HARKAWAT Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a petition filed under Section 482 of the Code of Criminal Procedure, 1973, for quashment of the prosecution of the present petitioners under sections 276C read with Section 278B of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'), in Criminal Case No. 14 of 1996 pending in the court of Chief Judicial Magistrate, Ratlam.

(2.) ACCORDING to the prosecution case, the present petitioner No. 1 is a partnership firm and petitioners Nos. 2 and 3 are its partners. They were engaged in business of cigarette. They made payment of interest to the manufacturer company in the assessment year 1984 -85 but tax was not deducted at source in accordance with the provisions of Section 194A of the Act and was not deposited in the Central Government's account as provided in Rule 30 of the Income -tax Rules, 1962. After getting proper sanction, a criminal complaint against the petitioners was filed for commission of the aforesaid offences before the CJM, Ratlam. 3. It has been averred by the petitioners that penalty imposed by the Revenue was set aside by the Income -tax Appellate Tribunal, vide order dated August 20, 1993, passed in I. T. A. No. 1165/Ind/88 and in view of the judgment of the apex court reported in the matter of K.C. Builders v. Asst. CIT : [2004]265ITR562(SC) , prosecution cannot be sustained when the penalty has already been set aside by the Income -tax Appellate Tribunal.

(3.) THE above order shows that the appeal preferred by the present petitioner was allowed by the Income -tax Appellate Tribunal and penalty imposed by the Department has already been set aside and basis of prosecution has already gone. In these circumstances; the principles laid down by the apex court in the matter of K.C. Builders : [2004]265ITR562(SC) are squarely applicable in the facts of present case also and, therefore, prosecution is not sustainable.