RAJESH KUMAR PRASAD V. UNION OF INDIA THRU.INCOME TAX

CR. MISC./33759/2002

AI Insights

The case involves Dr. K.M. Prasad, an official in the Animal Husbandry Department of Bihar, and his family members, who were accused of embezzling and misappropriating government funds. Following a search and seizure operation in 2000, the Income Tax Department issued notices under Sections 158(B)(C) of the Income Tax Act, 1961, for which the petitioners failed to file returns or provide explanations. The Assistant Commissioner of Income Tax decided to prosecute them under Section 276 CC of the Income Tax Act, 1961. The petitioners argued that the prosecution should be stayed until the matter was resolved by the Tribunal and contested the lack of new facts or earlier assessments to justify the prosecution. The court, however, found that the prosecution was valid based on the petitioners' non-compliance with the notices and directed the Tribunal to expedite the proceedings.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 686050 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 20-08-2013
• Assessment Year: misc
• Other Referred Cases: AIR 1991(3) SC 459, 261 ITR 522, 43 ITR 392
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; ARCHANA SINHA
• Assessee Lawyers: D V PATHY; RAJIB RANJAN
• Keywords: Embezzlement; Income Tax; Misappropriation; Quashing of proceedings; Search and seizure; AHD scam
• Section: 142(1); 276 CC; 158(B)(C)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE AT PATNA Criminal Miscellaneous No. 33759 of 2002 =================================================== Rajesh Kumar Prasad, Son of Dr. K. M. Prasad, Resident of D- 81, Road No. 1, Ashok Nagar, Ranchi. .... .... Petitioner/s Versus Union of India through the Asstt. Commissioner of Income Tax, Central Circle-II, Patna. .... .... Opposite Party/s =================================================== with Criminal Miscellaneous No. 34217 of 2002 =================================================== Smt. Manorma Prasad, Wife of Dr. K. M. Prasad, Resident of D-81, Road No. 1, Ashok Nagar, Ranchi. .... .... Petitioner/s Versus Union of India through the Asstt. Commissioner of Income Tax, Central Circle-II, Patna. .... .... Opposite Party/s =================================================== with Criminal Miscellaneous No. 34219 of 2002 =================================================== Dr. K.M. Prasad, Son of Late Maheshwari Prasad, Resident of D-81, Road No. 1, Ashok Nagar, Ranchi. .... .... Petitioner/s Versus Union of India through the Asstt. Commissioner of Income Tax, Central Circle-II, Patna. .... .... Opposite Party/s =================================================== with Criminal Miscellaneous No. 34221 of 2002 =================================================== Kamlesh Kumar, Son of Dr. K. M. Prasad, Resident of D-81, Road No. 1, Ashok Nagar, Ranchi. .... .... Petitioner/s Versus Union of India through the Asstt. Commissioner of Income Tax, Central Circle-II, Patna. .... .... Opposite Party/s ================================================== Appearance : (In Cr.Misc. No. 33759 of 2002) For the Petitioner/s : Mr. D.V. Pathy, Adv. Mr. Rajib Ranjan, Adv. For the Opposite Party/s : Mr. Harshwardhan Prasad, Adv. Sr. Standing Counsel. Mrs. Archana Sinha, Adv. Jr. Standing Counsel. (In Cr.Misc. No.34217 of 2002) For the Petitioner/s : Mr. D.V. Pathy, Adv Patna High Court Cr.Misc. No.33759 of 2002 (18) dt.20-08-2013 2 Mr. Rajiv Ranjan, Adv. For the Opposite Party/s : Mr. Harshwardhan Prasad, Adv. Sr. Standing Counsel. Mrs. Archana Sinha, Adv. Jr. Standing Counsel. (In Cr.Misc. No.34219 of 2002) For the Petitioner/s : Mr. D.V. Pathy, Adv. Mr. Rajib Ranjan, Adv. For the Opposite Party/s : Mr. Harshwardhan Prasad, Adv. Sr. Standing Counsel. Mrs. Archana Sinha, Adv. Jr. Standing Counsel. (In Cr.Misc. No.34221 of 2002) For the Petitioner/s : Mr. D.V. Pathy, Adv. Mr. Rajib Ranjan, Adv. For the Opposite Party/s : Mr. Harshwardhan Prasad, Adv. Sr. Standing Counsel. Mrs. Archana Sinha, Adv. Jr. Standing Counsel. =================================================== CORAM: HONOURABLE JUSTICE SMT. ANJANA PRAKASH ORAL ORDER 18. 20.08.2013 1. The Petitioners seek quashing of the entire proceeding including the order of cognizance dated 28.09.2012 passed by the Special Judge, Economic Offences, Patna in Complaint Case No. 323(C) of 2002. 2. The case of the Complainant is that whereas the Petitioner, Dr. K. M. Prasad the Asstt. Director, Planning of Animal Husbandry Department, Govt. of Bihar had allegedly embezzled and misappropriated huge amount of Government funds the rest of the Petitioners are his wife and sons. This prosecution was launched after a search and seizure operations carried out in the residential premises of Dr. K. M. Prasad and his family members on 06.06.2000 in pursuant to the unearthing of the AHD scam when despite several notices under Section 158 (B)(C) Income Tax Act, 1961 on 31.08.2002 and Patna High Court Cr.Misc. No.33759 of 2002 (18) dt.20-08-2013 3 thereafter on many dates they failed to file returns for the block period of 01.04.1990 to 09.06.2000. Nor was any explanation furnished by them and, hence, Assistant Commissioner, Income Tax, Central Circle-II, Patna decided to prosecute the Petitioners under the provisions of Section 276 CC Income Tax Act, 1961. 3. It has been submitted on behalf of the Petitioners firstly that the same issue is pending before the Tribunal where the Department is taking repeated adjournments and, therefore, this prosecution should be kept in abeyance till the matter is decided by it. For this proposition that he relies on decision reported in AIR 1991(3) SC 459 Para 3 wherein it was held that one of the proceedings should be kept in abeyance. On the same point Petitioner relies on 261 ITR 522 Para 40. 4. The further submission is that as per the scheme of the Income Tax Act the Petitioners could be proceeded afresh only upon discovery of new facts or upon the earlier assessment u/s 158(B)(C) IT Act. In the absence of preparation of a Panchnama/Inventory List it could be presumed that no further fact had been discovered and it not having been initiated on the basis of the earlier assessment the prosecution is liable to be set aside. 5. He further submits that the Income Tax Department has been repeatedly directed to produce the relevant documents unearthed during search which were Patna High Court Cr.Misc. No.33759 of 2002 (18) dt.20-08-2013 4 the basis of fresh notices but they have failed to do so because of which the matter is still pending before the Tribunal. 6. As for the argument on behalf of the wife and the sons of Dr. K. M. Prasad is that they would come within the definition of protective assessee which position has been accepted by the Income Tax Authorities in the assessment order dated 28.06.2002. In such circumstances when no penalty or recovery could be directed as against them their prosecution is meaningless as laid down by various decisions including that of the Hon’ble Supreme Court and decisions of various High Courts reported in 43 ITR 392. 7. On the other hand, Counsel for the Income Tax submits that it was after due search and seizure the present prosecution was launched and, therefore, the Petitioners should be prosecuted. The further submission is that it is not they who are seeking time before the Tribunal but it is the Petitioners who are delaying the decision. The Counsel for the Department also relies on a decision passed in Cr. Misc. No. 1789 of 2011 dated 06.02.2013 passed under similar circumstances. 8. As for the explanation offered by the Petitioners through their Counsel on 14.06.2002 the Counsel for Income Tax Department explains in the Counter-Affidavit that it not having been filed through a proper power it was considered by them. Patna High Court Cr.Misc. No.33759 of 2002 (18) dt.20-08-2013 5 9. As for the first submission I find that the issues before the Tribunal and the present prosecution are not the same. The issue before the Tribunal is as to the correctness of the assessment. Even though there is a challenge also to the power of the Department to issue fresh assessment notices but that is not the main issue whereas in the present prosecution the Petitioners are sought to be criminally proceeded only for the reason that they did not furnish an explanation to the Notices issued by the Department. 10. As for the second submission of the Petitioner I find that notices were issued to the Petitioners under Section 142 (1) Income Tax Act after search and seizure operations pursuant to the unearthing of the AHD scam. Possibly some material may have transpired on physical search from the premises of the others having a reasonable bearing/connection/nexus with the earlier assessment of the Petitioners. Thus just because no Inventory/Panchnama was prepared after search of the premises of the Petitioner it could not be presumed that there was no discovery of fresh material and hence there cannot be any restriction in the Department proceeding against them. 11. As to the issue whether the family members of Dr. K. M. Prasad would come within the category of protective assessee the Counsel for the Income Tax Department has rightly explained that anyone who is sent Patna High Court Cr.Misc. No.33759 of 2002 (18) dt.20-08-2013 6 a demand notice is evidently an assessee. Moreover, the appeal is still pending. Hence, I am not inclined to set aside this prosecution at the stage of inception which in my opinion would not serve the ends of justice. 12. In view of the discussion above, I am not inclined to interfere in the matters. The same is dismissed. 13. The Income Tax Appellate Tribunal is directed to expedite the hearing and conclude the same preferably within three months. Vikash/- (Anjana Prakash, J.) "