M.B.Sharma, J. - (1.) ALL the abovenumbered revision petitions involve a common question of law and, therefore, it will be in the interest of justice to deal with them by a common order. It is also necessary to deal with them under a common order because the complaint out of which the abovenumbered revision petitions arise was filed after the proceedings under Section 132(5) of the Income-tax Act, 1961 ("the Act"), were finalised and they arose out of a raid organised on May 20, 1983, by the Income-tax Officer, Central Circle-3, Jaipur.
(2.) THE common question of law which is involved in all the cases is as to whether for filing a complaint under Section 276C of the Act, it is necessary that there should be a regular assessment under the Act, against the assessee. On May 20, 1982, under the provisions of Section 132(1) and (1A), a search was conducted in the business premises and residential house of the accused situated in Dhamani Market and also at Bodala farm, Jaipur, after obtaining a search warrant. During that search, it is alleged that cash, precious and semi-precious stones and jewellery as well as certain documents were found. The Income-tax Officer, after affording reasonable opportunity to the petitioners of being heard and after making an enquiry under the provisions of the Act, with the approval of the Inspecting Assistant Commissioner, made an order under Sub-section (5) of Section 132, for various asssessment years in respect of the petitioners. In the said order, the amount of tax on the income estimated to be undisclosed income was also calculated. Thereafter, complaints were filed against the accused petitioners under Section 276C for the assessment years 1980-81 to 1984-85. The complaints were filed at the instance of the Commissioner as required under Section 279 of the Act, Applications were filed in all the cases on behalf of the accused petitioners that the complaints were premature and there were no reasonable grounds for prosecuting the petitioners. The learned Chief Judicial Magistrate (Economic Offences), Jaipur, dismissed the applications. The main contention of learned counsel for the petitioners is that the prosecution has been launched on uncertain facts. He contends that when the complaints were filed, regular assessment orders had not been made in any of the cases and it cannot be said how much tax is imposable against the accused petitioners. He has further contended that the order under Section 132(5) was not made under the provisions of the Act with the approval of the Inspecting Assistant Commissioner, as required under Sub-section (5) of Section 132 as it is not so averred in the complaints. He contends that unless a regular assessment order is made, it cannot be said definitely that the accused petitioners have wilfully evaded in any manner payment of any tax, penalty, interest chargeable under the Act, and he cannot be prosecuted under Section 276C of the Act. His contention is also that even if it be assumed that they can be prosecuted, they should not be so prosecuted and the Assistant Income-tax Commissioner should not rush for prosecution of the accused unless there is a regular assessment order from which it can be said that the accused petitioners wilfully attempted in any manner whatsoever to evade any tax/penalty or interest chargeable or imposable under the Act. His further contention is that on the amount of tax sought to be evaded two different kinds of imprisonments are provided under Clauses (i) and (ii) of Sub-section (1) of Section 276C and, therefore, it will not be in the interest of justice to launch the prosecution unless the liability is established in a regular assessment by the assessing authority. In support of his contention, Mr. Khandelwal, learned counsel for the petitioner placed reliance on the case of Uttam Chand v. ITO [1982] 133 ITR 909 (SC). In that case, it was held that (p. 910): "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 Smt. 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. ... " In the aforesaid case, when the appeal was pending before the Appellate Tribunal, the Income-tax Officer initiated prosecution of the partner of the firm under Section 277 of the Act for filing false returns. It was not held in Uttam Chand's case [1982] 133 ITR 909 (SC), that during the pendency of the appeal, the Income-tax Officer has no jurisdiction to initiate the prosecution. This case of Uttam Chand came up for consideration before their Lordships of the Supreme Court in P. Jayappan v. S.K. Perumal, First ITO [1984] 149 ITR 696 (SC), and it was observed that (p. 700): "It is true that as observed by this court in Uttam Chand v. ITO [1982] 133 ITR 909, the prosecution once initiated may be quashed in the light of a finding favourable to the assessee recorded by an authority under the Act subsequently in respect of the relevant assessment proceedings but that decision is no authority for the proposition that no proceedings can be initiated at all under Section 276C and Section 277, as long as some proceeding under the Act, in which there is a chance of success of the assessee is pending. ... "
(3.) THEIR Lordships further observed as under (p. 700): "...an appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings under Section 276C and Section 277 of the Act. In the criminal case, all the ingredients of the offence in question have to be established in order to secure the conviction of the accused. The criminal court no doubt has to give due regand to the result of any proceeding under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings 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. Otherwise there is a danger of a contention being advanced that whenever an assessee or any other person liable under the Act had failed to convince the authorities in the proceedings under the Act that he has not deliberately made any false statement or that he has not fabricated any material evidence, the conviction of such person should invariably follow in the criminal court. ... " It will, therefore, be clear that in the case of P. Jayappan [1984] 149 ItR 696 (SC), the Hon'ble Supreme Court has categorically held that mere pendency of proceedings of assessment/reassessment under the Act against an assessee is not a bar against initiation of criminal prosecution for the offence punishable under Section 276C or Section 277. In any criminal case, before the prosecution can succeed, it has to establish all the ingredients of the offence. No doubt, in case any assessment or reassessment order is passed in favour of the assessee during the criminal proceeding, the criminal court has to take note of it and may drop the proceedings. In the case of PNB Finance & Industries Ltd. v. Miss Gita Kripalani, ItO [1986] 157 ItR 385 (Delhi), on which reliance has been placed by Mr. Khandelwal, learned counsel for the petitioners, it has been observed as under (p. 405): "In cases of offences, under the tax laws, it would be improper for the Department to rush with the prosecution without a proper determination by a competent authority, under the Act, of liability which is sought to be made the basis for the prosecution, even though such prosecution may not be incompetent. ... " ;