ELOOR CONSTRUCTIONS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE original petition has been filed to quash exhibit P-9. Exhibit P-9 is a complaint filed by the Deputy Commissioner of Income-tax (Assessment), Special Range, Thrissur against the petitioners before the Additional Chief Judicial Magistrate (Economic Offences), Ernakulam, for offences under sections 276C(1) and 277(ii), read with Section 278B of the Income-tax Act. During the pendency of the original petition, the third petitioner died. Counsel for the petitioners submitted that on the same facts penalty proceedings were initiated against the petitioners under Section 271(1)(c) of the Income-tax Act. But these proceedings had been set aside finally by the Income-tax Appellate Tribunal by exhibit P-10 order and reference application, exhibit P-11, has also been dismissed. Hence, counsel for the petitioners contends that since the basis of the complaint is not there, exhibit P-9 should be quashed. Counsel for the Revenue submitted that the petitioners have to approach the magistrate's court and bring to the notice of that court regarding the subsequent developments. Even though, earlier, this court had quashed the said proceedings on the basis that the penalty proceedings have been set aside, subsequently in two Division Bench decisions, a contrary view has been taken. That is in Upasana Hospital and Hursing Home v. ITO [1996] 217 ITR 555 (Ker) and P.K. Narayanan v. CIT [1996] 219 ITR 33 (Ker). In both these cases, the Division Bench has taken the view that it cannot be said that prosecution will not be maintainable and the same is to be quashed the moment the appellate authority cancels the order imposing penalty. Every case will have to be considered separately and a decision will have to be taken according to the facts of each case. THE Division Bench in those two cases directed the petitioner to approach the magistrate's court with a prayer for discharging on the various grounds mentioned.

(2.) IN the above view of the matter, I do not see any ground to interfere. The petitioners can approach the magistrate's court and file applications for discharging them on the ground that the penalty proceedings had been dropped.