JYOTI PRAKASH MITTER Vs. HARAMOHAN CHOWDHURY

JUDGEMENT

(1.) These two rules, which are at the instance of the same petitioner, relating to two different periods of assessment, are taken up together for disposal as they involve the same points for consideration. The rules are directed against two orders dated the 27th January, 1975, passed by Sri D. C. Chakravarthi, Chief Metropolitan Magistrate, Calcutta, issuing process against the petitioner under Section 277 of the Income-tax Act, 1961, in Cases Nos. C/72/75 and C/73/75 pending before him.

(2.) The facts leading on to the two rules can be put in a short compass. Two petitions of complaint were filed by the Union of India, on the complaint of Sri Haramohan Chowdhury, Income-tax Officer, " F " Ward, District-III(1), Calcutta, under Section 277 of the Income-tax Act, 1961, for the assessment years 1967-68 and 1968-69. The case as made out in the petition of complaint, inter alia, is that after the retirement of the petitioner, on or about the 27th December, 1961, he has been in extensive legal practice and had large amount of consultation work and chamber practice in addition to his pension; that he acquired large amount of wealth by way of immovable properties, fixed deposits and moneys in banks but was systematically concealing his professional income by filing false returns with a view to defraud the Government of its legitimate dues; that on October 6, 1971, the petitioner delivered two duly verified returns of income-tax for the assessment years 1967-68 and 1968-69 along with three other years disclosing, inter alia, income from pension only but not including his income from professional or other sources; that on searches being conducted and upon enquiry and investigation by the income-tax department there was a disclosure that for the two assessment years, the accused had failed to disclose substantial amount as income ; that the petitioner made a verification in the returns of income to the effect that the numbers shown therein are correct although he knew or had reason to believe that the returns and particulars furnished by him were totally false ; and that thereby the petitioner committed an offence punishable under Section 277 of the Income-tax Act, 1961. The learned Chief Metropolitan Magistrate by his order of the same date took cognizance and issued summons for appearance of the accused. The petitioner appeared on February 28, 1975, and was granted a bail of Rs. 2,000 in default, to jail custody, and the said amount of P. R. bond was subsequently reduced to Rs. 500 on prayer made by the petitioner. The proceedings were impugned by the petitioner and two rules were issued along with an ad-interim stay of all further proceedings if prayed for. Two affidavits-in-opposition on behalf of the opposite party No. I, Sri Haramohan Chowdhury, affirmed on June 4, 1975, and June 5, 1975, respectively, and a supplementary affidavit on behalf of the petitioner, affirmed on the 13th June, 1975, were thereafter filed.

(3.) The submissions of Mr. J. P. Mitter, who appeared in person, are of five dimensions. Firstly, that the present proceedings based on the complaints filed on January 27, 1975, are premature and contrary to the principles of natural justice in view of the notice dated January 15, 1975, issued by the Inspecting Assistant Commissioner, Range-Ill, Calcutta, and served on the petitioner calling upon him to appear before him on February 26, 1975, and show cause as to why a penalty should not be imposed on him under Section 271(1)(c) of the Act; secondly, that neither any prosecution under Section 277 nor any penalty proceedings under Section 271(I)(c) of the Act is maintainable because the assessment for the relevant periods were not completed until then and even now ; thirdly, that the subject-matter of the assessment is barred by limitation in view of the provisions of Sections 153(1)(a)(i) and 139(4)(b)(i) and (5) of the Income-tax Act, 1961; fourthly, that in view of the provisions of Section 139(5) of the Income-tax Act, 1961, for filing the revised return of income at any time before the assessment is completed and also the provisions that even after an ex parte assessment is made, which, however, is not the case here, such ex parte assessment is liable to be set aside under Section 146 of the Income-tax Act and an appeal, thereafter, lies under Section 246 of the Act, the present proceedings are bad in law and improper; and fifthly and lastly, on merits, inasmuch as, in any event, the income from the investments of the petitioner's wife having already been held to be separate, by the Appellate Assistant Commissioner and also by the Commissioner in his order, the same has been wrongly included in the order of assessment against the petitioner to form the basis of the present prosecution. In support of his contentions Mr. Mitter referred to the relevant provisions of the Income-tax Act and also to several cases : Commissioner of Income-tax v. Muthukaruppan Chettiar , T. S. Baliah v. T. S. Rangachari, Income-fax Officer , Assistant Collector of Customs v. L. R. Melwani, . Mr. Balai Lal Pal, Senior Advocate (with Messrs. Biswaranjan Ghoshal and Ajit Kumar Sengupta, Advocates), appearing on behalf of the complainant-opposite party No. 1, Sri Hara-mohan Chowdhury, in both the rules joined issue on all the contentions raised by Mr. Mitter and in support of his submissions he relied on the relevant provisions of the Income-tax Act, 1961, as bearing on his submissions and referred to a long catena of judicial decisions in [1967] 64 ITR 456 (Cal) (Anadi Nath Chakraborty v. Commissioner of Income-tax); (T. S. Baliah v. T. S. Rangachari, Income-tax Officer); (Commissioner of Income-tax v. Anwar Ali); (Jain Brothers v. Union of India) ; [1971] 79 ITR 117 (sic) ; [1917] LR 44 IA 11 ; 39 IC 788 (PC) (Chatrapat Singh Dugar v. Kharag Singh Lachmiram) ; (Commissioner of Income-tax v. S. Teja Singh); (R. P. Kapur v. State of Punjab) and (Jehan Singh v. Delhi Administration). He also distinguished the principles laid down in the case (Commissioner of Income-tax v. Muthukaruppan Chetliar), which was cited by Mr. J. P. Mitter. Mr. Pal in his reply to the first dimension of Mr. Mitter's contentions submitted that the proceedings are neither premature nor opposed to the principles of natural justice being within the ambit of Section 277 of the Income-tax Act, 1961, and as such the prosecution is independent of any other proceedings for penalty, etc., that may be started. As to the second branch of Mr. Mitter's submissions, Mr. Pal relied on the provisions of Section 277 and submitted that even a mere statement in the verification will do. As to the third dimension of Mr. Mitter's submissions, Mr. Pal contended that the subject-matter of assessment is not barred by limitation in view of the provisions of Section 153(1)(b) of the Income-tax Act, 1961, providing for the expiry of 8 years from the end of the assessment years. Mr. Pal next proceeded to submit that the fourth branch of Mr. Mitter's contentions is not warranted in law as the facts referred to are not on the record and as such the point at issue cannot be determined at this stage.