Girdhari Lal Goenka @ Shri Girdharilal Goenka and Raj Goenka V. Union of India through Assistant Commissioner of Tax namely Shri Biswanath Maji, Income Tax Department

W.P.(Cr.)/276/2023

AI Insights

The case involves Girdhari Lal Goenka and his wife, Raj Goenka, who were directors of M/s Golden Goenka Commerce Pvt. Ltd., accused of willfully attempting to evade tax under the Income Tax Act, 1961. The Income Tax Department had raised a demand of Rs. 3,44,78,550/- against the company, which was not paid despite several demands. The department initiated criminal proceedings after the company failed to comply with tax demands and show cause notices. However, the Income Tax Appellate Tribunal later set aside the tax demand, leading to the petitioners seeking quashing of the criminal proceedings. The court, referencing Supreme Court judgments, concluded that the criminal proceedings were unwarranted following the Tribunal's decision, which found no tax evasion.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 798174 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 16-12-2024
• Assessment Year: misc
• Other Referred Cases: Radheshyam Kejriwal versus State of West Bengal and Another, Ashoo Surendranath Tewari versus Deputy Superintendent of Police, EOW, CBI and Another
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KUMAR VAIBHAV; ANURAG VIJAY; SRIJAN
• Assessee Lawyers: RISHAV KUMAR
• Keywords: Assessment Order; Criminal proceeding; Income tax evasion; Prosecution sanction; Quashing
• Section: 143(3); 68; 127; 279(1); 276C(2); 2(7); 278B

Judgement Text

" --1-- W.P. (Cr.) No. 276 of 2023 IN THE HIGH COURT OF JHARKHAND, RANCHI W.P. (Cr.) No. 276 of 2023 ---- 1. Girdhari Lal Goenka @ Shri Girdharilal Goenka, aged about 59 years, son of Late Jivan Ram Goenka, resident of 2B/1, Satyam Tower, R-3, Alipore Road, 2nd Floor, PO – Alipore, PS - Alipore, District – Kolkata – 700027 (West Bengal) 2. Raj Goenka, aged about 53 years, wife of Girdhari Lal Goenka, resident of 2B/1, Satyam Tower, R-3, Alipore Road, 2nd Floor, PO – Alipore, PS - Alipore, District – Kolkata – 700027 (West Bengal) .... Petitioners -- Versus -- Union of India through Assistant Commissioner of Tax namely Shri Biswanath Maji, Income Tax Department, at Circle – 2(1), 47, C.H. Area, Bistupur, PO and PS – Bistupur, Town Jamshedpur, District – East Singhbhum, 831001 .... Respondent ---- CORAM: HON’BLE MR. JUSTICE SANJAY KUMAR DWIVEDI --- For the Petitioners :- Mr. Rishav Kumar, Advocate For the Respondent :- Mr. Kumar Vaibhav, Advocate :- Mr. Anurag Vijay, Advocate :- Mr. Srijan, Advocate ---- 06/16.12.2024 Heard learned counsel appearing for the petitioners and learned counsel appearing for the Income Tax Department. 2. The prayer in the writ petition is made for quashing of the entire criminal proceeding including the order taking cognizance dated 06.07.2019 in connection with Complaint Case No.563 of 2018 pending in the Court of learned Special Judge, Economic Offence, Jamshedpur. 3. The complaint case was filed alleging therein that the complainant being the Assistant Commissioner of Income Tax, Circle-2(1), Jamshedpur, is a Public Servant and the complaint has been filed by him in his official capacity at the instance of the Principal Commissioner of Income Tax, Jamshedpur. The accused company M/s Golden Goenka Commerce Private --2-- W.P. (Cr.) No. 276 of 2023 Limited (formerly known as Rajgaj Traders Private Limited) (PAN AABCR 7503F) is an assesse within the meaning of Section 2(7) of the Income Tax Act. The complainant has alleged that the accused company filed its Return of Income Tax on 27.09.2012 disclosing total income at Rs. 68,840/- (Rupees Sixty Eight Thousand Eight Hundred Forty only) for the Financial Year 2011-12 relevant to the Assessment Year 2012-13, the Accused Company has been assessed by the Income Tax Officer, Ward-3(3), P-7, Chowringhee Square, Kolkata-700 069. The assessment in this case was completed under Section 143(3) of the Income Tax Act, 1961 on 11.03.2015, determining the total income at Rs. 7,98,52,120/- (Rupees Seven Crore Ninety Eight Lakhs Fifty Two Thousand One Hundred Twenty) only, and demand of Rs. 3,56,79,580/- (Rupees Three Crore Fifty Six Lakh Seventy Nine Thousand Five Hundred Eighty) only, was raised by the ITO, who had assessed the total income of the assesse. In the case of assesse, additions were made under head share capital and premium under Section 68 of the Income Tax Act, 1961 and accordingly, the demand was raised. Subsequently, the jurisdiction of the case was transferred from ITO, Ward-3(3), Kolkata to Deputy Commissioner of Income Tax, Circle-2, at Jamshedpur vide jurisdiction order passed by the Learned Principal Commissioner of Income Tax, Kolkata under Section 127 of the Income Tax Act, 1961 and the same jurisdiction order was communicated under Memo No. Principal Income Tax Commissioner Call/MISC/2014- 15/11514-11522 dated 12.03.2015. The complainant has further alleged that in spite of repeated demands, the aforesaid company did not pay the demanded amount of Rs. 3,44,78,550/- (Rupees Three Crore Forty Four Lakh Seventy Eight Thousand Five Hundred Fifty) only. According to the complainant, at the relevant time, both the --3-- W.P. (Cr.) No. 276 of 2023 petitioners were the Directors of the Accused Company and they were responsible for the day-to-day affairs of the company. A show cause notice dated 09.10.2018 in respect of the company as well as the Directors was issued by the Assistant Commissioner of the Income Tax, Circle-2 (1), Jamshedpur, as to why prosecution under Section 276C (2) of the Income Tax Act, 1961 should not be initiated against them for willful attempt to evade tax, but, the accused persons made no compliance to the aforesaid show cause notice dated 09.10.2018. The Principal Commissioner of Income Tax, Jamshedpur, thereafter issued another show cause letter as to why the sanction under Section 279(1) of Income Tax Act, 1961, should not be accorded for launching prosecution against them under Section 276C(2) read with Section 278B of the Income Tax Act, 1961. In pursuance to the aforesaid show cause notice, Sri Pankaj Kant Tondon, F.C.A. and Sri Anadi Ram Mishra, Learned Advocate appeared and filed written submissions before the Learned Principal Commissioner of Income Tax, Jamshedpur, and argued that the appeal has been preferred against the aforesaid assessment year passed under Section 143(3) of the Income Tax Act, 1961 by the Learned Income Tax Officer, Ward No. 3(3), Kolkata, and they also informed that the date of hearing has not been fixed in the said appeal. During the course of hearing, the aforesaid authorized representative of accused company admitted to pay 20% of the demanded amount before 31.03.2019 in 04 equal monthly installments of Rs.13.5 Lakh each and they agreed to produce challan to the Income Tax Office by 15th March, 2019, but, on perusal of the record available on system, it has been found that the accused company has failed to pay the amount as per their commitment. The further case of the complainant is that again a show cause letter was issued by the Principal Commissioner of Income Tax to the persons and --4-- W.P. (Cr.) No. 276 of 2023 the same was duly served upon them and the case was fixed for hearing on 05.02.2019, but, the accused persons did not appear on the date of hearing. The complainant accordingly concluded that vide facts and circumstances stated above, it is clear and established that the accused company M/s Golden Goenka Commerce Private Limited and its aforesaid Directors had willfully and deliberately attempted to evade the tax liability. Thus, the accused made themselves liable to be prosecuted under Section 276C (2) read with Section 278B of Income Tax Act, 1961 (\"I.T. Act\"). The complainant has alleged that the sanction order under Section 279(1) of Income Tax Act, 1961 for launching of prosecution under Section 276C (2) read with Section 278B of I.T. Act, 1961 against the accused persons has been accorded by the Learned Principal Commissioner of Income Tax, Jamshedpur, on 25.02.2019, and accordingly, the complainant has filed the instant complaint petition in the Court on 28.02.2019, alleging offences punishable under Section 276C(2) read with Section 278B of I.T. Act, 1961 against the accused persons. 4. Learned counsel appearing for the petitioners submits that the demand order of Rs.3,44,78,550/- the petitioners have preferred an appeal being Appeal Ref. No. CIT(A) Kolkata-1/17995/2015-16 in respect of Assessment Year 2012-13 and the petitioners have deposited 20% of the demand amount in installments being paid as Rs.6,00,000/- on 05.08.2018, Rs.6,00,000/- on 05.02.2018, Rs.6,00,000/- on 26.11.2018, Rs.6,00,000/- on 21.01.2019, Rs.12,00,000/- on 14.03.2019 and Rs.18,00,000/- on 16.01.2023 by way of Annexure-4 and 4/1 respectively. He submits that against the assessment order dated 11.03.2015 M/s. Golden Goenka Commerce Pvt. Ltd. the petitioners had preferred an appeal before the appellate authority i.e. Office of Commissioner of Income Tax, Appeal --5-- W.P. (Cr.) No. 276 of 2023 CIT(A), Lucknow-3. And the appellate authority vide order dated 29.11.2023 dismissed the said appeal and against the said order dated 29.11.2023 M/s. Golden Goenka Commerce Pvt. Ltd. preferred an appeal before the learned Income Tax Appellate Tribunal, Kolkata which was registered as I.T.A No.84/Kol/2024. He submits that the learned Appellate Tribunal vide order dated 03.05.2024 allowed the appeal preferred by the assessee on the ground that the assessment officer did not consider all the evidences as regard the identity and creditworthiness of the investors and genuineness of the transactions filed by the assessee contained in Annexure-7 & 8 of the supplementary affidavit. He submits that the assessment order was initiated against the Director of M/s Golden Goenka Commerce Pvt. Ltd. on the basis of Assessment Order dated 11.03.2015 passed under Section 143(3) of Income Tax Act. He submits in view of the allowing of the appeal by the Tribunal there is no demand existing today and in view of that the entire criminal proceeding is malicious and in view of that this entire criminal proceeding may kindly be quashed. He submits that the case of the petitioner is covered in light of the judgment of Hon’ble the Supreme Court in the case of Radheshyam Kejriwal versus State of West Bengal and Another reported in (2011) 3 SCC 581 in paragraph No.38 and 39 which has been held as under:- 38. The ratio which can be culled out from these decisions can broadly be stated as follows :- (i) Adjudication proceeding and criminal prosecution can be launched simultaneously; (ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution; (iii) Adjudication proceeding and criminal proceeding are independent in nature to each other; --6-- W.P. (Cr.) No. 276 of 2023 (iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution; (v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20 (2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceeding is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue underlying principle being the higher standard of proof in criminal cases. 39. In our opinion, therefore, the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court. 5. He submits that the above judgments were further reiterated by the Supreme Court in the case of Ashoo Surendranath Tewari versus Deputy Superintendent of Police, EOW, CBI and Another reported in (2020) 9 SCC 636 in paragraph No.12 and 13 which has been held as under:- --7-- W.P. (Cr.) No. 276 of 2023 12. After referring to various judgments, this Court then culled out the ratio of those decisions in paragraph 38 as follows:- “38. The ratio which can be culled out from these decisions can broadly be stated as follows: (i) Adjudication proceedings and criminal prosecution can be launched simultaneously; (ii) Decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) Adjudication proceedings and criminal proceedings are independent in nature to each other; (iv) The finding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution; (v) Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases.” 13. It finally concluded: (Radheshyam Kejriwal case, SCC P. 598 para 39) “39. In our opinion, therefore, the yardstick would be to judge as to whether the allegation in the adjudication proceedings as well as the proceeding for prosecution is identical and the exoneration of the person --8-- W.P. (Cr.) No. 276 of 2023 concerned in the adjudication proceedings is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the court.” 6. Relying on the above judgments, he submits that in view of the issue laid down by Hon’ble the Supreme Court the entire criminal proceeding may kindly be quashed. 7. Learned counsel appearing for the respondent I.T. Department submits that firstly the demand was made on 11.03.2015 and the first payment was made on 05.02.2018 that is much after the demand. He submits that initially the intention was there to evade the tax, however, he is not disputing the fact that the Tribunal has quashed the assessment order. 8. In view of the above submission of learned counsel appearing for the parties, it transpires that in the year 2012-13 demand of Rs.3,44,78,550/- was made against the petitioners and some of the amount has been paid in installments which is noted in the argument of learned counsel appearing for the petitioners and the appeal preferred by the petitioner by order dated 29.11.2023 has been dismissed and against that the petitioners had preferred an appeal before the learned Income Tax Appellate Tribunal, Kolkata which was registered as I.T.A. No.84/Kol/2024 and the Tribunal has set aside in view of the setting aside the demand by the Tribunal there is no existing liability upon the petitioners and it has not been pointed out that the said Tribunal order has been further reversed by any Higher Court and that order has attained the finality. 9. In view of the above it transpires that the case of the petitioners is fully covered in light of the two judgments relied by learned counsel appearing for the petitioners in the case of Radheshyam Kejriwal versus --9-- W.P. (Cr.) No. 276 of 2023 State of West Bengal and Another and Ashoo Surendranath Tewari versus Deputy Superintendent of Police, EOW, CBI and Another (supra). 10. Further applying the aforesaid judgments in light of the facts of the present case it is clear that in view of the detailed order of the tribunal dated 29.11.2023 passed by learned Income Tax Appellate Tribunal, Kolkata the chances of conviction in a criminal trial involving in the same facts appeared to be bleak, as such the entire criminal proceeding including the order taking cognizance dated 06.07.2019 in connection with Complaint Case No.563 of 2018 pending in the Court of learned Special Judge, Economic Offence, Jamshedpur is hereby quashed. 11. This petition is allowed and disposed of. 12. Pending petition, if any, is also disposed of. (Sanjay Kumar Dwivedi, J.) Sangam/ A.F.R. "