Medivet and Smt. Anita Prasad and Smt. Nirmala Prasad and Sarad Kumar V. Union of India and Dy. Commissioner of Income Tax, Special Investigation Circle-I, Patna

CR. MISC./6794/2003

AI Insights

The case involves Medivet, a partnership firm, and other associated individuals, who sought to quash the proceedings initiated against them by the Income Tax Department under the Income Tax Act, 1961. The proceedings were based on allegations of non-compliance with notices issued for the assessment of a block period from 1986-87 to 1997-98, following a raid related to the AHD Scam. The petitioners contended that the notices were not properly served, and thus, the subsequent penalties and the criminal proceedings were unjustified. The Income Tax Department argued that the notices were duly served and the petitioners failed to comply, warranting prosecution under Section 276(D) of the Income Tax Act. The court, after examining the service of notices and the compliance with procedural requirements, ruled in favor of the petitioners.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 803439 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 13-09-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: HARSHVARDHAN PRASAD; ARCHANA SINHA
• Assessee Lawyers: D V PATHY; SANJAY KUMAR
• Keywords: AHD scam; Economic offences; Income Tax; Notice Compliance
• Section: 142(1); 158 BD; 276-D

Judgement Text

"IN THE HIGH COURT OF JUDICATURE AT PATNA Criminal Miscellaneous No. 6794 of 2003 ======================================================== 1. Medivet, a partnership firm having its Office at Laxmi Narain Market, Hazaribagh Road, Ranchi, through its partner Sarad Kumar, Son of Dr. Gauri Shankar Prasad Son of Late Sukhdeo Narain, Ranchi. 2. Smt. Anita Prasad, Daughter of Dr. Gauri Shankar Prasad, Resident of Chesire Home Lane, Bariatu Road, Ranchi. 3. Smt. Nirmala Prasad, Wife of Dr. Gauri Shankar Prasad, Resident of Chesire Home Lane, Bariatu Road, Ranchi. 4. Sarad Kumar, Son of Dr. Gauri Shankar Prasad, Resident of Chesire Home Lane, Bariatu Road, Ranchi. .... .... Petitioner/s Versus 1. Union of India, through the Commissioner of Income Tax, Central Patna. 2. Dy. Commissioner of Income Tax, Special Investigation Circle-I, Patna. .... .... Opposite Party/s with Criminal Miscellaneous No. 6795 of 2003 ======================================================== 1. Birsa Live Stock Feeds and Additives, Ram Mandir Marg, Bariatu, Ranchi through its partner Sarad Kumar son of Dr. Gauri Shankar Prasad, resident of Chesire Home Lane, Bariatu, Ranchi. 2. Smt. Anita Prasad, Daughter of Dr. Gauri Shankar Prasad, Resident of Chesire Home Lane, Bariatu Road, Ranchi. 3. Sarad Kumar, Son of Dr. Gauri Shankar Prasad, Resident of Chesire Home Lane, Bariatu Road, Ranchi. 4. Sidhartha Kumar, Son of Dr. Gauri Shankar Prasad, Resident of Chesire Home Lane, Bariatu Road, Ranchi. .... .... Petitioner/s Versus 1. Union of India, through the Commissioner of Income Tax, Central Patna. 2. Dy. Commissioner of Income Tax, Special Investigation Circle-I, Patna. .... .... Opposite Party/s ======================================================== Appearance : (In Cr.Misc. No. 6794 of 2003) For the Petitioner/s : Mr. D.V. Pathy, Adv. Mr. Sanjay Kumar, Adv. For the Opposite Party/s : Mr. Harshvardhan Prasad, Adv. Mrs. Archana Sinha, Adv. (In Cr.Misc. No. 6795 of 2003) For the Petitioner/s : Mr. D.V. Pathy, Adv. Mr. Sanjay Kumar, Adv. For the Opposite Party/s : Mr. Harshvardhan Prasad, Adv. Mrs. Archana Sinha, Adv. Patna High Court Cr.Misc. No.6794 of 2003 dt.13-09-2013 2 ======================================================== CORAM: HONOURABLE JUSTICE SMT. ANJANA PRAKASH ORAL JUDGMENT Date: 13-09-2013 Anjana Prakash, J. 1. Rejoinder to Counter-Affidavit and Supplementary-Affidavit filed on behalf of the Petitioners be kept on record. 2. The Petitioners seek quashing of the entire proceeding including the order of cognizance dated 19.04.1999 passed by the Presiding Officer, Economic Offences, Patna in Complaint Case Nos. 77(C) of 1999 and 78(C)of 1999. 3. The allegations in the Complaint Petition is that pursuant to the unearthing of AHD Scam a raid was conducted in the premises of Sanwin Pharmaceuticals and some documents relating to the Petitioners were seized. Invoking the provisions of Section 158(BD) Income Tax Act, 1961 notice was issued for assessment for the block period of 1986-87 to 1997-98. A notice under Section 142 (1) Income Tax Act dated 04.09.1997 were sent simultaneously at Calcutta and Ranchi address of the assessee. Subsequently, notice and letter were sent individually to one of the partners at residential address at Ranchi for ensuring compliance. The notice from Calcutta sent by registered post was returned with the remark that the receiver was not present nor found. Another Patna High Court Cr.Misc. No.6794 of 2003 dt.13-09-2013 3 copy of aforesaid notice was sent to ADIT (Investigation) Calcutta for service of notice which was subsequently served on 01.04.1997 through affixture. The aforesaid notice was sent on the accused persons at Ranchi address through registered post which did not return hence it was assumed as delivered. However, notice under Section 142(1) Income Tax Act was sent to DCIT, Ranchi for effective service. Then notices were served upon one Bandu Uraon at the instructions of one of the accused persons i.e. Petitioner No. 2. Another copy of notice was sent to the accused assessee duly served upon the same partner on 16.12.1997 but there was no compliance. 4. Since the accused failed to comply with the notice which was served upon the accused on 16.12.1997 penalty of Rs. 25,000/- was imposed on 02.01.1998. Subsequently, notice was sent to the assessee under Section 276(D) Income Tax Act for willfully failing to produce the accounts and documents specified in notice under Section 142(1) Income Tax Act which was served by ADIT (Investigation Unit) at Calcutta by affixture. The copies of the said notice were sent at residential address of Ranchi of the accused which was duly served. The Complainant alleged that from the statement made above it is clear that the accused had consciously and Patna High Court Cr.Misc. No.6794 of 2003 dt.13-09-2013 4 purposely avoided reply to the Department and hence they rendered themselves liable for prosecution under Section 276(D) Income Tax Act. This Complaint was filed on 12.03.1999. 5. The Counsel for the Petitioner submits that pursuant to the penalty imposed on 02.01.1998 one of the partners preferred an appeal before the Income Tax Appellate Tribunal and the Tribunal set aside the penalty on account of the reason that no sufficient opportunity has been given to the assessee before the final order was passed. He further submits that in view of the appellate order that no sufficient opportunity had been given to the Petitioner the allegation in the present Complaint that the assessee had consciously and purposely avoided to reply to the notice and is hence punishable under Section 276(D) Income Tax Act is misplaced. 6. On the other hand, learned Counsel for the Income Tax Department submits that the assessment order dated 30.04.1998 reveals that there was due compliance of notice to the assessee and despite receipt of notice assessee had failed to produce the books and hence they were punishable in law. 7. On going through the Complaint Petition, I find that in paragraph 5 even though it has Patna High Court Cr.Misc. No.6794 of 2003 dt.13-09-2013 5 been stated that notices were sent to the assessee both at Calcutta and Ranchi address and once again in paragraph 6 at Calcutta address through the ADIT (Investigation) Calcutta which was served on 01.04.1997 through affixture and in paragraph 8 that one Bandhu Uraon at the instruction of Anita Prasad had received the notice on 11.09.1997 as also on 16.12.1997 but this fact was not accepted by the Appellate Authority. Under these circumstances, evidently, the allegation that the Petitioners had willfully failed to produce the documents is without basis. 8. Moreover, interestingly, I find in the column of accused the address of firm M/s MEDIVET is mentioned as Laxmi Narain Market, Hazaribagh Road, Ranchi and M/s Birsa Live Stock Feeds and address as Ram Mandir Marg, Bariatu Road, Ranchi and that of one of the partners as Smt. Anita Prasad C/o Dr. Gauri Shankar Prasad, Cheshire Home Lane, Bariatu Road, Ranchi but in the assessment order I find that the last known address of the firm is said to be Mercantile Building, 9/12, Lal Bazar Street, Calcutta as also Anita Prasad is mentioned as daughter of late Surajdeo Narain Prasad, Booty Road, Ranchi. Under these circumstances, it is difficult to accept that notices were indeed sent to the concerned Patna High Court Cr.Misc. No.6794 of 2003 dt.13-09-2013 6 parties at the correct address and that there was willful non-compliance on their behalf. 9. Hence, the applications are allowed and the entire proceeding including the order of cognizance dated 19.04.1999 passed by the Presiding Officer, Economic Offences, Patna in Complaint Case Nos. 77(C) of 1999 and 78(C) of 1999 is, hereby, set aside. Patna High Court, Patna Dated, the 13th September, 2013 NAFR/Vikash/- (Anjana Prakash, J.) "