By TIOL News Service

NEW DELHI, DEC 18, 2015: THE issue is - Whether when it is known that pendency of appellate proceedings has no bearing in initiation of prosecution under the Income Tax Act, the proceedings once initiated in a warrant trial case, there is no provision under CPC, wherein the proceedings can be stayed by the Magistrate suo moto or upon the application filed on behalf of the accused. YES is the answer.

Facts of the case

The assessee sought staying of the criminal proceedings against him on the ground that against the Assessment Order, the assessee had already filed an appeal, which was pending for adjudication. Counsel appearing on behalf of the assessee argued that the complaint case filed by the Income Tax Department was liable to be quashed on the ground that at the time of filing of the criminal complaint, the assessee had attained the age of 70 years, thus, no prosecution can be initiated against him. In support of the aforenoted submission, senior counsel had heavily relied upon the case bearing Criminal Revision Petition No.36/2011, titled as Arun Kumar Bhatia & Anr Vs. Vijay Kumar & Ors. decided by HC on 02.11.2011. In the said case, the assessee had taken the ground that he was above the age of 70 years on the date of filing the complaint and as per Circular dated 07.02.1991 issued by the CBDT, no prosecution can be initiated against a person who is above the age of 70 years. It had further argued that case against the assessee was that he concealed his income and did not file income tax accordingly. The said complaint was filed on the allegation that assessee had filed his original return of income in the prescribed form duly signed and verified by him for AY 2007-08 on 31.07.2007 vide receipt No.000105, declaring income of Rs.75,31,769/-, in which his account with HSBC (P) Bank, Zurich, was not disclosed by him. The information that assessee was having foreign bank account with the aforesaid Bank was received by the Investigation Wing of the Income Tax Department, Government of India. On coming to know about the said information with the Indian Government, addressed to the Director General of Investigation, Income Tax Department, New Delhi, assessee stated that he had an account outside India, which was as per FEMA Regulations, through his AR Abhay K. Aggarwal. To verify the details of the said foreign bank account in the name of the assessee and the source of the deposits, summon u/s 131(1A) dated 02.09.2011 was issued to the assessee. Having knowledge qua start of the inquiries with regard to the source of funds deposited by the assessee in the aforesaid foreign bank account, the assessee admitted the same, wherein he firstly stated that the information with the Department was unauthentic/unreliable and then agreed to deposit income tax on account of the balance exists in the foreign bank account in his name. Assessee again offered to deposit income tax on the undisclosed deposits made by him in the foreign bank account.

Held that,

++ it is pertinent to mention here that the aforesaid petition of Arun Kumar Bhatia and Anr. was allowed on the statement made by senior standing counsel for the IT Department, who fairly conceded that as per Circular dated 07.02.1991, no prosecution can be initiated against a person who is above the age of 70 years. Since the aforesaid order dated 02.11.2011 was passed by this Court only, therefore, it can authoritatively be said that the said order was not passed on merits, however, based on the precise statement made by the counsel for the Department. The fact remains that Instruction No.5051/1991 dated 07.02.1991 stated prosecution need not normally be initiated against persons who have attained the age of 70 years at the time of commission of offence. Admittedly, at the time of commission of alleged offence, the petitioner was not reached to the age of 70 years, however, the complaint in question was filed against him when he attained the age of 70 years. Thus, in my considered opinion, since case of Arun Bhatia was decided on the basis of the Circular dated 07.02.1991 and not on merits, therefore, benefit of the same cannot be given to the present petitioner. In the impugned order, the Trial Court has recorded that both the complaints have been filed u/s 276C (1), 276D & 277. The grounds of appeal and statements of facts clearly establish that there was no ground in either of the appeal in respect of the offence U/s 276D. The appeal had been filed challenging the AO and consequential outcome of imposition of penalty u/s 271(1)(c). Thus, at any count, the outcome of the appeal filed on behalf of the petitioner will have no bearing on the present complaint at least in respect of offence U/s 276D. Moreover, no prayer for quashing of the proceedings was made by the petitioner in the application;

++ the Trial Court further recorded that in Sasi Enterprises Vs. ACIT, 2014-TIOL-09-SC-IT, while quoting the judgment in B. Premanand & Ors. Vs. Mohan Koikal & Ors., (2011) 4 SCC 266, the Supreme Court clearly held in para 30 that pendency of appellate proceedings has no bearing in initiation of prosecution under the Income Tax Act. Accordingly, it can be safely stated that proceedings once initiated in a warrant trial case, there is no provision under the Code of Criminal Procedure, 1973, except U/s 258 Cr.P.C., where the proceedings of the case can be stayed by the Magistrate suo moto or upon the application filed on behalf of the accused, however, Section 258 Cr.P.C. relates only to summons trial cases. Moreover, the application filed by the petitioner did not mention under which provision of Act it is filed. Thus, the Trial Court has rightly dismissed the application filed by the petitioner. From the above noted facts, it is crystal clear that the petitioner had admitted to have bank accounts outside India only after the investigation by the IT Department. The said foreign account was the undisclosed account and the deposits therein relates to his undisclosed income and the same needs to be examined. Therefore, I am of the considered opinion that there is no illegality, infirmity or perversity in the order dated 19.02.2015 passed by the Trial Court. Thus, finding no merit in the instant petition, the same is hereby dismissed. With the dismissal of the petition itself, the instant application has become infructuous. The same is dismissed accordingly.

(See 2015-TIOL-2834-HC-DEL-IT)