INCOME-TAX OFFICER Vs. GAGNEJA TRADERS

JUDGEMENT

(1.) THIS is a petition for leave to appeal filed by the Revenue against the order dated February 26, 2003, passed by the Chief Judicial Magistrate, Jalandhar (hereinafter referred to as 'the trial court'), by which he acquitted non -petitionersM/s. Gagneja Traders and its partnersShri Joginder Pal, and Smt. Sheila Devi in Criminal Case No. 683/02 of 2002 registered on the basis of the complaint filed by the petitioner under Sections 276C and 277 read with Section 278B of the Income -tax Act, 1961 (for short, 'the Act'), with regard to the assessment year 1988 -89.

(2.) NON -petitioner No. 1 is a registered firm and is deriving income from purchase and sale of gur and sugar. Non -petitioners Nos. 2 and 3 were partners in non -petitioner No. 1 having equal shares. For the assessment year 1988 -89, the return of income was filed on behalf of respondent No. 1 on August 29, 1988, declaring an income of Rs. 38,584, The assessment was completed on December 28, 1988. Non -petitioner No. 2Joginder Pal had signed the verification portion of the return as a partner of the accused firm. Enquiries were made by investigating agency of the Income -tax Department about the purchase of a draft by non -petitioner No. 1 on March 14, 1988, for Rs. 70,320 from the State Bank of India. The inspector signed the cash book on July 19, 1989. Thereupon, the assessee filed the revised return on July 21,1989, surrendering Rs. 70,320. The Department issued notice under Section 148 of the Act to bring to tax the escaped income. In response thereto, the assessee filed a revised return on February 15, 1990, declaring total income of Rs. 18,904. The verification of these returns were also signed by non -petitioner No. 2Joginder Pal. The assessment was made at net income of Rs. 1,14,404 on February 22/28, 1990. The Assessing Officer imposed penalty of Rs. 30,245, which was 100 per cent. of the tax sought to be evaded vide order dated August 28/29,1990. The assessee unsuccessfully challenged the order imposing penalty before the Commissioner of Income -tax (Appeals), who rejected its appeal vide order dated March 7, 1991. On second appeal, the Income -tax Appellate Tribunal, Amritsar Bench, Amritsar (for short, 'the Tribunal'), reversed the appellate order and deleted the penalties.

(3.) DR . N. L. Sharda, learned counsel for the petitioner, argued that the trial court committed a serious illegality by acquitting the non -petitioners only on the ground that the Tribunal had set aside the order of penalty. He argued that the Revenue has not accepted the decision of the Tribunal and filed appeal under Section 260A of the Act before the High Court and, therefore, that decision could not have been made the basis for acquitting the non -petitioners. In support of his arguments, Dr. Sharda relied on the judgments of the apex court in P. Jayappan v. S. K. Perumal, First ITO : [1984]149ITR696(SC) and K. T. M. S. Mohammed v. Union of India : 1992CriLJ2781 .