N.S. BABU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) PETITIONER is the proprietor of M/s Bharathy Clays, Thiruvananthapuram and M/s Bharathy Earth Engg. Contractors, income of Rs. 2,19,375 unabsorbed depreciation of Rs. 2,24,060 was deducted resulting in a loss of Rs. 4,685. Along with the return computation statement and annual account were submitted. Accepting the loss, the return of income was to scrutinise the accounts. As he did not respond, AO proposed to do an ex parte assessment of an income of Rs. 40,00,000. Petitioner submitted a reply and in that reply he offered to add two items to the income originally declared namely, Rs. 40,413 being the interest received from M/s Kalpaka Finance, Trivandrum on its winding up and Rs. 1,28,335 received from M/s Tranvancore Cements Ltd., Kottayam in full against the advance made. Assessment was done under s. 143(3) disallowing business expenses of Rs. 43,499. Petitioner filed an appeal before CIT(A). Appeal was allowed and expenses of Rs. 43,499 were allowed. The AO was directed adjustment of property income against the income from other sources and to allow deduction under s. 80C, which petitioner had not claimed in his return. As a result when originally no tax was payable on regular assessment, petitioner has to pay Rs. 1,64,266. Penalty of Rs. 1,20,000 was also imposed. Petitioner filed an appeal under s. 271(1)(c). In the appeal, CIT(A) directed the AO to treat Rs. 1,68,748 as concealed income and levy the minimum penalty as provided under s. 271(1)(c). It was contended that the said levy of penalty was not contested before the Tribunal and the penalty payable was Rs. 66,805. Department filed an appeal against the said order before Tribunal, Cochin Bench. It was subsequently disposed by Ext. P4 order whereunder the penalty imposed was set aside allowing the cross -objection filed by the assessee. Department filed Ext. P1 complaint before Addl. Chief Judicial Magistrate (Economic Offences), Ernakulam, contending that petitioner deliberately concealed the income with the intention of evading tax and also made a statement on verification under the IT Act and delivered an account or statement which he knew or believed to be false and therefore he committed offences under s. 276C and s. 277 of IT Act and also offences under ss. 193, 196 and 420 of IPC. Learned Magistrate has taken cognizance of the offences. Petition is filed under Art. 226 of the Constitution of India to quash Ext. P1 complaint.

(2.) LEARNED counsel appearing for the petitioner and standing counsel for the first respondent were heard.

(3.) SEC . 276C of the IT Act provides that if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under the Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of the Act shall be punishable as provided under the section. Sec. 277 provides that if a person makes a statement in any verification under the 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, shall be punishable as provided thereunder.