G.M. Lodha, J. - (1.) THIS is an application under Section 482, Criminal Procedure Code, filed by the assessee who is being prosecuted for offences under Sections 277 and 276C of the Income-tax Act, The gist of the offences is evasion of tax and making of false statement. Sections 276C and 277, Income-tax Act, 1961, read as under : "276C. Wilful attempt to evade tax, etc.--(1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable,-- (i) in a case where the amount sought to be evaded exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine. Explanation.--For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person- (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or (ii) makes or causes to be made any false entry or statement in such books of account or other documents ; or (iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or (iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof. 277. False statement in verification, etc.--If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable,-- (i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds one hundred thousand rupees, with rigorous imprisonment for a terra which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine."
(2.) THE kingpin of the arguments of the learned counsel for the applicant is that all the omissions or commissions pointed out by .the Income-tax authorities which are the bedrock of the prosecution, have been washed away by the appellate judgment of the Commissioner of Income-tax and now there is no existing omission or commission which could have been the base of either false statement or evasion of tax. In support of the above, the learned counsel has submitted a copy of the judgment of the Commissioner of Income-tax. Shri Surinder Kumar Jain, the learned counsel for the applicant, has also relied upon the judgment of the Apex Court in Uttam Chand v. ITO [1982] 133 ITR 909. The judgment of the Apex Court reads as under (at page 910): " Heard counsel, special leave granted. In view of the finding recorded by the Income-tax Appellate Tribunal that it was clear on the appraisal of the entire material on the record that Shrimati Janak Rani was a partner of the assessee-firm and that the firm was a genuine firm, we do not see how the assessee can be prosecuted for filing false returns. We, accordingly, allow this appeal and quash the prosecution." Shri R. N. Surolia, the learned advocate for the respondent, Income-tax Officer, has argued that the appellate judgment is also under appeal of the Appellate Tribunal and, therefore, even if the omissions or commissions alleged by the authorities forming the bedrock of the prosecution have been washed away, they can be revived by the Tribunal. Shri Surolia placed reliance upon the judgment of the Apex Court in P. Jayappan v. S. K. Pemmal, 1st ITO [1984] 149 ITR 696 (SC). It was held in the above decision that the pendency of the reassessment proceedings could not act as a bar to the institution of criminal prosecution for the offences punishable under Section 276C or Section 277 of the Income-tax Act, 1961.
(3.) IN this very judgment, the important observations which are relevant for the purposes are as under (at page 697--headnote) : "The criminal court no doubt has to give due regard to the result of any proceedings under the INcome-tax Act having a bearing on the question in issue and in an appropriate case it may drop the proceeding?, in the light of an order passed under the Act. It does not, however, mean that the result of a proceeding under the Act would be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it. Section 279(1 A) does not provide that the mere fact that there is a possibility of the Commissioner passing an order waiving or reducing the penalty imposed or imposable on the accused under Section 271(1)(c), prosecution for an offence under Section 276C or Section 277 shall not be instituted. IN appropriate cases, the criminal court may adjourn or postpone the hearing of a criminal case in exercise of its discretionary power under Section 309 of the Criminal Procedure Code if the disposal of any proceeding under the INcome-tax Act which has a bearing on the proceedings before it is imminent so that it may take into consideration also the order to be passed therein. Even here the discretion should be exercised judicially and in such a way as not to frustrate the object of the criminal proceedings. There is no rigid rule which makes it necessary for a criminal court to adjourn or postpone the hearing of a case before it indefinitely or for an unduly long period only because some proceedings which may have some bearing on it is pending elsewhere." I have given very thoughtful consideration to the rival contentions of the learned counsel for the parties, and have also applied my mind to the record of the case produced before the court. I am of the opinion that normally in economic offences, the provisions of Section 482, Criminal Procedure Code should not be invoked and when prosecutions are launched, they should be allowed to take their own way because the assessee has every right to defend, here and there. However, in view of the above two decisions of the Apex Court, in some rare cases, this court cannot remain a silent spectator if it finds that there is going to be avoidable harassment, humiliation, torture to a citizen without there being any foundation, base or bedrock. ;