GEETANJALI MILLS LIMITED Vs. V THIRUVENKATA REDDIAR

JUDGEMENT

(1.) THE petition has been filed to quash the proceedings in C. C. No. 29 of 1985 on the file of the Additional Chief Judicial Magistrate (Economic Offences), Madurai THE Inspecting Assistant Commissioner of Income-tax (Assessment Range No. 1), Madurai, launched prosecution against petitioners Nos. 1 to 7 (accused Nos. 1 to 4, 6, 7 and 10) and three others (accused Nos. 5, 8 and 9) for the offences under sections 120B read with sections 193, 196, 420 read with section 511 of the Indian Penal Code ("IPC") and sections 276C(1), 277 and 278B of the Income-tax Act, 1961.

(2.) THE first petitioner is a limited company, a spinning mill manufacturing cotton yarn. THE second petitioner is its managing director. Petitioners Nos. 3 to 6 are its directors and the seventh petitioner is its secretary. THE first petitioner-company furnished its income-tax return and connected statements declaring an income of Rs. 1, 11, 370 for the fifteen months' period ending with March 31, 1980, claiming exemption by way of stores consumption in the form of bobbins, spinning wheels, etc., without even mentioning the names And addresses of the suppliers, to the tune of Rs. 7, 53, 963. On the direction of the Assessing Officer, the first petitioner-company, in fact, furnished the names, and addresses of four suppliers and the particulars of purchase vouchers. On scrutiny of all such materials produced, the Assessing Officer computed the income at Rs. 20, 87, 680 by his order dated March 24, 1983, for the assessment year 1980-81. During scrutiny, it was found that the names and addresses of the suppliers as given by the petitioner company were non-existing persons, besides the vouchers numbering about 263 being found to be bogus.

(3.) THEREAFTER, the Department launched prosecution against the assessee under section 277 of the Income-tax Act, 1961. The assessee filed a petition in the High Court under section 482 of the Criminal Procedure Code, 1973, for quashing the criminal complaint against it on the ground that the criminal proceedings were an abuse of the process of the court, because, since the order of the Tribunal was not final and the penalty proceedings were open to correction in the light of the opinion given by the High Court in the income-tax reference which was pending, the jurisdictional foundation might be knocked off and fresh penalty proceedings might have to be undertaken by the Income-tax Officer and, in that event, he might take a different view so as to absolve the assessee altogether from the imposition of penalty and that even if the Income-tax Officer did not do so, there were two other higher forums in which such a finding could be arrived at. It was held under such circumstances as follows: "Mere expectancies should not stand in the way of the criminal court from proceeding in the matter.