M.S. Raju V. Deputy Commissioner of Income Tax and another

CRLP/3598/2008

AI Insights

M.S. Raju filed a petition under Section 482 of the Cr.P.C to quash the proceedings in C.C.No.70 of 2007, which were pending before the Special Judge for Economic Offences, alleging that the criminal proceedings should be stayed until the appeal regarding the penalty under Section 158BFA(2) of the Income Tax Act, 1961 was resolved. The penalty was initially imposed for tax evasion through bogus expenditures and undisclosed income, which was partly reduced by the Commissioner of Income Tax (Appeals)-I, Hyderabad. Both parties had pending appeals before the Income Tax Appellate Tribunal, which had remanded the matter back to the Commissioner for fresh disposal. The court found that the criminal proceedings should continue, as the petitioner could still appeal after the Commissioner’s decision.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 796913 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 31-03-2011
• Assessment Year: misc
• Other Referred Cases: M.A. Quddus v. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961, Cr.P.C
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Appeal; Bogus Expenditure; Commissioner of Income Tax (Appeals); Income tax appellate tribunal; Penalty; Quashing of proceedings; Tax Evasion
• Section: 132; 158BC; 158BFA(2); 482; 276C; 277

Judgement Text

"HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL PETITION NO.3598 OF 2008 Dated 31-03-2011 Between: M.S. Raju ……..Petitioner And: Deputy Commissioner of Income Tax and another ………Respondents HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL PETITION NO.3598 OF 2008 ORDER: This petition is filed under Section 482 of Cr.P.C for quashing the proceedings in C.C.No.70 of 2007 pending on the file of the Special Judge for Economic Offences, Nampally Criminal Courts, Hyderabad. The petitioner herein was prosecuted for the offences under Sections 276C and 277 of the Income Tax Act, 1961 (for short, the Act) alleging that the accused has attempted to evade the tax by claiming bogus expenditure on account of battas, set expenses, costume and make-up expenses and recoding expenses, difference in royalty received from National Litho Printers, amount claimed to be incurred through Sri Sadiq and advance given to Sri Ranga Rao and these unaccounted amounts would not have been disclosed in the normal course. Therefore, penalty under Section 158BFA(2) of Rs.16,95,006/- was levied on 22.6.2006. The accused challenged the penalty order before the Commissioner of Income Tax (Appeals)-I, Hyderabad, who vide his order in ITA No.0396/CC-4, Hyd/CIT(A)-I/06-07, dated 25.1.2007 has partly allowed the appeal. Consequently, penalty levied under Section 158BFA(2) was reduced. The Department has however preferred second appeal before the ITAT against the said appellate order passed by the CIT(A)-I, Hyderabad and the same is pending for disposal before ITAT. Thus, the accused has deliberately and willfully attempted to evade the tax which would not have come to light but for the search and seizure operation and as such the accused has committed the offence punishable under Section 276C of the Act and the accused has also made a false verification in the return of income filed on 29.10.2003. The learned counsel for the petitioner has pleaded that aggrieved by the said penalty order passed by the 1st respondent, the petitioner has preferred an appeal before the Commissioner of Income Tax (Appeals)-I, Hyderabad and the same was partly allowed and deleted the penalty to an extent of Rs.9,19,617/-. The petitioner has filed further appeal to the Income Tax Appellate Tribunal, Hyderabad in respect of the penalty upheld by the learned Commissioner (Appeals). The Revenue also filed appeal before the Income Tax Appellate Tribunal, Hyderabad in respect of the relief granted by the learned Commissioner (Appeals). Both the appeals are disposed of by the Income Tax Appellate Tribunal by order dated 03.11.2008 remanding the matter to the Commissioner of Income Tax (Appeals)-I, Hyderabad for fresh disposal after giving opportunity to both the parties. He further pleaded that since the matter is pending before the Commissioner of Income Tax (Appeals)-I, Hyderabad, the prosecution against the same is not maintainable and hence the proceedings before the Special Judge for Economic Offences, Hyderabad are liable to be quashed. He also pleaded that even otherwise also, the petitioners are entitled for stay of the proceedings pending before the Special Judge for Economic Offences, Hyderabad till the disposal of the appeal pending before the Commissioner of Income Tax (Appeals)-I, Hyderabad. The learned counsel for the respondent No.1, on the other hand, has pleaded that there is no necessity for quashing of the proceedings or stay of the proceedings pending before the Special Judge for Economic Offences, Hyderabad as the petitioner want to drag on the matter by one way or the other and of the order by the Commissioner of Income Tax (Appeal), is again liable to be questioned before the Income Tax Appellate Tribunal and the petitioner has not taken any steps for getting the appeal disposed of. The allegations made against the petitions are that the search and seizure action under Section 132 of the Act was conducted on 21.2.2003 at the residence and office premises of the assessee and the search proceedings were finally concluded on 21.4.2003. During the course of search, it was detected that the accused had been debiting bogus expenditures on account of set expenses, battas, earning undisclosed income on account of royalty, making payments to persons which is not accounted. A notice under Section 158BC of the Act calling for return of income for the block period was issued to the assessee on 5.9.2003. The accused has filed the return for the block period admitting undisclosed income of Rs.14,59,710/-. After considering the seized materials and explanation filed by the accused, the block assessment under Section 158BC was completed on 21.4.2005 on total undisclosed income of Rs.41,50,195/- and the order passed under Section 158BC of the Act and penalty proceedings were initiated under Section 158BC of the Act and the petitioner has preferred an appeal before the Commissioner, Income Tax Appeals-I, Hyderabad challenging the assessment order and the same was dismissed. The department has imposed the penalty of Rs.16,95,006/- on 22.6.2006 and the same was challenged before the Commissioner of Appeals-I, Hyderabad vide order in ITA No.0396/CC- 4, Hyd/CIT(A)-I/06-07 dated 25.1.2007 and they have partly allowed and consequently penalty was reduced. However, the department has preferred an appeal before the Income Appellate Tribunal and the same is pending for disposal. Now the learned counsel for the petitioner has pleaded that the Income Tax Appellate Tribunal has disposed of the appeal pending before it and remanded the matter back to the Commission, Income Tax (Appeals)-I, Hyderabad again for fresh disposal by giving opportunity to the assessee and in view of the pendency of the appeal, the further proceedings in the C.C.No.70 of 2007 before the Special Judge for Economic Offences, Hyderabad are not maintainable. The present petition was filed by the petitioner on 2.5.06.1998 and obtained interim stay and the appeal was said to have been disposed of on 03.11.2008 but they have not taken any steps so far for getting the appeal disposed of and it appears only under the guise of pendency of the appeal, they are trying to get the criminal proceedings quashed. The learned counsel for the petitioner has further pleaded that they have filed letters before the Commissioner, Income Tax (Appeals)-I, Hyderabad for quick disposal but no action was taken by the said authority. Simply filing of the letters before the said authority will not serve the purpose and the petitioner ought to have moved the application for earlier disposal of the appeals pending before it in view of the pendency of the criminal proceedings. Therefore, the said contention of the learned counsel for the petitioner cannot be accepted. The learned counsel for the petitioner has further pleaded that the proceedings before the Commission, Income Tax (Appeals)-I, Hyderabad are to be stayed and in support of his contention, he relied upon a decision rendered in M.A. Quddus v. Income Tax Officer[1] wherein the single Judge of this Court has held: “Granted stay of the criminal proceedings before the criminal court till the disposal of the appeals filed by the Department before the Income Tax Appellate Tribunal and after disposal of the said appeals, the criminal court is directed to dispose of the cases.” Relying upon the said decision, the learned counsel for the petitioner has pleaded that the matter has to be stayed till the disposal of the appeal pending before the Commission, Income Tax (Appeals)-I, Hyderabad. In the above said case, the appeals were pending before the Income Tax Appellate Tribunal and as such the stay was granted till disposal of the appeal. In the present case, the Income Tax Tribunal has already disposed of the matter by remanding the matter back to the Commissioner, Income Tax (Appeals)-I, Hyderabad for fresh disposal and after disposal of the appeal by the Commissioner, Income Tax (Appeals)-I, Hyderabad, the petitioner again will have an opportunity to prefer an appeal before the Income Tax Appellate Tribunal. Therefore, the said proceedings cannot be stayed pending disposal of the appeals before the Commissioner, Income Tax (Appeals)-I, Hyderabad. In view of the pendency of the appeal before the Commissioner, Income Tax (Appeals)-I, Hyderabad, the lower court can be directed to give reasonable time for getting the appeals disposed of by the Commissioner, Income Tax (Appeals)-I, Hyderabad. Hence, the criminal petition is dismissed. However, the Special Judge for Economic Offences, Nampally Criminal Courts, Hyderabad is hereby directed to give reasonable time to the petitioner to get the appeals pending before the Commissioner, Income Tax (Appeals)-I, Hyderabad are disposed off. ______________________ P.DURGA PRASAD,J. Date:31.03.2011. Gk. HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL PETITION NO.3598 OF 2008 Dated 31-03-2011 Gk. [1] 1998-CTR-145-271 "