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Judgment
Amar Saran, J.—Heard learned Counsel for the applicants and Sri Ashok Kumar for the Income Tax Department.
Learned Counsel for the applicants states that applicant No. 1 had died and, therefore, he may be permitted to delete her name from the array of the parties. The prayer is accepted.
A prosecution has been launched against the applicants under Sections 276C in respect of the assessment year (A.Y.) 1979-80 (Annexure-11) and 1980-81 (Annexure-12) and u/s 276CC for the A.Y. 1979-80, (Annexure-13) after a search and seizure operation at the applicants'' premises u/s 132 of the Income Tax Act on 21.5.1980.
The three aforesaid complaints at Annexures-11, 12 and 13 resulted in Criminal Case Nos. 625, 626 and 627 of 1988 which are pending after cognizance before the Special C.J.M., Kanpur. The applicants seek quashing of these three criminal cases by means of the present application u/s 482, Cr. P.C.
It is submitted by the learned Counsel for the applicants that initially the notice which was issued to them, was only u/s 271(1)(a) for delayed filing of returns, and not for concealing particulars of their income for which notices are needed u/s 271(1)(c) of the Income Tax Act. Prosecution u/s 276C can only be initiated for wilfully concealing ones income, i.e., for action taken u/s 271(1)(c) and not when a notice for delayed payment of taxes is issued u/s 276(1)(a). In view of this position the prosecution u/s 276C of the Income Tax Act is unjustified and cannot be sustained and the criminal complaints u/s 276C (Annexures-11 and 12) for the years 1979-80 and 1980-81 are quashed.
For delayed filing of returns, a prosecution u/s 276CC could have been launched against the applicants for the A.Y. 1979-80 (Annexure-13).
Learned Counsel for the applicants has filed a rejoinder-affidavit today in which it is stated that as far back as in 10.4.1996 they were given an opportunity by the Income Tax Officer, Ward 2 (3), Kanpur to pay composition fees of Rs. 2,650, as a case u/s 276CC was pending against the applicants. The order further mentioned that after deposit of the amount, proceedings for compounding the offence could be initiated. In pursuance of that offer, the applicants deposited the amount of rupees 2,650 as demanded, through treasury challan on 25.4.1996. Thereafter power has been conferred u/s 279(2) on the Commissioner to compound the offence.
Learned Counsel for the applicants submits that proceedings were initiated for compounding the offence, in pursuance whereof the order of the Income Tax Officer dated 10.4.1996 was issued to the applicants, who complied with the additional demands for compounding the offence, but there was failure on part of the department in taking further steps for compounding the offence. This was due to no fault of the applicants, as the applicants even sent reminders to the department for initiating compounding proceedings.
Furthermore, learned Counsel for the applicants submits that the prosecution was launched after four years delay for ulterior motives. Even the penalties etc. were waived by the Commissioner, Income Tax Department so far as applicants Smt. Bhagwati Devi Agarwal and Ajai Agarwal are concerned u/s 273A of the I. T. Act, 1961, as no incriminating material was discovered, and no concealment was alleged. According to the decision of the Apex Court in the case of K. C. Builders and Anr. v. Assistant Commissioner of Income Tax JT 2004 (2) SC, when penalty is quashed the prosecution must also be quashed, because the two subsist simultaneously. This position is not controverted by the learned Counsel for the Income Tax department.
In this view of the matter, no useful purpose would be served in allowing this criminal prosecution against the applicant to continue any further. Accordingly criminal proceedings in case Nos. 625, 626 and 627 of 1988, pending in the Court of Special Chief Judicial Magistrate, Kanpur, are hereby quashed.
This application is allowed as above.