JUDGMENT
Sukhdev Singh Kang, J.
1. Petitioners Nos. 1 to 3 are partners of a firm, M/s. Om Industries, Charkhi Dadri (petitioner No. 4), which is engaged in the business of commission agency and manufacture of gram dal, barley, ghat, etc. Petitioner No. 1, Devi Dayal, filed a return of income of the partnership firm for the assessment year 1971-72 on April 6, 1972, showing an income of Rs. 5,480 which was later on revised to Rs. 7,000. During the assessment proceedings, the Income-tax Officer, Bhiwani (respondent No. 3), took into possession certain documents from the Station House Officer, Dadri, and alleged that the same belonged to the petitioners. He issued notices to the petitioners under Section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), and sought clarification from them. According to the Income-tax Officer, the petitioners had purchased 1,376 bags of gram dal which were not accounted for in the books of petitioner No. 4. The Income-tax Officer ultimately completed the assessment under Section 143(3) on February 22, 1973, and assessed the income of respondent No. 4 at Rs. 55,022. On appeal, the said assessment order was set aside and the case was remanded for fresh decision after proper investigation. Respondent No. 3 sent the proposed assessment for approval to the Inspecting Assistant Commissioner of Income-tax, Rohtak, and the said proposal was approved and, consequently, the income of respondent No. 4 was assessed at Rs. 1,44,190. The Income-tax Officer (respondent No. 3) found that the petitioners had done business without showing it in the books of account to the tune of 1,376 bags and assessed the initial investment at Rs. 1,37,600 and added Rs. 36,956 on account of profits thereon. Respondent No. 3 consequently found that the return which was signed and verified by Devi Dayal, petitioner No. 1, did not disclose the true income and petitioner No. 1 knew it to be false. The petitioner filed an appeal before the Commissioner of Income-tax (Appeals), Chandigarh, and the learned Commissioner modified the order of the Income-tax Officer and came to the conclusion that an addition of Rs. 41,000 was justified in view of the
unexplained investments and profits of Rs. 1,37,600 and Rs. 36,952, respectively, as found by the Income-tax Officer, Thereafter, penalty proceedings under Section 271(1)(c) of the Act were initiated against the petitioners and a penalty of Rs. 41,000 was imposed for concealment of income. The appeal against the imposition of this penalty was dismissed by the Commissioner of Income-tax (Appeals), Chandigarh. The petitioner took an appeal against the imposition of penalty to the Income-tax Appellate Tribunal at Delhi and the same is pending.
2. A complaint dated January 23, 1980, has been filed by the Income-tax Officer against the petitioners under Section 277 of the Act read with Sections 191/193/34 of the Indian Penal Code on the allegations that in the assessment year 1971-72, the petitioner had intentionally, dishonestly and fraudulently made false entries in the books of account with a deliberate and mala fide intention of concealing their income in order to cause wrongful loss to the Department and had signed and verified the return of income which they knew to be false and not true. Aggrieved, the petitioners have filed the present writ petition challenging the constitutional validity of Sections 277, 278 and 279 of the Act and the validity of the criminal proceedings pending against them in the Court of the Chief Judicial Magistrate, Bhiwani.
3. It is apparent from the above narration of facts that even the Commissioner of Income-tax (Appeals) has given a finding that an income of Rs. 41,000 had accrued to the petitioner-firm (respondent No. 4) on account of unexplained investments and profits. Simply because the Commissioner of Income-tax (Appeals) has deleted the addition of Rs. 1,33,552 from the addition made by the Income-tax Officer, it cannot be said that the criminal complaint against the petitioners cannot proceed in relation to the addition of Rs. 41,000 also. What is the effect of the deletion made by the Commissioner of Income-tax (Appeals) will be a matter to be gone into by the trial court. Mr. G. C. Garg, learned counsel for the petitioners, submitted that as an appeal against the imposition of penalty is pending before the Income-tax Appellate Tribunal, Delhi, the matter has not been decided finally.
4. On the basis of these contentions, it cannot be plausibly argued that criminal proceedings pending against the petitioners, cannot continue. However, if the Commissioner of Income-tax (Appeals) had deleted all the additions made by the Income-tax Officer, the position may have been different. Mere filing of an appeal by the petitioners against the imposition of penalty under Section 271(1)(c) of the Act will not be a bar to the continuance of the proceedings in a criminal court. If and when any order favourable to the petitioners has been passed or may be passed by the
departmental authorities that surely can be produced by them before the learned trial Magistrate and there is no doubt that due weight and consideration shall be given to that order.
5. No argument has been raised to assail the constitutional validity of Section 277 of the Act and rightly so, because the constitutional validity of Section 52, a similar provision in the Indian Income-tax Act, 1922, has been upheld by the Supreme Court in T.S. Baliah v. T. S. Rangachari, ITO [1969] 72 ITR 787. Those very reasons apply to uphold the constitutional validity of the provisions of Sections 278 and 279 of the Act.
6. In this view of the matter, there is no merit in this writ petition and the same is dismissed. However, anything said or observed in this judgment may not be taken to be an expression of any opinion on the merits of the case pending before the trial court and that court shall decide the matter on the basis of the evidence produced before it. No costs.
