The Plea Of The Petitioners Is That They Have Filed Appeal Before v. Assistantcommissioner Of Income Tax : (2004) 2 Scc 731 In Support Ofhis Contention

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI WEDNESDAY, THE 23RD DAY OF OCTOBER 2019 / 1ST KARTHIKA, 1941 OP(Crl.).No.402 OF 2019 C.C. NO. 915/2014 OF THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT (E.O), ERNAKULAM PETITIONERS: 1M/S.GOOD HOME PVT.LTDPUTHURAN PLAZA K.P.C.C. JUNCTION, KOCHI 682 011, REPRESENTED BY ITS PRINCIPAL OFFICER, MR. B.R. AJIT. 2B.R. AJITH,AGED 64 YEARSS/O. KESAVAN B UNNITHAN, PRINCIPAL OFFICER, M/S. GOOD HOME PVT. LTD., PUTHURANPLAZA, K.P. C.C. JUNCTION, KOCHI 682 011. BY ADV. SRI.DALE P.KURIEN RESPONDENTS: 1THE DEPUTY COMMISSIONER OF INCOME TAXCORPORATE CIRCLE 1 (1), CORPORATE RANGE -1, IVTH FLOOR, CENTRAL REVENUE BUILDINGS, I.S. PRESS ROAD, KOCHI 682 018.CORPORATE CIRCLE 1 (1), CORPORATE RANGE -1, IVTH FLOOR, CENTRAL REVENUE BUILDINGS, I.S. PRESS ROAD, KOCHI 682 018. 2THE COMMISSIONER OF INCOMETAX (APPEALS), 1, GIRINAGAR 1ST CROSS ROAD, PANAMPILLY NAGAR, KOCHI 682 020.TAX (APPEALS), 1, GIRINAGAR 1ST CROSS ROAD, PANAMPILLY NAGAR, KOCHI 682 020. 3STATE OF KERALA,REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, KOCHI 682 031. R1 AND R2 BY SRI JOSE JOSEPH, SC, TAX R3 BY PUBLIC PROSECUTOR THIS OP (CRIMINAL) HAVING BEEN FINALLY HEARD ON 09.10.2019,THE COURT ON 23.10.2019 DELIVERED THE FOLLOWING: R.NARAYANA PISHARADI, J ************************ O.P.(Crl) No.402 of 2019 ---------------------------------------------- Dated this the 23[rd] day of October, 2019 O R D E R This original petition is filed under Article 227 of the Constitutionof India. The prayer in this petition is to issue a direction to theAdditional Chief Judicial Magistrate's Court (Economic Offences),Ernakulam to keep in abeyance all further proceedings in the caseC.C.No.915/2014 of that court till the disposal of the appeal filed bythe petitioners in the matter before the Commissioner of Income Tax(Appeals). 2. The petitioners are the accused in the aforesaid case. The firstpetitioner is a company. The second petitioner is the ManagingDirector of the first petitioner company. The case C.C.No.915/2014 isbased on the complaint filed against them by the DeputyCommissioner of Income Tax alleging that they had wilfully not filedthe return of income tax for the assessment year 2007-08 within theprescribed time and that they have committed the offence punishableunder Section 276CC of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 3. The plea of the petitioners is that they have filed appeal before the statutory authority challenging the assessment of tax and that thedecision in the appeal has got bearing on the prosecution against themand therefore, the criminal proceedings pending against them may bekept in abeyance till the disposal of the aforesaid appeal. 4. Heard learned counsel for the petitioners and the learnedStanding Counsel for Government of India (Taxes) and the learnedPublic Prosecutor. 5. Learned counsel for the petitioners contended that, if thestatutory appeal filed by the petitioners under the Act is allowed, itwould knock down the very basis of the prosecution against them andtherefore, the criminal proceedings may be ordered to be kept inabeyance. Learned counsel for the petitioners has relied upon thedecision of the Apex Court inK.C.Builders v. AssistantCommissioner of Income Tax : (2004) 2 SCC 731 in support ofhis contention. 6. The decision in K.C.Builders (supra) has no application tothe facts of the present case. It was a case of concealment of incomewhere penalty was imposed on the assessee by the assessingauthority. The prosecution against the assessee was under Sections 5. Learned counsel for the petitioners contended that, if thestatutory appeal filed by the petitioners under the Act is allowed, itwould knock down the very basis of the prosecution against them andtherefore, the criminal proceedings may be ordered to be kept inabeyance. Learned counsel for the petitioners has relied upon thedecision of the Apex Court inK.C.Builders v. AssistantCommissioner of Income Tax : (2004) 2 SCC 731 in support ofhis contention. 6. The decision in K.C.Builders (supra) has no application tothe facts of the present case. It was a case of concealment of incomewhere penalty was imposed on the assessee by the assessingauthority. The prosecution against the assessee was under Sections 276C(2) and 278B of the Act and Sections 193, 196 and 420 and 120Bof the Indian Penal Code. Section 276C provides the punishment forwilful attempt to evade tax, penalty or interest. Section 278B of theAct provides for offences by companies. In K.C.Builders (supra), theApex Court has held that levy of penalties and prosecution underSection 276C of the Act are simultaneous and hence, once thepenalties are cancelled on the ground that there is no concealment,the quashing of prosecution under Section 276C of the Act isautomatic. In the instant case, the prosecution is under Section 276CCof the Act for wilful failure to file returns within due time. It does notdepend on the assessment of tax. 7. Learned counsel for the petitioners has also relied upon thedecision of the Supreme Court in Commissioner of Income Tax v.Bhupen Champak Lal Dalal : AIR 2001 SC 1096, wherein it hasbeen held as follows: “The prosecution in criminal law and proceedings arisingunder the Act are undoubtedly independent proceedingsand, therefore, there is no impediment in law for thecriminal proceedings to proceed even during the pendencyof the proceedings under the Act. However, a wholesomerule will have to be adopted in matters of this naturewhere courts have taken the view that when theconclusions arrived at by the appellate authorities have a relevance and bearing upon the conclusions to be reachedin the case necessarily one authority will have to await theoutcome of the other authority”. 8. The decision in Bhupen Champak Lal Dalal (supra) has application only in cases where the conclusions arrived at by theappellate authorities have a relevance and bearing upon theconclusions to be reached in the criminal proceedings. This is not acase of that nature. 9. Learned standing counsel for the first and the secondrespondents has invited the attention of this Court to the decision of the Apex Court in Sasi Enterprises v. Assistant Commissioner ofIncome Tax : (2014) 5 SCC 139, wherein it has been held asfollows: “We also find no basis in the contention of the learnedsenior counsel for the appellant that pendency of theappellate proceedings is a relevant factor for notinitiating prosecution proceedings under Section 276CCof the Act. Section 276CC contemplates that an offenceis committed on the non-filing of the return and it istotally unrelated to the pendency of assessmentproceedings except for second part of the offence fordetermination of the sentence of the offence, thedepartment may resort to best judgment assessment orotherwise to past years to determine the extent of thebreach. ..... If it was the intention of the legislature tohold up the prosecution proceedings till the assessment proceedings are completed by way of appeal orotherwise the same would have been provided in Section276CC itself. Therefore, the contention of the learnedsenior counsel for the appellant that no prosecutioncould be initiated till the culmination of assessmentproceedings, especially in a case where the appellanthad not filed the return as per Section 139(1) of the Actor following the notices issued under Section 142 orSection 148 does not arise”. proceedings are completed by way of appeal orotherwise the same would have been provided in Section276CC itself. Therefore, the contention of the learnedsenior counsel for the appellant that no prosecutioncould be initiated till the culmination of assessmentproceedings, especially in a case where the appellanthad not filed the return as per Section 139(1) of the Actor following the notices issued under Section 142 orSection 148 does not arise”. 10. The decision in Sasi Enterprises (supra) squarely applies to the facts of the present case. Therefore, I find that this is not fit casein which the supervisory jurisdiction of this Court under Article 227 ofthe Constitution should be invoked to stay the criminal proceedingsagainst the petitioners in the competent court. 11. Learned counsel for the petitioners has argued at length onthe merits of the complaint filed against them. This is not a petition forquashing the proceedings against the petitioners. Therefore, it is notnecessary to advert to those contentions. 12. In the aforesaid circumstances, this original petition fails andit is dismissed. jsr Sd/-R.NARAYANA PISHARADI, JUDGE APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1TRUE COPY OF THE ASSESSMENT ORDER DATED 29.3.2014.29.3.2014. EXHIBIT P2TRUE COPY OF THE COMPLAINT PENDING BEFORE THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT E.O. AT ERNAKULAM DATED 1.9.1014.THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT E.O. AT ERNAKULAM DATED 1.9.1014. EXHIBIT P3TRUE COPY OF THE MEMORANDUM OF APPEAL ITA NO. 26/R-1/CIT (A ) -11/14015 DATED 26.4.2014 FIELD BEFORE CIT APPEALS.NO. 26/R-1/CIT (A ) -11/14015 DATED 26.4.2014 FIELD BEFORE CIT APPEALS. EXHIBIT P4TRUE COPY OF THE HEARING NOTES BEFORE CIT APPEALS DATED 1.11.2016.APPEALS DATED 1.11.2016. EXHIBIT P5TRUE COPY OF THE DECISION REPORTED IN 265 ITR 562 (SC) CITED K.C. BUILDERS AND ANOTHER VS ACIT.ITR 562 (SC) CITED K.C. BUILDERS AND ANOTHER VS ACIT. EXHIBIT P6TRUE COPY OF THE DECISION REPORTED IN 288 ITR 134 (KER) EDAYANAL CONSTRUCTIONS VS. ITO.ITR 134 (KER) EDAYANAL CONSTRUCTIONS VS. ITO. EXHIBIT P7TRUE COPY OF THE DECISION REPORTED IN 248 ITS 830 (SC0 CITED CIT VS. BHUPAN CHAMPAK LAL DALAL AND ANOTHER VS. CIT.ITS 830 (SC0 CITED CIT VS. BHUPAN CHAMPAK LAL DALAL AND ANOTHER VS. CIT. EXHIBIT P8TRUE COPY OF THE DECISION REPORTED IN 2009 2 KLT 948 (KEER0 CITED K.S. NANDAKUMAR VS. I.T.O.2 KLT 948 (KEER0 CITED K.S. NANDAKUMAR VS. I.T.O. EXHIBIT P9TRUE COPY OF DISCHARGE SUMMARY FROM AMRITHAHOSPITAL, ERNAKULAM DATED 2.9.2019.HOSPITAL, ERNAKULAM DATED 2.9.2019. RESPONDENTS EXHIBITS: NIL TRUE COPY P.A TO JUDGE