Arvind Kumar Tripathi, J. - (1.) HEARD learned counsel for the applicant, Mr. Bharat Ji Agarwal, Senior Advocate appeared on behalf of the respondent Union of India assisted by Mr. Govind Krishna, Advocate and perused the record. Learned counsel for the applicant contended that the applicant is income tax payee. While filing the income tax return for assessment year 2004 -05, in computation of the income chart, he claimed deduction under Section 80GGA of Income Tax Act (hereinafter referred to as "the Act") amounting to Rs. 5 lacs, which was given as donation to Swami Sahajanand Educational Trust, Varanasi and the same was verified and accepted by the assessing officer. Subsequently, The Commissioner of Income Tax, Varanasi in exercise of power under Section 263 of the Act issued notice to the applicant calling for objection, if any, for recall of the deduction allowed under Section 80GGA of the Act. It was also found that the aforesaid Educational Trust was not approved for deduction under Section 80GGA of the Act, which was earlier verified by the assessing officer and deduction was allowed. Hence, there was no wilful evasion of tax on the part of the applicant. After reassessment of the tax, penalty was imposed under Section 271(1)(c) of the Act. However, the Tribunal has revoked the order of penalty after recording the finding that there was no wilful evasion of tax by the applicant. Whether the said Trust was approved for exemption, the applicant was not aware. When it was found that the said Trust was not approved for exemption by the Income Tax Department, after reassessment, whatever liability of tax was imposed, the same was paid by the applicant.
(2.) LEARNED counsel for the applicant contended that since the penalty imposed under Section 271(1)(c) of the Act against the applicant was revoked and there was no concealment of the fact then the criminal prosecution is also not maintainable against the applicant in view of the judgment of the Apex Court in the case of K.C. Builders and Another Vs. The Assistant Commissioner of Income Tax : JT 2004 (2) SC 100. Learned counsel for the respondent Union of India opposed the aforesaid prayer and submitted that there was a false statement and verification by the assessee applicant, hence, the prosecution was not only under Section 276(C) but also under Section 277 of the Act. Apart from that the order was passed on 13.03.2013 and at this belated stage, the present application u/s. 482 has been filed, hence, he is not entitled for any relief.
(3.) CONSIDERED the submissions of learned counsel for the parties. From perusal of the complaint, it appears that false statement was made and verified by the applicant when income tax return was submitted claiming deduction of Rs. 5 lacs under Section 80GGA of the Act which was accepted by the assessing officer. The Commissioner of Income Tax, Varanasi in exercise of power under Section 263 of the Act, issued notice to the income tax assessee, why the deduction allowed under Section 80GGA of the Act should not be withdrawn. Subsequently, it was found that Swami Sahajanand Educational Trust, Varanasi was not registered and approved by the Income Tax Department with regard to the deduction under Section 80GGA of the Act. Hence, there was not only reassessment but even for concealment of the fact, the penalty was imposed under Section 271(1)(c) of the Act. There was prosecution for wilful attempt to evasion of tax under Section 276(C) of the Act and the prosecution under Section 277 of the Act for giving false statement and verification. While considering the appeal against penalty, the appellate Tribunal decided that there was no wilful attempt for evasion of tax by the applicant, penalty imposed against the applicant, was invoked. Para 26 and 27 of the judgment of the Apex Court in the case of K.C. Builders (supra) is quoted herein below: 26. The above judgment squarely applies to the facts and circumstances of the case on hand. In this case also, similarly, the application was moved by the assessee before the magistrate to drop the criminal proceedings which were dismissed by the magistrate and the High Court also on a petition filed under Section 397 and 401 of the Code of Criminal Procedure, 1973 to revise the order of the additional chief metropolitan magistrate has also dismissed the same and refused to refer to the order passed by the competent Tribunal. As held by this Court, the High Court is not justified in dismissing the criminal revision vide its judgment ignoring the settled law as laid down by this Court that the finding of the appellate Tribunal was conclusive and the prosecution cannot be sustained since the penalty after having been cancelled by the complainant following the appellate Tribunal's order, no offence survives under the Income Tax Act and thus quashing of prosecution is automatic. 27. In the instant case, the penalties levied under Section 271(1)(c) were cancelled by the respondent by giving effect to the order of the Income Tax Appellate Tribunal in I.T.A. Nos. 3129 -3132. It is settled law that levy of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276C is automatic.;