INCOME TAX OFFICER Vs. RAJAN AND CO

JUDGEMENT

(1.) This revision petition is directed against the order dated 25.9.2004 passed by the learned Additional Sessions Judge whereby the respondents have been discharged of the offences under Section 276C (1) and 277 of the Income Tax Act, 1961 (hereinafter referred to as ?the said Act?). The Income Tax Department is aggrieved by this order. The point taken, at the outset by Mr Jolly, who appeared on behalf of the petitioner, is that the respondents have been discharged on the purported ground that since penalty has been deleted by the order passed by the Income Tax Appellate Tribunal (hereinafter referred to as ?ITAT?), the criminal prosecution under Sections 276C (1) and Section 277 of the said Act cannot continue. The learned Additional Sessions Judge in coming to the aforesaid conclusion of discharging the respondents took into consideration several decisions of the Supreme Court. In particular, he considered the decision in K.C. Builders and Another v. Assistant Commissioner of Income-Tax : 265 ITR 562. He also took into consideration the case of G.L. Didwania v. ITO : 1997 ITR 687. After referring to these decisions, the learned Additional Sessions Judge observed as under:- ?Keeping in view the decision of the Apex Court on this point, once the penalty has been deleted by the orders of CIT (Appeals) and by the ITAT, it will not be appropriate in the eyes of law to let the criminal prosecution continue in the case.? After further reference to the provisions of Sections 276C (1) and 277 of the Income Tax Act, the learned Additional Sessions Judge observed as under:-

(2.) Before adverting to the arguments advanced by the learned counsel for the parties, the facts need to be stated. The Assessment Year involved in this case is 1990-91. While computing the assessible income in respect of the said assessment year, the Assessing Officer, inter alia, made an addition of Rs 3,20,868/- in the trading account on account of suppression of sales. He also made an addition of Rs 40,630/- on account of commission disallowed to Smt. Archana Gupta, as being a bogus payment. The assessment order dated 26.3.1993 referred to the two additions in the following manner:-

(3.) Being aggrieved by these additions an appeal was preferred before the CIT (Appeals) by the Assessee. The CIT (Appeals) enhanced both the additions. Thereafter, the Assessee approached the ITAT and the ITAT deleted the enhancements on both counts. Insofar as the addition in the trading account was concerned, the same was set aside in its entirety and the issue was remanded to the Assessing Officer with some directions. In other words, the ITAT did not maintain the addition insofar as the trading account was concerned. The addition of the disallowed commission was maintained in terms of the assessment order. This finding is final because neither party preferred any appeal with regard to the same before the High Court.