SABINA,J. - (1.) PETITIONERS have filed this petition under S. 482 of the CrPC, 1973 for quashing of the complaint No. 9/1 of 20th Jan., 1992 (Annex. P-1) and all subsequent proceedings arising therefrom including the summoning order dt. 29th March, 1985 (Annex. P-2) and the order dt. 4th April, 2001 (Annex. P-3).
(2.) THE case of the complainant in brief is that the accused had filed return of income-tax on 5th Oct., 1983 declaring the income of Rs. 71,800. After inquiry, an addition of Rs. 3,15,000 was made in the assessment order dt. 27th March, 1985. It was also found that no basis for the interest paid i.e. Rs. 35,000 were given. Notices under S. 143(2) and 142(1) were issued to the accused. The accused then furnished a revised return of income showing addition of Rs. 3,15,000 under the Amnesty Scheme. Since the revised return had been filed after the detection of concealment during original assessment proceedings, the surrender made in the Amnesty Scheme was not complete. Moreover, the interest of Rs. 35,000 had not been surrendered. Learned counsel for the petitioners has submitted that the assessment order was challenged by the petitioners and the same was set aside by the appellate authority vide order dt. 3rd Feb., 1986 and the assessing authority was directed to pass a fresh order of assessment. Thereafter, the petitioners surrendered the amount of Rs. 3,15,000 and filed a revised return of income under the Amnesty Scheme. Thereafter, the assessment order was passed. The additions made by the petitioners by way of revised return were accepted. However, the claim of the petitioners, qua the amount of Rs. 35,000 was disallowed. The said order was confirmed in appeal. Vide order dt. 5th Dec., 1994, the Tribunal recalled the finding qua levy of interest of Rs. 35,000 in question. Thereafter, the petitioners moved an application for deletion of penalties and vide order dt. 12th Jan., 2000, CIT(A)-XXVI ordered that the penalty imposed by the AO be deleted. Learned counsel has submitted that in view of the above factual position, the criminal proceedings against the petitioners were liable to be quashed as now nothing remained due against the petitioners. Learned counsel for the petitioners has placed reliance on K.C. Builders & Anr. vs. Asstt. CIT (2004) 186 CTR (SC) 721 : (2004) 265 ITR 562 (SC). The apex Court has held as under : "In our view, once the finding of concealment and subsequent levy of penalties under S. 271(1)(c) of the Act has been struck down by the Tribunal, the AO has no other alternative except to correct his order under S. 154 of the Act as per the directions of the Tribunal. As already notice, the subject-matter of the complaint before this Court is concealment of income arrived at on the basis of the finding of the AO. If the Tribunal has set aside the order of concealment and penalties, there is no concealment in the eyes of law and, therefore, the prosecution cannot be proceeded with by the complaint and further proceedings will be illegal and without jurisdiction. The Asstt. CIT cannot proceed with the prosecution even after the order of concealment has been set aside by the Tribunal. When the Tribunal has set aside the levy of penalty, the criminal proceedings against the appellants cannot survive for further consideration. In our view, the High Court has taken the view that the charges have been framed and the matter is in the stage of further cross-examination and, therefore, the prosecution may proceed with the trial. In our opinion, the view taken by the learned Magistrate and the High Court is fallacious. In our view, if the trial is allowed to proceed further after the order of the Tribunal and the consequent cancellation of penalty, it will be an idle and empty formality to require the appellants to have the order of the Tribunal exhibited as a defence document inasmuch as the passing of the order as aforementioned is unsustainable and unquestionable."
(3.) LEARNED counsel has also placed reliance on Gupta Constructions Co. and Ors. vs. ITO and Ors. (2003) 260 ITR 415 (P&H) wherein it was held as under : "In view of the judgment of the Supreme Court, mentioned above, wherein, it has been held that if the penalty proceedings have been set aside in the deparmental proceedings then the very basis of launching of the prosecution against the assessee stands knocked down. In such facts, the Supreme Court had quashed the proceedings initiated under the IT Act against the assessee. In view of the said judgment, I find that the prosecution against the petitioner is an abuse of the process of law. The very basis of penalty has been struck down by the authorities under the Act." ;