IRM TRUST V. PR. COMMISSIONER OF INCOME TAX, AHMEDABAD 5

SCA/15888/2018

AI Insights

The case involves the IRM Trust challenging an order by the Principal Commissioner of Income Tax, Ahmedabad, which granted sanction for prosecution under section 279 of the Income-tax Act, 1961. The prosecution was based on penalty proceedings related to tax assessments and additions made, which were under appeal. The High Court had previously stayed the tribunal's judgment confirming the penalty. The court found that proceeding with the prosecution would be inappropriate while the penalty dispute was unresolved. Additionally, the court quashed the prosecution order against a deceased trustee, Indravadan Ambalal Modi, who had passed away in 2012.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 684382 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 23-10-2018
• Assessment Year: misc
• Laws Referred To: Income-tax Act 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: B S SOPARKAR
• Keywords: Income Tax; Penalty; Prosecution sanction; Trust
• Section: 279; 278B

Judgement Text

"C/SCA/15888/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 15888 of 2018 ========================================================== IRM TRUST Versus PR. COMMISSIONER OF INCOME TAX, AHMEDABAD 5 ========================================================== Appearance: MR B S SOPARKAR(6851) for the PETITIONER(s) No. 1 MRS MAUNA M BHATT(174) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE UMESH TRIVEDI Date : 23/10/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) The petitioner is a trust. The petitioner has challenged an order passed by respondent Principal Commissioner of Income­ tax granting sanction for prosecution in exercise of powers under section 279 of the Income­tax Act 1961 (“the Act” for short). The petitioner has also taken up case of sanction of prosecution being granted against Shri Indravadan Ambalal Modi who expired way back on 26.11.2012. In case of the trust, the assessment proceedings were carried out ultimately resulting into imposition of penalty in relation to additions made. Such penalty order as confirmed by the Tribunal is in appeal before the High Court. Appeal of the trust being Tax appeal N. 488/2018 was admitted on 2.5.2018. Simultaneously in the stay petition, the Court issued rule and judgment of the Tribunal was stayed. Page 1 of 3 C/SCA/15888/2018 ORDER Before this happened, the Principal Commissioner had already granted sanction for prosecution on 21.3.2018 authorising one Shri B.L. Meena, Joint Commissioner to file necessary complaint before the concerned Court. We are informed that Shri B.L. Meena was transferred without filing such complaint, a need therefore arose for the Principal Commissioner to authorise another officer substituting Shri B.L. Meena. On 7.9.2018, he passed the impugned order which is titled as order under section 279(1) read with section 278B of the Act. It also grants sanction for prosecution but authorised one Sonal Singh Assistant Commissioner of Income­tax to file complaint in place of Shri B.L. Meena. This order the petitioner has challenged in the present petition. Counsel for the petitioner stated that though stay order granted by the High Court against the judgment of the Tribunal was brought to the notice of the Principal Commissioner, impugned order came to be passed. Counsel for the department however pointed out that impugned order is nothing but substitution of the person authorised to file the complaint, sanction for prosecution already having been granted earlier. In facts of the case when High Court is in seisin of the penalty disputes and has also specifically passed the order staying judgment of the Tribunal confirming the penalty, we would not permit further prosecution of the trust which is based on the same penalty proceedings. Insofar as trust is concerned, without elaborate reasons, therefore, petition is allowed by suspending impugned order Page 2 of 3 C/SCA/15888/2018 ORDER dated 7.9.2018 till such time that either stay granted in the interim application being Civil Application(OJ) No.1/2018 in Tax Appeal No.488/2018 is vacated or the tax appeal of the petitioner being Tax Appeal No.488/2018 is dismissed. Insofar as deceased trustee is concerned, impugned orders stand quashed. It is declared that against him no prosecution can be stated to be pending. Petition is disposed of. (AKIL KURESHI, J) (UMESH TRIVEDI, J) Raghu Page 3 of 3 "