The Income Tax Officer, V. M/s. Gurukrupa Textiles,

CRLA/275/2003

AI Insights

This case involves an appeal by the Income Tax Department against the acquittal of two accused by the first appellate court. The accused were initially convicted by the Special Judge for Economic Offences, Hyderabad, for offences under the Income Tax Act, 1961. However, the Metropolitan Sessions Judge, Hyderabad, acquitted them, leading to the present appeal. The main legal contention revolved around the relationship between penalty proceedings and prosecution under the Income Tax Act. The court examined whether the dropping of penalty proceedings automatically leads to the quashing of related criminal prosecutions.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 736223 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 16-11-2018
• Assessment Year: misc
• Other Referred Cases: Assistant Commissioner of Income Tax v. Poorna Cine Theatre (P.) Ltd., Income Tax Officer v. S.M. Traders, Commissioner of Income Tax v. Tirumala Agencies, K.C. Builders and another v. Asst. Commissioner of Income Tax
• Laws Referred To: Code of Criminal Procedure, 1973, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: LEARNED COUNSEL
• Assessee Lawyers: SENIOR STANDING COUNSEL
• Keywords: Concealment of income; Criminal Appeal; Income Tax; Penalty; Prosecution
• Section: 271(1)(c); 260A; 276C(1); 277; 278B; 378(4)

Judgement Text

"SMT. JUSTICE T. RAJANI CRIMINAL APPEAL No.275 OF 2003 JUDGMENT: This Criminal Appeal is preferred, under Section 378 (4) of the Code of Criminal Procedure, 1973, against the judgment, dated 13.03.2002, passed in Criminal Appeal No.316 of 2000 by the learned Metropolitan Sessions Judge, Hyderabad, by virtue of which, the first appellate Court acquitted accused No.1 for the offences punishable under Section 276C (1) and 277 read with 278B of the Income Tax Act, 1961 (for short ‘Act, 1961’) and accused No.2 for the offences punishable under Sections 276C (1) and Section 277 of the Act, 1961 by setting aside the judgment of conviction and sentence, dated 01.07.2000, passed in Calendar Case No.23 of 1998 by the learned Special Judge for Economic Offences, Hyderabad. 2. The present appeal is preferred by the Income Tax Department on the grounds that the learned Sessions Judge erred in allowing the first appeal and failed to see the facts of the case that penalty proceedings under Section 271 (1) (c) of the Act, 1961, never came to be dropped, and on the other hand, final penalty order had been passed by the Assessing Officer and the same had been confirmed by the Commissioner of Income Tax (Appeals), and that the lower appellate Court ought to have seen that the Department has filed appeal under Section 260A of the Act, 1961 against the order of the Income Tax Appellate Tribunal, and the same is pending before this Court. 2 TR,J Crl.A. No.275 of 2003 3. Heard the learned Senior Standing Counsel for the appellant and the learned counsel for the respondents, and also the learned Public Prosecutor appearing for the State of Telangana. 4. The first appellate Court by considering the fact that the order of penalty is set aside, which is not disputed by the appellant herein, and by considering the decisions of our High Court in Assistant Commissioner of Income Tax v. Poorna Cine Threatre (P.) Ltd.1; Income Tax Officer v. S.M. Traders2 and the Commissioner of Income Tax v. Tirumala Agencies3, wherein it was held that once penalty proceedings are dropped, prosecution for concealment of Income does not survive, acquitted the accused by setting aside the order of the learned trial Court. 5. The learned Standing Counsel appearing for the appellant fairly submits that against the order setting aside the penalty, the Income Tax Department preferred an appeal, wherein the order under challenge was confirmed by a learned Division Bench this Court. A copy of the Judgment, dated 16.09.2014, in Income Tax Tribunal Appeal No.177 of 2003 is also filed by the learned standing counsel. Apart from that, the decision of the Hon’ble Supreme Court in K.C. Builders and another v. Asst. Commissioner of Income Tax4, is also to the effect that it is a settled law that levy of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground 1. 1996 (220) Income Tax Reports 361 2. Judgment, dated 01.10.1996 in Crl.Appeal No.556 of 1994 3. Judgment, dated 11.12.1996, in Crl.Appeal No.815 of 1994 4. 2004 (265) Income Tax Reports 562 3 TR,J Crl.A. No.275 of 2003 that there is no concealment quashing of prosecution under Section 276C is automatic. 6. In view of the above legal position, this Criminal Appeal fails, and consequently, the same is dismissed. As a sequel, Miscellaneous Applications, if any, pending in the appeal stand closed. _______________________ SMT. T. RAJANI, J November 16, 2018 Mgr "