DEEPAK ENGINEERING WORKS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE present petition has been filed under Section 482 of the Code of Criminal Procedure on behalf of petitioner no. 1 i.e. an unregistered firm (U.R.F.)and petitioner nos. 2 to 4 in the capacity of the partner of petitioner no. 1 with a prayer to quash entire criminal proceeding vide Complaint Case No. 47(C) of 1992/569 of 1993 pending before the Special Court of Economic Offences at Patna Civil Court, Patna which was transferred from the Special Court of Economic Offences at Muzaffarpur. Since it was an official complaint, the learned Special Judge, Economic Offences, Muzaffarpur had taken cognizance of offences under Sections 276C, 276D & 277 of the Income Tax Act, 1961 (hereinafter referred to as the I.T. Act) and directed for summoning 2 the petitioners. At the very outset, it is pertinent to mention that the petitioners have not bothered to mention in the present petition as to when the case was transferred to the court of Special Judge, Economic Offences, Patna and as to whether petitioners had ever appeared before the court below in the said proceeding.

(2.) SHORT fact of the case is that after obtaining sanction from the Commissioner of Income Tax under Section 279(1) of the Income Tax Act, 1961 (hereinafter referred to as the I.T. Act) the Income Tax Officer, Bhagalpur had filed a complaint vide Complaint Case No. 47 of 1992 in the Special Court of Economic Offences, Muzaffarpur against petitioners and one another namely Smt. Rajmani Devi on allegation of commission of offences under Sections 276C, 276D & 277 of the Income Tax Act. It was disclosed in the complaint petition that petitioner no. 1 was an unregistered firm (U.R.F.) and petitioner nos. 2 to 4 and one another were partners of accused no. 1 and equally responsible for every act of omission and commission of the said firm. The said firm had derived income from manufacturing steel furnitures as well as contract works and income tax return was filed on 1.9.1989 showing total income of Rs. 49,470/- for the assessment year 1989-90 including the income of M/s Deepak Electricals. Subsequently, on 8.2.1990, a revised return was filed excluding the income of M/s Deepak Electricals and plea was taken that M/s Deepak Electricals was a proprietary concern of petitioner no. 2 who was also a partner of petitioner no. 1 i.e. M/s Deepak Engineering Works. Despite granting several indulgence, the accused persons did not produce the books of accounts, and on the contrary, the accused asked for the certified copies of trading and profit & loss account filed alongwith the original return on the ground that the original copy was misplaced. The Assessing Officer was of the 3 view that since no books of accounts were maintained, the accused tried to avoid production of the same in spite of several opportunities and accordingly, the income was determined under the provisions of Section 145(2) of the Income Tax Act, 1961 (hereinafter referred to as the I.T. Act). It was further alleged that accused firm had advanced loans to two ladies namely Smt. Ranjana Agrawal, W/o petitioner no. 3 and one Smt. Nisha Agrawal, W/o petitioner no. 2. On the strength of the said loan the two ladies had constructed a house and then let it out to the firm. During assessment, statements on oath of both the ladies were not found convincing and as such, the Assessing Authority was of the view that both the ladies were having no source of income of their own and only with a view to divert the income of the firm and their husbands who were partners of accused no. 1 income from the house property was shown in their names. The income from the house property was treated as income of the firm and assessment was completed on the total income of Rs. 4,69,090/- as against declared income of Rs. 49,470/- and penalty proceedings under Section 271(1)(C) were also initiated. The computation of income was also described in the complaint petition which is as follows:

(3.) SRI Jain has emphatically argued that had there been a case of concealment or evasion of the tax, the Income Tax Authority would have initiated penalty proceeding. It was submitted that in this case penalty proceeding was never initiated and in absence of penalty proceeding prosecution of petitioners for alleged offences is not permissible in the eye of law.