CRIMINAL MISC.M NO.6621 OF 2007 :{ 1 }:
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
DATE OF DECISION: SEPTEMBER 29, 2008
M/s Hoshiarpur Roller Flour Mills, Hoshiarpur and others
.....Petitioners
VERSUS
Income Tax Officer, Gurdaspur
....Respondent
CORAM:- HON'BLE MR.JUSTICE RANJIT SINGH
1. Whether Reporters of local papers may be allowed to see the judgement?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
PRESENT: Mr. K. S. Dadwal, Advocate,
for the petitioners.
Ms. Navinder K. Singh,
Senior Central Govt. Standing Counsel.
****
RANJIT SINGH, J.
The petitioners seek quashing of complaint dated
28.3.2006 (Annexure P-6) whereby they have been summoned to
face prosecution for offences under Sections 276C(1) and 277 of the
Income-Tax Act, 1961 (for short, “the Act”). Prayer is for quashing the
subsequent proceedings also.
The petitioners have sought quashing of this complaint
and the subsequent proceedings on the ground that criminal
proceedings can not be continued against them as the adjudicating
CRIMINAL MISC.M NO.6621 OF 2007 :{ 2 }:
proceedings initiated under the Act have been decided on the basis
of an agreed or consented order, which would bar the criminal
proceedings. Submission is that it will not be fair to direct
prosecution of the petitioners. Plea also is that summoning order is
cryptic and reflects non-application of mind and hence, can not be
sustained.
I have perused the pleadings and the stand of the
parties. While issuing notice of motion, this Court has noticed the
contention raised on behalf of the petitioners that Appeal No.146 of
2006 filed by the assessee is already pending before this Court.
Placing reliance on the judgment in the case of Commissioner of
Income Tax Vs. Bhopen Champak Lal Dalal, 2002 (2) RCR (Crl.)
141, it was urged that till the proceedings in appeal are pending, the
criminal proceedings against the petitioners are not to continue. The
proceedings pending before the Court of Chief Judicial Magistrate,
Amritsar, were, thus, stayed.
Reply has been filed. Counsel for the parties heard.
Mr.K.S.Dadwal, counsel appearing for the petitioners, has
first drawn my attention to Annexure P-2, which is an application
given to Income-tax Officer, Ward I, Gurdaspur, by V.B.Aggarwal,
Chartered Accountant, who was representing the petitioners. In the
application, it is averred that the assessee has agreed for levy of
penalty under Section 271(1)(c) of the Act and accordingly, assessee
may be levied this penalty on the basis of discussions, which is
stated to be due to negligence of the employees of the assessee. It
is further mentioned in the application that the penalty levied be
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minimum on the tax payable by the assessee firm and after taking
into consideration the replies filed in the course of assessment
proceedings. It is categorically mentioned that the assessee has
agreed for the levy of tax to buy peace of mind. On the basis of this
admission, which the counsel now wants to term as “agreed” or
“consented order”, penalty amounting to Rs.6,00,080/- was levied.
Once this penalty is levied, the petitioners appear to have
change of mind and filed an appeal against this levy of penalty before
the Commissioner of Income Tax (Appeals). The said appeal was
dismissed on the ground that the assessee had agreed for levy of
penalty and, thus, they can not make any grievance against the said
levy. While rejecting the appeal of the petitioners, reliance is placed
on a judgment passed by this Court in the case of Banta Singh
Kartar Singh Vs. CIT, 135 I.T.R. 239. Still not satisfied, the
petitioners challenged the order without success before the Income-
Tax Appellate Tribunal at Amritsar. Here again, they were non-suited
basically on the ground that they had agreed for the penalty to be
levied on them and hence, can not be heard to complain against the
same. Despite these set backs, the petitioners still sought a
reference by filing an appeal before this Court. The Division Bench of
this Court on 5.2.2007, also declined the prayer of the petitioners on
the ground that no substantial question of law warranting admission
of the instant appeal would arise. Rather it is clearly held that the
statement, which the petitioners made before the Income-tax
authorities, would fall into the definition of “admission” as contained
in Sections 17 and 18 of the Indian Evidence Act.
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It was pendency of this reference before this Court, which
had mainly been referred and relied upon by counsel for the
petitioners at the time of issuance of notice of motion. The appeal
and all remedies that are available to the petitioners have been
declined on the ground that they had admitted/confessed the evasion
of tax and accordingly, penalty amounting to over Rs.6,00,000/- was
levied.
During the course of arguments, the counsel even could
not clarify whether this penalty amount has been deposited or not.
Counsel for the respondent-Department, however, stated that till
21.8.2008, this penalty has even not been deposited. She, however,
is not clear whether this penalty amount is deposited in the meantime
or not. Be that as it may, the primary grievance of the petitioner as
noticed at the time of issuance of notice of motion was the pendency
of the appeal/the reference before this Court. That reference has
been declined by observing that no question of law arise in this case.
I have not been able to appreciate the line of submissions persued
by the counsel for the petitioners. Once the petitioners have failed in
his departmental remedies and have agreed for penalty, they
perhaps are in no position to plead for quashing the criminal
proceedings against them on account of evasion of tax. Is it a
genuine plea on the part of the counsel to read order of penalty to be
consented/agreed order or an attempt to ignore his admission or
confession? The order, which the learned counsel for the petitioners
wishes to read as a “consent” or “agreed” order, certainly can not be
taken as an agreed/consented order. It is a clear case of admission
CRIMINAL MISC.M NO.6621 OF 2007 :{ 5 }:
of the petitioners and the evasion of tax was admitted by them. On
that basis, they were, thus, directed to pay a levy of over
Rs.6,00,000/- as a penalty due to their admission. The submissions
that criminal prosecution can not continue against the petitioners is,
thus, without any basis whatsoever. The petitioners appear to have
cleverly got a notice issued by referring to the pendency of appeal
before this Court and now are making an attempt to catch any straw
to avoid their drowning. Nothing is seen in favour of the petitioners.
They have failed to deposit the penalty imposed on them after
passing of this order, which they now wish to describe as an
“agreed” or a “consented order”. They have cleverly avoided paying
penalty and were also able to have stay of their criminal proceedings
since February 2007. The prayer for quashing of these criminal
proceedings certainly appears misconceived and misplaced.
The second limb of the submission made by learned
counsel for the petitioners that the order summoning the petitioners,
(Annexure P-7), is a cryptic one, in my view, also is not made out.
The counsel has drawn my attention to the case of Batra Finance
Corporation and another Vs. Chief Judicial Magistrate and
others, 1991 ITR 71, in support. In this case, the order summoning
the petitioners was set-aside on the ground that the same is passed
without application of mind to the facts and circumstances of the
case. The order in the case of Batra Finance Corporation (supra)
read as under:-
“Complaint has been presented today. It be registered.
Accused be summoned by bailable warrants in the sum of
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Rs.3,000 for February 5, 1986.”
Obviously, the abovesaid order would clearly show a non-
application of mind. Such is not the situation in the present case. The
Chief Judicial Magistrate in this case has clearly held that this
complaint has been filed in discharge of official duties, thus, the
Magistrate had dispensed with the recording of preliminary evidence
of the complainant as well as of his witnesses. The complainant also
made a request for exemption from personal appearance. This was
also allowed. The Chief Judicial Magistrate has then recorded in the
order that from the perusal of the complaint alongwith accompanying
documents, sufficient grounds to proceed against the accused under
Sections 276(1) and 277 of the Act were made out. This would be
sufficient indication about the application of mind on his part. It may
need a mention here that the case against the petitioners is based on
their admission of the evasion of tax and this fact would alone be
enough for issuing process. The impugned order is otherwise not
cryptic, as can be said about the order, which was under challenge in
the case of Batra Finance Corporation (supra). There is, thus, no
case made out to interfere in the impugned order.
The present revision petition under Section 482 Cr.P.C. is
totally without any merit and the same is dismissed.
September 29,2008 ( RANJIT SINGH ) khurmi JUDGE