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Satya Narayan Rao v/s Union of India & Another

    Application U/S. 482 No. 4899 of 2014

    Decided On, 18 February 2014

    At, High Court of Judicature at Allahabad

    By, THE HONOURABLE MR. JUSTICE ARVIND KUMAR TRIPATHI

    For the Appellant: Rupak Chaubey, Advocate. For the Respondents: ----------.



Judgment Text

Arvind Kumar Tripathi, J.

1. Heard learned counsel for the applicant, Mr. Bharat Ji Agarwal, Senior Advocate appeared on behalf of the respondent Union of India assisted by Mr. Govind Krishna, Advocate and perused the record. Learned counsel for the applicant contended that the applicant is income tax payee. While filing the income tax return for assessment year 2004-05, in computation of the income chart, he claimed deduction u/s 80GGA of Income Tax Act (hereinafter referred to as "the Act") amounting to Rs. 5 lacs, which was given as donation to Swami Sahajanand Educational Trust, Varanasi and the same was verified and accepted by the assessing officer. Subsequently, The Commissioner of Income Tax, Varanasi in exercise of power u/s 263 of the Act issued notice to

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the applicant calling for objection, if any, for recall of the deduction allowed u/s 80GGA of the Act. It was also found that the aforesaid Educational Trust was not approved for deduction u/s 80GGA of the Act, which was earlier verified by the assessing officer and deduction was allowed. Hence, there was no wilful evasion of tax on the part of the applicant. After reassessment of the tax, penalty was imposed u/s 271(1)(c) of the Act. However, the Tribunal has revoked the order of penalty after recording the finding that there was no wilful evasion of tax by the applicant. Whether the said Trust was approved for exemption, the applicant was not aware. When it was found that the said Trust was not approved for exemption by the Income Tax Department, after reassessment, whatever liability of tax was imposed, the same was paid by the applicant.

2. Learned counsel for the applicant contended that since the penalty imposed u/s 271(1)(c) of the Act against the applicant was revoked and there was no concealment of the fact then the criminal prosecution is also not maintainable against the applicant in view of the judgment of the Apex Court in the case of K.C. Builders and Another Vs. The Assistant Commissioner of Income Tax, .

3. Learned counsel for the respondent Union of India opposed the aforesaid prayer and submitted that there was a false statement and verification by the assessee applicant, hence, the prosecution was not only u/s 276(C) but also u/s 277 of the Act. Apart from that the order was passed on 13.03.2013 and at this belated stage, the present application u/s. 482 has been filed, hence, he is not entitled for any relief.

4. Considered the submissions of learned counsel for the parties. From perusal of the complaint, it appears that false statement was made and verified by the applicant when income tax return was submitted claiming deduction of Rs. 5 lacs u/s 80GGA of the Act which was accepted by the assessing officer. The Commissioner of Income Tax, Varanasi in exercise of power u/s 263 of the Act, issued notice to the income tax assessee, why the deduction allowed u/s 80GGA of the Act should not be withdrawn. Subsequently, it was found that Swami Sahajanand Educational Trust, Varanasi was not registered and approved by the Income Tax Department with regard to the deduction u/s 80GGA of the Act. Hence, there was not only reassessment but even for concealment of the fact, the penalty was imposed u/s 271(1)(c) of the Act. There was prosecution for wilful attempt to evasion of tax u/s 276(C) of the Act and the prosecution u/s 277 of the Act for giving false statement and verification. While considering the appeal against penalty, the appellate Tribunal decided that there was no wilful attempt for evasion of tax by the applicant, penalty imposed against the applicant, was invoked. Para 26 and 27 of the judgment of the Apex Court in the case of K.C. Builders (supra) is quoted herein below:

26. The above judgment squarely applies to the facts and circumstances of the case on hand. In this case also, similarly, the application was moved by the assessee before the magistrate to drop the criminal proceedings which were dismissed by the magistrate and the High Court also on a petition filed u/s 397 and 401 of the Code of Criminal Procedure, 1973 to revise the order of the additional chief metropolitan magistrate has also dismissed the same and refused to refer to the order passed by the competent Tribunal. As held by this Court, the High Court is not justified in dismissing the criminal revision vide its judgment ignoring the settled law as laid down by this Court that the finding of the appellate Tribunal was conclusive and the prosecution cannot be sustained since the penalty after having been cancelled by the complainant following the appellate Tribunal's order, no offence survives under the Income Tax Act and thus quashing of prosecution is automatic.

27. In the instant case, the penalties levied u/s 271(1)(c) were cancelled by the respondent by giving effect to the order of the Income Tax Appellate Tribunal in I.T.A. Nos. 3129-3132. It is settled law that levy of penalties and prosecution u/s 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution u/s 276C is automatic.

5. According to judgment of the Apex Court the levy of penalty and prosecution u/s 276(C) of the Act are simultaneous. Hence, if penalty is cancelled on the ground that there was no concealment of the fact, then, quashing of the prosecution u/s 276(C) of the Act is automatic. But in the present case, this factual aspect is required to be examined whether there was false statement and verification by the applicant to get the benefit of deduction u/s 80GGA of the Act because according to the applicant, he paid a sum of Rs. 5 lacs in cash, however, he could not disclose name of the person to whom the cash was handed over rather it was informed that donation was given to Swami Sahajanand Educational Trust, Varanasi. Subsequently even the receipt only for a sum of Rs. 4.6 lacs was produced and admittedly the aforesaid Trust was not registered and approved with regard to deduction u/s 80GGA of the Act for donation paid to the aforesaid Trust. The prosecution is not only u/s 276(C) but also u/s 277 of the Act. Hence, in view of the fact, at this stage, it cannot be said whether there is false statement and verification by the applicant or not and the same has to be decided by the court concerned at appropriate stage, in accordance with law on the basis of evidence adduced by the parties. In view of the judgment of the Apex Court, if penalty was revoked then prosecution u/s 276(C) of the Act, is liable to be dropped or quashed. Hence, no interference is required at this initial stage.

6. However, if objection/discharge application is moved by the applicant through counsel within 30 days before the court concerned, it is expected that the same shall be considered and decided by a reasoned and speaking order, expeditiously, at appropriate stage, in accordance with law. Till disposal of the application on merit, no coercive action shall be taken against the applicant in Complaint Case No. 722 of 2013, under Sections 276C(1) and 277 of Income Tax Act, District Varanasi pending in the court of Special C.J.M. Varanasi.

7. Further, if discharge application is rejected and the applicant appears before the court concerned within three weeks and applies for bail in aforesaid complaint case, it is expected that the same will be considered and disposed off, expeditiously, if possible on the same day, in accordance with law, in view of the law laid down by the Full Bench of this Court in the case of Amarawati and Another (Smt.) Vs. State of U.P., and by the Apex Court in Lal Kamlendra Pratap Singh Vs. State of U.P. and Others, after giving opportunity to public prosecutor. With aforesaid observations and direction, the present application u/s. 482 Cr.P.C. is finally disposed off.
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