.2008 which must be considered for the purposeof computing the limitation of time making assessment. In thatcase, direction of the Assessing Officer was subsequent to theexpiry of the due date for making assessment. Further withoutprejudice, even with the date 25.01.2008, considered by theAssessing Officer as the date of service of direction and not on28.01.2008 as considered by the CIT (A) is taken into account,still the assessments were not made in the period specifiedunder Section 153 B of the Act. Therefore, it was held that theassessments for the five assessment years on 24.09.2008 are badin law. 19.Essentially, the Income Tax Appellate Tribunal disposedthe appeals only on the ground of limitation and not on merits.It is further observed that other grounds relating to meritsbecome an academic exercise, meaning that other issues raised inthe complaint, especially the allegations raised in thecomplaints with regard to non filing of return of income, nonpayment of advance tax, non payment of the tax demanded,suppression of true and correct income by not filing return ofincome had not been considered by the Income Tax AppellateTribunal. When the matter was not decided on merits, but only ontechnical ground of limitation, this Court is of the consideredview, on the basis of the principles settled in (2011) 3 SCC 581Radheshyam Kejriwal Vs. State of West Bengal and another, thatpetitioner cannot seek to quash the proceedings inE.O.C.C.Nos.101, 102, 103, 104, 105 of 2015 on the ground thatIncome Tax Appellate Tribunal had set aside the assessmentorders. 20.It is seen from the complaint allegation that despite,giving notice, statutory notice as detailed in the complaint,petitioner has not filed return, paid advance tax and taxdemanded, suppressed the real and true income by not filing thereturn in time. These issues have to be necessarily tried beforethe Court. The assessment order relating to the assessment year 20.It is seen from the complaint allegation that despite,giving notice, statutory notice as detailed in the complaint,petitioner has not filed return, paid advance tax and taxdemanded, suppressed the real and true income by not filing thereturn in time. These issues have to be necessarily tried beforethe Court. The assessment order relating to the assessment year 2009-2010 was not challenged before the Income Tax AppellateTribunal. Therefore, petitioner cannot seek aid of order passedby the Income Tax Appellate Tribunal in I.T.A.Nos.1858 to1862/Mds/2014. In this case also there is allegation of nonfiling of return of income for the assessment year 2009-2010,concealment of true and correct income by not filing return ofincome, non payment of income despite issuance of notice. Theseviolations are liable to be prosecuted for the offences underSection 276 C (1), 276 C (2), 276 CC and 277 of the Income TaxAct, 1961. 21.When it comes to quashing a criminal proceedings, it isvery well settled that uncontroverted averments in the complaintwithout any addition or subtraction should be looked into toexamine whether an offence can be made out are not. If thatyardstick is applied in this case, this Court is of theconsidered view that respondent/complainant made out prima-faciecase to proceed against the petitioner for the offences allegedin the complaint. Section 278 (e) of the Income Tax Act, 1961,empowers the Court to presume culpable mental state of theaccused, unless, the accused shows that he had no such mentalstate with respect to the act charged as an offence in theprosecution. In this view of the matter, this Court finds thatpetitioner shall necessarily face the trial. 22.Infine,CriminalOriginalPetitionsinCrl.O.P.Nos.29914, 29915, 29916, 29917, 29918 & 29919 of 2015are dismissed. Consequently, connected miscellaneous petitionsstand closed. Sd/- Assistant Registrar(CS-V) //True Copy// Sub Assistant Registrar ep To 1. The Additional Chief Metropolitan Magistrate (E.O.I)Chennai, Alikulam Road. Alikulam Road. 2. The Deputy Commissioner of Income Tax, Central Circle II (4), Chennai – 34. Central Circle II (4), Chennai – 34. https://hcservices.ecourts.gov.in/hcservices/ 3. The Public Prosecutor High Court of Madras.+3cc to Mr.P.Ramesh Kumar, Advocate, S.R.No.31915,31916,31917 (Pre-Delivery Judgment in)Crl.O.P.No.29914, 29915, 29916, 29917, 29918 & 29919 of 2015and M.P.Nos.1 & 2 of 2015 AD(CO)AJ(07/06/2022)