B. Jhansi Rani, V. Dy. Commissioner of Income-tax,

CRLATR/77/2018

AI Insights

The case involves M/s Kanchanjunga Greenlands Pvt. Ltd. and its directors, who were convicted for willful evasion of tax under the Income Tax Act, 1961. The appellants argued that they did not have the funds to pay the tax on the due date and that there was no willful evasion. The trial court had found them guilty based on the evidence presented, which included the company's financial activities and tax returns. The High Court, after reviewing the submissions and evidence, found that the trial court needed to reconsider the case with the new documents and evidence provided by the appellants.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 768761 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 17-06-2023
• Assessment Year: misc
• Other Referred Cases: Akkinapalli Sujatha Ismt. v. State of Telangana, Pooja Ravinder Devidasani v. State of Maharashtra, National Small Industries Corporation v. Harmeet Singh Paintal, Gunmala Sales Pvt. Ltd. v. Anu Mehta, Pepsi Foods Ltd. v. Special Judicial Magistrate, Alka Khandu Avhad v. Amar Syamprasad Mishra
• Laws Referred To: Income Tax Act, 1961, Cr.P.C.
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B SHARMA
• Assessee Lawyers: VINOD DESHPANDE
• Keywords: Book profit; Income Tax Returns; Penalty; Tax liability; Willful evasion of tax; Regular income
• Section: 143(1); 208; 37; 115JB; 221(1); 374(2); 278-B; 281-B; 276-C(2); 140-A; 278-B(1)

Judgement Text

"IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD FRIDAY,THE SEVENTEENTH DAYOF JUNE TWO THOUSAND AND TWENry TWO PRESENT THE HONOURABLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL (TR) Nos : 22 and 77 oF 2018 Crl.Appeal Under Section 37 el of Cr.p.C. against the Judgment dated 09-01-2014 in c.c.No. 12o ot zo11 on the fire of the-court or tne srtciai .ruate for Economic Offences at Hyderabad. Crl.A.TR.N o.22 of 2018 Between: 1. M/s Vi Kanchanjunga Greenlands pvt. Ltd H.NO. B-55, Flat No.202, Sai shnavi Vihar Vengala Rao Nagar, S.R. Nagar Post, Hyderabad-500o38, Rep.rby Sri. N s L.R. Prasad Raju, S/o. Venkat Raju, aged about 48 years i 2. N.S.L.R. Prasad Raju,, R/o. Plot No.B-55, Flat No. 202 Sai Vaishnavi Vihar, Vengala Rao Nagar, S.R. Nagar Post, Hyderabad-SO0038. ... Appellants/ Accused I & 2 AND Counsel fo Dy. Commissioner of lncome-tax,, Central Circle-g, Aayakar Bhavan, Room No.805, 8th Floor, Basheerbagh, Hyderabad-So0oo4.' ...RESPONDENT/ Complainant the Appellant :SRl. Sri V. VTNOD KUMAR DISHPANDE, SENIOR COUNSEL FOR G. ASHOK REDDY I I r Counsel foi t II' Ir t Crl. Appeal Under Section 374 (21 ot Cr.p.C. against the Judgment dated o9-o't'2014!in c-c.No- 12o of 2011 on the file of the -court of the sfecial Judge for Econonlic Offences at Hyderabad. i Between: i t Undn{ Rani, Director of M/s. Kanchanjunga Greenlands hrt. 202, Sai Vaishnavi Vihar, Vengala Rao n-agal, S.R. Nagar post, he Respondent: SRI B. NARASIMHA SARMA, SC for l.T. CRIM INAL APPEAL TR) NO: 77 OF 2018 Ltd., H.No. B-55, Flat No. Hyderabad. ... Appellant / Accused No.3 i ; I I I l AND DV commissioner of lncome.tax,, Central Circle.8, Aayakar Bhavan' Room No.805' 8th Fttoi. aasneerbagh, Hyderabad-500004' ...RESPONDENT/ ComPlainant Gounsel for the APPellant: SRI VINOD KUMAR DESHPANDE SENIOR COUNSEL FOR SRI. V SURENDER RAO Counsel for the Respondent: SRI B' NARASIMHA SARMA' SC for l'T' The Court dilivered the following: Common Judgment l i I i i I l i i l I I , I I 1 I l HONOURABLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL (TR Nos.22 and,77 of 2Ol8 COMMON JUDGMENT: Cr1.A.(TR).No.22 of 2Ol8 is frled by A1 and A2 i.e., Company and one of its Directors respectively, whereas Crl.A.(TR).No .77 of 2Ol8 is filed by ,{3, who is another Director of A I / company, being aggrieved by the conviction and sentence imposed by the learned Special Judge for Econornic Offences at Hyderabad in C.C.No.l2O of 2O11 vide Judgment dated 09.01.2014, wherein Accused Nos. I to 3 were found guilty of the offences punishable under Section 276_C(2) read with Section 278-8 of the Income Tax Act, 196l (for short, ..the Act,,) consequently accused No. 1 was sentenced to pay fine of Rs.1O,OOO/- and in default of payment of f-rne to initiate appropriate proceedings as required under Section 421 of Cr.P.C., whereas Accused No.2 was sentenced to undergo rigorous imprisonment for a period of one year and A3 was sentenced to undergo rigorous imprisonment for a period of six months and to pay hne of Rs. 1O,0OO/_ each and in default of payment of frne by accused Nos.2 and 3, to undergo simple imprisonment for a period of one month each. ( 2 Since the issues involved in these appeals are one and the same, both the appeats are being disposed of by this common judgment. 2. For conveniertce, the par-ties hcrcin are referred to as they are arrayed before the trial Court' i'e', Appellant No' 1 as Accused No.1/Company and Appellant Nos'2 and 3 as Accused Nos. 2 and 3. 3. The genesis of these cases, which lead the appellants- accused to prefer these appeals, a-re narrated in brief as under: i) Accused No.1/Company - M/s' Kanchanjunga Greenlands Private Limited, which was registered under the Companies Act with the Registrar of Companies at Hyderabad as Private Limited Company, was engaged in the business of acquisition and sale of lands' Appellant Nos. 2 and 3 herein are the Directors of Accused No.1/CompanY. ii) Accused No.l/Company has acquired lands to an extent of Ac.34.85 guntas 1n Sy.Nos.206, 2O7 and 257 under the limits of Bachupally Mandal, Ranga Reddy .f District during the financial years 2OO1_2OO3 and developed the said lands by incurring some amounts during the financial yea.rs 2OOO-O I to 2OO7 _Og. Al/company has floated three comparries by name M/s. Beas Greenfields Private Limited and five other companies with 1OO% holding in the year 2006-07 and, sold lands under 9 different sale deeds for the financial year 2OO7 _Og and claimed exemption of such a transfer by invoking provisions under Section 47 of the Income Tax Act. iii) iii) For the assessment year 2OOg-Og, accused No. 1/company has filed income tax returns on 3O.O9.2OOS under Ex.Pl by showing taxable income as Nil and book profit under Section 115.1B as Rs.6,74,1O,g2 I /_, which is more than regular income. Since the book profit was more than regular income, the same has been taken for the purpose of taxation and tax liability was arrived at Rs.76,37,652/-. iv) Accused No.1/Company is expected to pay the income tax either by way of advance tax as required under ( Section 208 of the Act or at least along with filing of 4 returns in terms of Section 140-A of the Act. As per Section 143 (1) of the Act, the tax liability of Accused No.1 was arrived at Rs'76,37,652 l- bY the respondent,/ complainant and raised a demand under Section 156 read with Section 143 of the Act and issued an intimation to Accused No. 1/Company under Ex.P2' Accused No.l/company was required to pay the tax demanded within 30 days of service of notice, but it has committed default. v) Respondent/complainant has issued show-cause notice under Section 221 (ll of the Act under Ex'PS, wherein the appellants were asked to show cause as to why penalty should not be levied for committing default in payment of tax. As there was no response from the appellants, the complainant has issued another show- cause notice dated 01.09.2010 under Ex.P6 under Section 221 (l read with Section 140-A(3) of the Act. Fina1ly, one more opportunity was also given by the Department by giving another show-cause notice dated 17.09.2010 (Ex.P7) under Section 221 (ll read with Section 143-4 of the Act. 5 An opportunity of being heard was also given by the respondent/complainant to Accused No.1/Company hxing the date of hearing as 21.09.2010, but there was no response, on which a penalty of Rs. I5,OO,OOO/- was imposed by way of order dated 22.09.2010 (Ex.PS) under Section 221 read with Section 140-A(3) of the Act and the said proceedings were served on accused No.1 on 05.10.2010. 4. Considering the witlful evasion of payment of tax, the respondent/complainant has decided to initiate prosecution and accordingly a notice was issued to accused No.1/company and other Directors under Section 276-C(21 of the Act, as to why prosecution shall not be initiated against them for willful evasion of the tax. All of them have given reply stating that there was no intention to evade payment of tax. Another notice was issued to accused No.1/Company arrd its directors under Exs.plO to p12 asking them as to why prosecution shall not be initiated under Section 276-C(2) of the Act. Again replies were filed by accused No. l/company and its Directors/accused Nos.2 and 3 under 6 Exs.P13 to P15 stating that there was no intention of willful evasion of tax. 5. As Accused No.1/Company and its Directors/ accused Nos.2 and 3 have not paid the tax in response to the demand notice issued under Section 1a3 (l) of the Act and also failed to pay the penalty, the respondent/ complainant after obtaining sanction order dated 25.02 .2011 for launching of prosecution filed a complaint before the Special Court for Economic Offences against accused No.1 and accused Nos.2 and 3, the other Directors, aileging that they have committed offence punishable under Section 276-C(21 read with Section 278-B of the Act, as they have willfuily evaded tax even though they were having sufficient resources. 6. The Special Court for Economic Offences took cognizance of the offences against Accused No.1/Company and its Directors i.e., Accused Nos. 1 to 3, under Section 276-C(2 read with Section 278-B of the Act and charges were framed against them under Section 276 - C(2) read with Section 278-B(l) of the Act and all the accused have pleaded not guilty of the charges and claimed to be tried. --* 7 7. In order to prove the charges leveled against the appellants, the respondent/complainant has examined pws. I to 3 and got marked Exs.pl to pl6. After closure of eyidence of the complainant, the incriminating evidence elicited against the appellants was read over and explained to them under Section 313 of the Cr.P.C., for which all of them have denied and reported that they did not choose to examine any witness on their behalf. However, they got marked Exs.Dl to D3 on their behalf. 8. The substance of the evidence of pWl is that after receiving of returns of income tax liled by accused No.l /company, the respondent/complainant has processed the same under Section 143(1) of the Act and issued intimation determining the total taxable income as Rs.6,74,10,g71/_ and tax liability as Rs.93,21,766/-. The evidence of pW2/Income Tax officer is to the extent that he has considered the annual report of accused No'l/company for the financial year 2oo7-og under Ex.p3 and bank account statements of accused No.1/Company with the AXIS Bank Limited under Ex.p4 and found that accused No. l/Company did not pay ttre tax returns in spite of having - ( B surplus and sufficient funds' PW3 is the Income Tax Officer' whohassucceededPW2.Hisevidenceisthathehaspassed penalty order under Ex.PS imposing penalty of Rs'15 lakhs and raised demand under Ex.P9 and the same was served on the accused. He also deposed that as there was no response from the accused, show cause notices under Section 276-C of the Act were issued against all the accused through which accused were inforrned that the department is initiating criminal proceedings and consequently the department has Iiled the complaint' g. After full-fledged trial, on considering the entire material on record,thetria-lCourthasfoundAccusedNo'1/Companyand A2 and A3, the Directors of A1 company, guilty of the offences punishable under Sections 276'C(2) and' 27a-B of the Act and were sentenced as stated supra. Aggrieved by the said judgment and conviction of Special Judge for Economical Offences at Hyderabad, the present appeals are filed originally before the Metropolitan Sessions Judge Court at Hyderabad' 10. The erstwhile High Court for the States of Telangana and Andhra Pradesh has issued circular ROC'No'34, Criminal Section/2017, clated 28.O8.2017, wherein it is clarified that 9 agarnst any orders passed by the Offences, Hyderabad, in the Special Judge for Economic State of Telangana and Visakhapatnam in the State of Andhra pradesh, the High Court has the jurisdiction to entertain the appeals, not the Sessions Court. In view of the said circular, these appeals frled by the appellants have been transferred from Metropolitan Sessions Judge Court, Hyderabad, to the High Court for the State of Telangana. 11. The summary of grounds of appeal as filed by the appellants in brief are as under: a) The trial Court has failed to see that accused No. l/company was not having funds to pay the tax on the due date as reflected in Ex.p4-bank statements. b) The trial court has misconstrued the presumption under section 278-E of the Act and erred in holding that the burden of proof is on the accused to prove that there was no willful evasion of payment of tax. c) The tria.l Court erred in holding that the accused failed to prove non-existence of culpable mental state in non_pa5rment of ( 10 taxes on the date of filing returns and as on the date of demand notice and that the trial Court failed to appreciate that in spite of not having any cogent evidence to show that all the accused have willfully evaded the tax, the trial Court has corrcluded that accused have committed willfui evasion in payment of tax. d) The trial court failed to see that all the assets belong to accused No. 1 / Company were attached under Section 28 1-B of the Act and due to paralyzing of hnancial activities of accused No. l, tax could not be paid in time. e) The Trial Court should not have concluded that accused Nos.2 and 3 are responsible for day to day affairs of accused No. I / company and should have taken into consideration the notices issued under Section 278-B of the Act proposing the prosecution did not refer accused Nos. 2 and 3 as principal olficers and thereby accused Nos.2 and 3 should have been acquitted. f) The Court below failed to see that when the returns were determined, the department held that since the book profit under Section 115 JB was more than regular income, they have 11 arrived that A1 was liable to pay the tax. However, Al was not having funds on that date and hence, the element of mens rea is absent and hence, the Court ought to have acquitted the accused. 12. Heard Sri Vinod Kumar Deshpande, learned Senior counsel for the appellants and Sri B. Narasimha Sharma, learned Standing counsel for the income tax department, considered the entire material on record, relevant provisions of the Act and the authorities cited. 13. Now, the points for determination in these appeals are: 1) Whether the conviction judgment dated O9.O1.2O14 in C.C.No. l2O of 2011 on the frle of Special Judge for Economic Offences at Hyderabad against the appellants can be set aside? 2) Whether the appellants committed willful eva.sion of tax? accused have 3) To what reliep 14. It is submitted by the appellants in the grounds of appeal that the Respondent - Income Tax Department has not placed L 12 suffislsn1 material to show that appellant No'l Company has comrnitted willful default, to fasten the liability under Section 276 c of the Income Tax Act. The question of willful default comes, when appellant No.1 Company is having sufficient funds to its credit and deliberately chooses not to pay the tax or diverts the funds for other purposes. According to the appellants they were not having funds to pay the tax, thereby, contended that there was no willful default committed by them' 15. pw3 in his cross examination admitted that appellant No.1 cornpany was not having funds as on the date of Iiling of the ret rrns. It is also the case of the appellants that the Respondent - Income Tax Department has not placed any material to show that inspite of having sufficient funds, the appellant No' 1 cornpany has deliberately evaded in payment of tax, thereby the aPpellants were not having any culpable mental state to evade the tax deliberately. 16. According to the appellant No'l company has filed IT returns on due date declaring the income tax as \"nil,,by showing book profit under Section 115JB of the lncome Tax Act. As per ttte returns, the book profits were found to be more than regular / l3 income. According to one of the grounds of appeal, even though book profits were found to be more than income, as there were no funds in the account of the appellant No.I company, could not pay the tax. The tria.l Court in its order has observed that though appellant company was not having the liquid cash as on the date of filing of returns, it (company) was having reserves, which were diverted to other concerns without bothering the tax liability on book profits in terms of section 11sJB of the Income Tax Act. Thus, even the trial Cor:rt has concluded that the appellant No. 1 Company had no liquid funds to pay the tax as on the date of filing of returns. It is mentioned in the grounds of appeal that even though the book profits were more than regular income, appellant No.I Company was not in a position to pay the tax, thereby, appellant No.l company has not committed default willfully. 17. It is also admitted fact that ail the assets of appellant No.l Company were attached under Section 2g1B of the Income Tax Act and thereby there was no finan cial activit5r of the appellant No.1 Company. Thus, there was no occasion for appellant No.l Company to have any funds to its credit. Further, M/s. Maytas ( t4 properties Limited also requested for raising of the attachment of the properties in order to execute the sale deeds in favour of the purchasers so that the sale proceeds cal be paid directly to the department on behalf of the appellant No'l corrlpany' M/s Maytas properties Limited also requested to raise the attachment of five acres belonging to M/s. Chitravathi Agro Farms Private Limited for disposal by Revenue Department to be adjusted against the outstanding tax demand of all the 19 companies including appellant No.1 Company vide letter dated 11'O3'2011' 18. It is also mentioned in the ground of appeal that even though appeliant No.1 company has trarsferred the land in favour of subsidiary company, it does not amount to transfer as per Section 45 read with Section 47 (iv) of the Income Tax Act and thereby appellant No.1 company is not liable to pay tax' 19. The other aspect raised by the appellants in the grounds of appea.l is that when appellant No.l Company has submitted incorne tax returns, surplus amount was claimed to be exempted under capital gains as per Section 45 read with Section 47 (ivl of the Income Tax Act and thereby the liability of tax should not be levied on the said surplus amount. l5 20. It is also not in dispute that M/ s. Maytas properties Limited has requested the Respondent - Income Tax Department for adjustment of TDS refund of income tax and adjustment of refund of income tax dues of Rs.1 1.45 crores vide letters dated 22.02.2O1O arrd 11.O3.2011 in favour of appellant No.1 company. The trial court in its judgment at Page 15 para No.33 has observed that nothing has been placed on record to show that the department was in fact any due of any refunds to M/s. Maytas properties Private Limited and whether such refunds were fortified by passing appropriate refund orders. However, on perusal of the letters dated 22.O2.2O1O and 11.03.2011 addressed by the M/s.Maytas properties private Limited, the endeavour of appellant No.l Company is very clear that in the most possible manner the tax liability was to be paid. This court is of the opinion that if really the intention of appellant No.l company was not to pay the income tax and evade the same willfully, the letters dated22.O2.20lO and l1.O3.2Oll addressed by M/s.Maytas Properties Limited requesting the department to adjust TDS refund of the tax liability could not have been addressed. -c- 16 21 . Another contention raised in the grounds of appeal is that accused Nos.2 and 3 are not responsible for day to day affairs of appellant No.1 company and that there is no material placed before the trial Court to establish that accused Nos.2 ald 3 are responsible for day to day affairs of appellant No.I company and that unless there is specific resolution authorizing one of the directors as principle officer, all the directors of the company are principle ofhcers of the company, thereby, the observation of trial Court that unless restricted by the provisions of the Companies Act, all the directors are authorized to do all the acts and thereby accused Nos.2 and 3 are princrpal officers is erroneous 22. In Akkinapalli Sujatha lsmt.) and others v. State of Telangana, Public Prosecutor, High Court of Telangana, Hyderabad and anotherr, u,herein it was held as follows '10. In. POOJA RAVINDER DEVIDASANI u. STATE OF MAHARASHTRAI the Supreme Court made the following obseruations: \"... Tim,e and again, it has been asserted bg this Court that onlg those persons who tuere in charge of and responsible for the conduct of the business of the Compang at the time of '2021 (2) ALT (crl.) 2la (S.Il.) 17 commission of an offence uill be liable for ciminal action. A Drector, who was not in clnrge of and u)as not responsible for the conduct of the buslness of the Company at the releuant time, taill not be liable for an offence tlnder Section 141 of the N.I. Act.' In National Small Industies Corporation (supra) this Court obserued: Section 141 is a penal prouision creating uicarious liabilitg, and which, as per settled law, must be stictlg construed. It is therefore, not sufficient to make a bald cltrsory statement in a complaint that the Director (arraged as an accused) is in charge of and responsible to the compang for the conduct of the business of the companA without angthing more as to the role of the Director. But the complaint should spell out as to hout and 1 (2014) 16 SCC 1 6 inwhat manner Respondent 1 taas in charge of or tuas responsible to the accused Company for the conduct of its business. This is in consonance with stict interpretation of penal statutes, especiallg, where such statutes create uicaious liability. A company may haue a number of Directors and to make ang or all the Directors as accused in a complaint merely on tfu basis of a statement that they are in charge of and responsible for the conduct of tlrc business of the compang uithout anything more is a IB not a sulrtcient or adequate fulfillment of the requirements Under Section 14 I . 27. Unfortunately. lhe High Court did not deal the i,ssue in a proper perspectiue and committed error in dismissing the uit petitions bg lnlding that in the Complaints filed by the Respondent No. 2, speciJic ouerments were made against tLrc Appellant. But on the contrary, taking the complaint as a u.thole, it can be inferred that in the entire complaint, no specific role is attibuted to the Appellant in the commission of offence. It is settled latu that to attract a case Under Section 141 of the N.I. Act a specifi.c role must haue been plaged bg a Director of the Company for Jastening uicaious liabilitg. But in this case, the Appellant uas neither a Director of the occttsed Company nor in charge of or inuolued in the dag to daA affairs of the CompanA at the time of commission of the alleged offence. There is not euen a uhisper or shred of euidence on record to show that there is ang act committed bg the Appellant from uhich a reasonabl.e inference can be drawn that the Appellant could be uicariously held liable for the offence with uhich she is charged.\" 11. In POOJA RAVINDER DEVIDASANIS case (1 supra), the Supreme Court allotued the quash petition not only on the ground that there is 19 no specific role attributed to the appellant but also on the ground that the appellant has resigned. as Director much prior to issuance of the cheque. The Supreme Court taking into consid.eration its earlier decisions in National Small Industies Corporation u. Harmeet Singh panital [(2O1O) 3 SCC 330]; Gunmala Sales 7 priuate Ltd. u. Anu Mehta [(2015) 7 SCC 1O3l and pepsi Foods Ltd.. u. Spectal Judicial Magistrate [(l9g|) S SCC 343], reiterated the ratio that a complaint, tuhere no specific role is attibuted to the Director - Accused, is liable to be quasLed.' 23. In Alka Khandu Avhad v. Amar Syamprasad Mishra and anotherz, it was treld by the Honourable Supreme Court as follows: \"8.1 Sectiort 141 of the NI Act is relating to the offence bg companies and- it cannot be made applicable to tbe indiuiduals. Learned counsel appearing on behalf of the oiginal complainant has submitted tlzat \"Compang\" mecLns any bod.g corporate and includes, a firm or otlter association of indiuiduals artd. therefore in case of a joint liabilitg of two or more persons it will fall utithin \"other associatio rt of indiuiduals\" and therefore , 2o2t 12) ALt lctt.l(Sc) 69 (D.8.) ( 20 with the aid. of Section 141 of the Nl Act' the appellaftt rttho is jointlg liable to pag the debt' can be prosecuted,. The aforesaid cannot be accepted' Tuo piuate indiuiduals cannot be said to be \"other association of indiuiduats\" ' Tlerefore, there is no Question oJ inuoking Section 141 of tle NI Act against the appetlant. as the liabilitg is the indiuidual liability (mag be a joint liabilities)' but cannot be said to be the offence committed bg a companA or bg it corporate or firrn or other qssociations of indiuiduats. The appellant herein is rLeither a Director nor () partner in ang firm u'tho has issuecl the cheque ' Therefore, euen the appellant ccinnot be conuicted ruith the aid of Section 141 of the NI Act. Therefore, tle High Court has committed. a graue error in not quashing the complaint ag ciinst the appellant for the offence punishable under Section 138 r/rtt Section 141 of the NI Act. The ciminal complaint frled against the appellant Jor the offence punishable under Section 138 r/ttt Section 141 of the NI Act, therefore' can be said. to be abuse of process of latu and therefore the same is required to be quashed and set aside-\" 24. On considering the ratio taid down by the Honourable Apex Court in the decisions reported above, it is clear that the prose cution must specifically mention in the complaint as to the 21 role played by the appellant in the management of the company. Merely saying that the appellants are responsible for the day_to- day affairs of the Accused No. I Company is not sufficient. It is also expected to allege that the appellants are in_charge of a particular branch/wing/unit of appellant No.I Company. Merely saying that all the directors are in-charge and responsible for the day-to-day affairs of the appellant No. I Company will not serve the purpose. 25. Appellant No.1 company has filed an application under Section 391 of the Code of Criminal procedure along with the appeal for receiving Order, dated 31.l2.2ol4passed by the Appellate Tribunal in ITA.No.O8g8/CtT (A)-12, HyD 20t4_tS. It is submitted by the learned counsel for the appellants that in view of the order, dated 31. ),2.2014 passed by the Income Tax Appellate Tribunal, the Assessing Officer has to re_compute the income of the assessee. Thus, the question of tax liability as per the fresh assessment would come into question. Hence, the prosecudon initiated by the Income Tax Department on the basis of order, which is not in existence is not maintainable. 22 26. Appellant No.l company has filed another application under Section 391 of the code of crimina-l Procedure along with the appeal for receiving (1) Dossier Reports of the appellant compary for the assessment year 2OO8-09, (2) Files pertaining to TRO Proceedings pertaining to the appellant company and (3) entire proceedings pertaining to the sanction order in the appeal' It is submitted by the learned counsel for the appellants that sanction was accorded for prosecution without assigning cogent reasons and in order to prove that the appellants have not willfully evaded the payment of taxes, the files pertaining to the said order and all communications between the assessing ofhcer and the sanctioning authority are crucial documents' 27. Considering the same and on hearing both sides' this Court is of the opinion that these documents ale very relevant to consider the grounds raised in the appeals on hand' thereby these documents are received. 28. In view of the above discussion and on perusal of the grounds of appeal, it is evident that the appellants have raised certain substantial issues including that the appellant Company has not committed rxzillful default, as admittedly there were no ..- i \"-/ 23 funds to the credit of appellants; the request of M/s. Maytas Properties Limited to raise the attachm€nt of lands, so that sale proceeds can be paid duly towards income tax on beharf of the appellants, but same was not considered; the appellant Nos.2 and 3 are not the principle ofhcers and thereby they cannot be held to be responsible for the acts committed by the company; appellant No.l company has filed IT returns on due date declaring the income tax as \"nil\" as book profit under Section I ISJB of the Income Tax Act. Further, the appellants have filed petitions under Section 391 of the Code of Criminal procedure to receive (1) Dossier Reports of the appellant company for the assessment year 2OO8_O9, (2) Files pertaining to TRO Proceedings pertaining to the appellant company, (3) entire proceedings pertaining to the sanction order in the appeal and (4) Order, dated 31.12.2014 passed by the Appellate Tribuna_l in ITA.No.O898/CIT (A)-12, HyD 20t4-15 and dccordingty the said documents were received. 29 ' considering the above, this court is of the considered opinion that the tria-l court is required to be directed to re-consider all the issues that are raised by the appellant in this 24 appeal and the documents filed under Section 391 of the Code of Criminal Procedure and give finding afresh by giving opportunity to both sides. 30. Accordingly, both these criminal appeals are disposed of setting aside the conviction arrd sentence dated Og.O1.2014 recorded by Special Court for Economical Offences at Hyderabad and C.C.No.72O of 2Ol1 is remanded back to the tria_l Court with a direction to consider the complajnt afresh in accordance with law, after giving an opportunity to both sides to adduce further evidence, if any. However, the trial Court shall not be influenced by the comments and observations, if any, made by this Court touching merits of the case while passing orders. As a sequel, pending miscellaneous applications, if any, sha.ll stand closed. To Sd/- B.S. CF.IIRANJEEVI JOINT REGISTRAR /ffRUE COPY// '--w SECTION OFF]CER 1. The Special Judge for Economic offences at Hyderabad. (with record, if any) 2. The Dy.. Commissiorer of lncome{ax,, Central Circle-8 , AayakarBhavan, Room No.805, 8th Floor, Basheerbagh, nyOeraOiO_SOOOO+. 3. One CC to SRt. c ASHOK REDDY, Advocate [OPUC] i 4. One CC to SRt. B NARASTMHA SARMA, SC FOR t.T. DEPT tOpUCI 5. One CC to Sri V. SURENDER RAO Advocate (OPUC) 6. Two CD Copies HIGH COURT DR. DNRJ lr DATED:17106/2023 COMMON JUDGMENT CRIMINAL APPEAL (TR) Nos i 22 and77 OF 2O1A DISPOSING OF THE BOTH THE TR. CRL.APPEALS 1 + ..- 6E SIA;4, d ?B JUN?rn .: S ---a:{-,- :_ "