N.S.GUPTA, J. - (1.) SRI Banwari Lal Agarwal, proprietor, Saraswati Pipe Company, Kanpur, the petitioner above named has filed the aforesaid four petitions for quashing the Criminal Complaints Nos. 99 of 1988, 94 of 1988, 97 of 1988 and 98 of 1988, filed by the Union of India through Sri V.B. Mishra, ITO, Circle 1 (5), Kanpur, for his criminal prosecution under S. 276C of the IT Act, 1961.
(2.) THE admitted facts of the cases are that the petitioner was carrying on business in the purchase and sale of steel tubes and fittings at Kanpur. On 21st May, 1980, a search was conducted by the IT officials at the business and residential premises of the petitioner. During the said search it was found that the petitioner had omitted to record certain transactions in his account books. The petitioner claimed that with a view to purchase peace and to avoid protracted litigation with the Department he was advised to settle the dispute with the then CIT, Kanpur. Accordingly, the petitioner surrendered a sum of Rs. 35,000 to be added towards the income for the asst. year 1980 81, Rs. 20,000 for the asst. year 1979 80. For the asst. year 1978 79 the petitioner filed return of income showing an income of Rs. 35,000. His income was, however, assessed to Rs. 56,254, after adding back certain items towards the depreciation and for low withdrawal. The Department maintained that since the petitioner filed wrong and belated returns, he was guilty of committing offence punishable under S. 276C of the IT Act. Hence, four separate criminal complaints were filed by the then ITO before the Chief Judicial Magistrate, Kanpur, and the petitioner was sought to be punished. Feeling aggrieved by the said criminal complaints, the petitioner filed the aforesaid four criminal miscellaneous applications before this Court under S. 482 of the CrPC, and prayed for quashing of the said complaints. Since common question of law and fact were involved in all these petitions, these petitions were heard together and are being disposed of by this common judgment. I have heard Shri R.S. Agarwal, learned counsel for the petitioner, and Sri Shekhar Srivastava, standing counsel for the IT Department. The first point urged by learned counsel for the petitioner before me is that since the assessments were made on the basis of the compromise arrived at between the petitioner and the then CIT, Kanpur, and since in pursuance of the understanding given by the then CIT, Kanpur, that no penal action would be taken against the petitioner, the petitioner surrendered various amounts. The assessment in question being a compromised assessment, there was no occasion for the ITO to initiate any criminal penal action against the petitioner. Further it was contended on behalf of the petitioner that the offence being compoundable and the prosecution having been launched without offering an opportunity of being heard and to compound the matter, as was contemplated by the provisions of sub s. (2) of S. 279 of the IT Act, before or after the institution of the proceedings, the criminal prosecution initiated against the petitioner was bad in law.
(3.) THE provisions of sub s. (2) of S. 279 read as under : "Any offence under this Chapter may, either before or after the institution of proceedings, be compounded by the Chief CIT or a Director General." The words "either before or after the institution of the proceedings" appearing in sub s. (2) of s. 279 reproduced supra are very significant. It is clear from the record of the case that before according the sanction for prosecution the CIT did not offer an opportunity of being heard to the petitioner. The petitioner in this case being a businessman, it is probable for me to believe that if an opportunity of being heard was afforded to the petitioner by the authorities of the IT Department before according sanction for prosecution, the petitioner would have offered to compound the matter before the prosecution was launched against him, in order to save himself from disgrace and ordeal of the prosecution, on such terms and conditions which the compounding authority may have imposed. By not affording such an opportunity to the petitioner, the authorities of the IT Department have failed to observe the rules of natural justice. Therefore, the criminal complaints instituted against the petitioner cannot be appreciated and would be deemed to be abuse of the process of the Court.;