JUDGMENT
Prasun Kumar Deb, J.
1. The petition under Section 482 of the Code of Criminal Procedure (“the Code”) has been filed for quashing the entire criminal proceedings in Complaint Case No. 2 of 1992 under Sections 276C and 277 of the Income-tax Act, 1961 (“the Act”), including the order of cognizance dated February 6, 1992, passed by the Judicial Magistrate-cum-Special Judge (Economic Offences), Dhanbad.
2. The contents of the complaint petition run as follows : On March 30, 1990, the petitioner filed his return for the assessment year 1989-90 showing total income of Rs. 19,470. The assessment for the assessment year 1989-90 was completed under Section 143(3) of the Act on a total income of Rs. 1,61,980 whereby an addition of Rs. 1,42,510 was made for undisclosed purchase, sale and profit detected by the Assessing Officer and also the undisclosed capital invested for purchasing cycle and cycle parts and also undisclosed and unexplained investment made in construction of a house. On the basis of such assessment, additional income of Rs. 18,380 of suppressed sale and undisclosed capital investment of Rs. 60,000 were added to the income of the accused petitioner. Making a detailed assessment after taking into consideration the valuer’s report, detection of damages, repairs, etc., the above assessment was made of the income. Thus, on different heads, the Assessing Officer found that there was suppression of income for the purposes of evading tax and as such tax amount had been imposed. As there was charge of evading of tax and on making verification of false statement, the prosecution was lodged by the above-mentioned complaint petition after taking sanction from the Commissioner of Income-tax as required under Section 279 of the Act. The petitioner against the above assessment preferred appeal before the Commissioner of Income-tax (Appeals), Ranchi, in Income-tax Appeal No. 135/RAN of 1991-92. The appellate court found that the quantum of undisclosed purchase found by the Assessing Officer was not correct. The appellate court also found that the estimated addition of Rs. 60,000 on account of undisclosed capital invested by the appellant was not correct. The appellate court came to the conclusion that the Assessing Officer has not taken all the relevant facts for consideration before accepting the report of the Valuation Officer in toto. The appellate court disposed of the appeal, vide order dated July 15, 1992, giving certain reliefs and restored the file to the Assessing Officer for a fresh consideration in the light of the evidence submitted by the appellant-petitioner. After the decision of the appellate court, a fresh assessment was
made by the Income-tax Officer and this time the total income of the appellant-petitioner was assessed at Rs. 1,30,555. Being aggrieved of the aforesaid assessment dated December 4, 1992, the petitioner preferred an appeal before the Commissioner of Income-tax (Appeals), Ranchi, being Income-tax Appeal No. 361/RAN/TH of 1992-93. The appellate court in terms of order dated March 18, 1993, allowed the appeal in part and deleted the addition of Rs. 38,122 only on account of undisclosed investment. The petitioner against the appellate order preferred appeal before the Income-tax Appellate Tribunal, Patna Bench, Patna, Jamshedpur Camp, being Income-tax Appeal No. 847/PAT of 1992. The Income-tax Officer also preferred an appeal, before the Income-tax Appellate Tribunal, Patna Bench, Patna, Jamshedpur Camp, being Income-tax Appeal No. 708/Pat of 1993. The Appellate Tribunal remanded the matter to the Commissioner of Income-tax (Appeals) for fresh decision according to law after giving opportunity of hearing to both sides. The Appellate Tribunal allowed the appeal of the petitioner in part and dismissed the Department’s appeal, vide order dated May 29, 1995. The Commissioner of Income-tax (Appeals) on receipt of the remand order from the Appellate Tribunal freshly examined the matter and decided that the addition made by the Assessing Officer on account of income from the house property at Rs. 36,188 in the hands of the assessee was correct. Therefore, he dismissed the appeal filed by the assessee and against that order, no appeal has been preferred by the petitioner and, as such, the decision of the Commissioner of Income-tax (Appeals) became final. Thus, the Assessing Officer’s assessment to the extent of the following grounds were found upheld by the Appellate Tribunal :
(a) Rs. 676 on account of estimated gross profit was confirmed.
(b) Rs. 18,380 on account of undisclosed sale of goods worth Rs. 4,59,422 was restricted to Rs. 16,950.
(c) Rs. 60,000 on account of undisclosed capital employed for making purchases not disclosed by the assessee was restricted to Rs. 30,000.
(d) Rs. 25,332 on account of income from house property was remitted back which was confirmed to the extent of Rs. 36,188.
(e) Rs. 38,122 on account of undisclosed investment over construction of market complex was deleted.
3. Thus, from the facts and circumstances it remains that the assessment which was made by the Assessing Officer has not been fully confirmed by the Income-tax Appellate Tribunal but some of which had been modified and some has been deleted but the return filed by the petitioner was found to be not correct and as such the fact remains that the income was shown low for the purpose of evading of tax even after the appellate order also.
4. Mr. Jai Prakash, counsel appearing for and on behalf of the petitioner, submitted that the complaint petition which was filed on the original assessment order of the Income-tax Officer after taking sanction from the Commissioner does not remain as it is after the appellate order and as such the prosecution is not maintainable as the sanction was bad and when discrepancy remained regarding the amounts of undisclosed investment against the petitioner. In support of his contention, he has referred to a decision of the single Bench of this court in Prem Kumar Keshri v. State of Bihar [1996] 2 PLJR 766.
5. On the other hand, Mr. K. K. Jhunjhunwala, counsel appearing for and on behalf of the Income-tax Department, has submitted that the assessment order on the basis of which complaint was filed remained as it is even after the appeal order also because evading of tax as complained of remained intact in the appeal order only with a modification of the amount on disclosure. In that view of the matter, according to Mr. Jhunjhunwala, there is no scope to challenge the criminal prosecution against this petitioner. He has referred to a judgment of the Division Bench of this court in Indian Builders v. CIT [1995] 211 ITR 997.
6. The first submission of Mr. Jai Prakash was that sanction was taken from the Commissioner of Income-tax for filing of the complaint petition under Sections 276C and 277 of the Act on the basis of the initial assessment order and the Commissioner had applied his mind on the amounts of assessment finding the same to be undisclosed for the purpose of evading of tax and afterwards when those amounts had been lessened then no fresh sanction is taken on the basis of the appeal order, the prosecution on the basis of the first sanction cannot be maintainable. His contention is that application of mind was on the basis of the amounts alleged to be undisclosed by the assessee but when the appellate order has restricted those amounts then there is every possibility that the sanctioning authority might not give sanction on the basis of the appellate order on the assessment, I do not find any force in such submission.
7. Sanction has been given after application of mind regarding evading of tax. The question of amount undisclosed might not be of much relevance. The broad consideration was regarding the suppression of real income and filing of false return/statement by the assessee. That suppression of real income remained even after the appellate order also. Only because some amounts have been lessened by the appellate court, I do not think that fresh sanction would be necessary and fresh complaint would be filed after the appellate order has been passed. Let us take an example that in a given case against a police officer, if there is allegation of causing grievous hurt to a person in the course of discharge of duties and sanction has been granted as per Section 197 of the Code
but afterwards on medical report it could be found that the offence cannot be under Section 326 of the Indian Penal Code but at best it can be under Section 324 of the Indian Penal Code, then in that case, whether fresh sanction would be necessary, definitely not. Sanction is given when a Government servant committed an offence under Section 197 of the Code and not on the particular feature of the offence. Sanction is not dependent on the rigour or gravity of the offence. In that view of the matter, the fact remains that the assessee had suppressed his real income and verification of the return and the same position remains even after the appellate order. Concealment of real income and false verification of the return is the subject-matter of sanction on the basis of the initial assessment order and the appellate court only reduced the amount of concealment. In that circumstance, no fresh sanction is necessary on fresh application of mind. Thus the submission of Mr. Jai Prakash has no force.
8. In this context, the Division Bench judgment may be referred to. In that case, on the basis of the assessment order, a complaint was filed under Sections 276C and 277 of the Act but the appellate court had set aside the assessment order regarding estimated value but in the appellate judgment, there was an observation to the effect that the various returns filed by the assessee and the discrepancy therein were not properly explained and that the books of account were not reliable and had rightly been rejected by the Assessing Officer.
9. The prosecution was challenged when the appellate court had set aside the assessment of the estimated value to the effect that the prosecution was not maintainable but the Division Bench in Indian Builders [1995] 211 ITR 997 (Patna), held that in view of the observations made by the appellate court, the fact remains that the assessee had suppressed his real income and the various returns filed by him were discrepant and, as such, even if the estimated value made by the Assessing Officer were set aside, yet the supression was there as per the appellate court’s order also and, hence, the prosecution was held to be maintainable. In that context, the judgment of the Supreme Court in Uttam Chand v. ITO [1982] 133 ITR 909 was relied on. Thus, on the Supreme Court’s decision and that of the Division Bench judgment of this court in Indian Builders [1995] 211 ITR 997, I am of the clear view that lessening of the quantum of assessment by the appellate court in the assessment order does in no way take away the broad principle of prosecution against the assessee who had admittedly suppressed his accounts for the purpose of evading of tax. The Single Bench case, as referred to by Mr. Jai Prakash, does not appear to have considered the question in its proper perspective, as per the observations made by the Supreme Court in the various cases including that of Uttam Chand [1982] 133 ITR 909. The Division Bench
judgment of this court has also not been placed before the learned single judge and hence the approach was not in the proper perspective, rather much reliance was placed on the contents of the complaint regarding the ingredients of the offence. The ingredients of the offence under Section 276C of the Act definitely attract the present circumstances of the case as per Explanation (iv) to that Section. Section 277 of the Act was not at all considered by the learned single judge and, in that view of the matter, I must hold that the judgment of the single judge may be considered as per incuriam as not being considered in its proper perspective. In that case, as regards valuation invested for the purpose of construction of house was being annulled by the appellate court but there was other concealment also but those had not been discussed or considered. When the assessment had been made disclosing concealment of income and such assessment has only been modified to the extent of quantum and deleting some, then in no way it takes away the authority of filing complaint under the penal provisions of the Act.
10. On a consideration of all these pros and cons and the legal provisions, I find and hold that this petition has got no force. At the time of framing of charge or explaining the offences, whatever might be, the Special Judge (Economic Offences), Dhanbad, shall definitely take into consideration the appellate order as subsequent events. For the reasons aforesaid, this application is dismissed.