Madura Chit and Investments Pvt. Ltd. and Another Vs. Income-tax Officer - Court Judgment

Excerpt:
- - in view of the decision of the apex court, the ratio of which is clearly applicable to the facts of this case, the complaint cannot be quashed at the threshold.pratap singh j.1. the accused nos. 1 and 2 in c. c. no. 298 of 1990 on the file of the additional chief judicial magistrate (e. o.), madurai, have filed this petition under section 482, criminal procedure code, praying to call for the records in the aforesaid case and quash the same. 2. short facts are : the respondent has filed a complaint against the petitioners arraying them as accused nos. 1 and 2 for offences under sections 276c(1) and 277 read with section 278b of the income-tax act, 1961, and sections 193, 196 and 420 read with section 511 of the indian penal code. the allegations in it are briefly as follows : the complainant is the income-tax officer, ward-i(1), madurai. he is a public servant. the complaint is filed with the period permission of the commissioner of income-tax, madurai. the complaint is in respect of the assessment year 1980-81. the first accused is a private limited company. the second accused is the managing director of the first accused and in charge of and responsible for the conduct of the business of the company. the first accused is an assessee. the return of income of the first accused for 1980-81 was filed on july 4, 1981. as part of the return, statements of accounts were also delivered to the income-tax officer. the loss disclosed in the return was rs. 31,520. subsequently, the balance-sheet was filed on august 5, 1982. as per the profit and loss account filed on that date, the net loss amounted to rs. 31,520.69. on a scrutiny of the books of account, the income-tax officer found that the entries in the day book have been altered thereby inflating the cash availability of those dates. as per the details given, the first accused had inflated the cash balance by a total sum of rs. 19,501.10. the entries were corrected to create a cash balance and to pay bharath fibres. the income-tax officer also found that cash amounting to rs. 7,000 was introduced by the first accused company in its head officer day book on november 28, 1979, with a narration that it was received from the branch office at chinnamanur. there is no corresponding debit in the books of the branch office. no explanation was given for this discrepancy and hence this sum was added. according to the day book of the first accused, there was a receipt of rs. 1,500 on august 2, 1979, from kalpana textiles, and on the same date, a sum of rs. 1,500 was found debited. it is clear that there was no actual cash receipt from kalpana textiles. the first accused took the matter in appeal to the commissioner of income-tax and further appeal to the income-tax appellate tribunal. the order of the income-tax officer was confirmed by the appellate tribunal. 3. it came to light that the first accused had fabricated its books of account by introducing unaccounted funds in the books. the accused suppressed and concealed the assessable income for the assessment year 1980-81. the accused have wilfully attempted to evade tax, penalty and interest chargeable or imposable under the income-tax act, 1961. hence the complaint. 4. mr. n. venkatachalapathy, learned counsel appearing for the petitioners, would submit that the order of assessment by the income-tax officer regarding this discrepancy were not accepted by the appellate forums. hence the complaint is liable to be quashed. he would further forums. hence the complaint is liable to be quashed. he would further submit that as per the guidelines and instructions given for prosecution, cases in which an addition of suppressed income over rs. 10,000 is confirmed by the income-tax appellate tribunal are considered as potential cases for prosecution, and this case does not fall within these two categories. he would further submit that the second petitioner is aged more than 70 and hence he should not have been prosecuted as per the guidelines given for prosecution. 5. i have heard mr. k. ramaswamy, learned standing counsel for the respondent, on the above aspects. i have carefully considered the submissions made by rival counsel. the allegations in the complaint do contain ingredients for the offences alleged against the petitioners and for which the complaint has been lodged. while so, whether it is liable to be quashed because of the order of the commissioner of income-tax dated july 11, 1988, in which he has stated that the assessee's explanations have not been found false but only rejected and hence, the requirements for the levy have not been fulfilled. the commissioner of income-tax (appeals) was of the view that the addition made under section 68 of the income-tax act is not sustainable. learned counsels for the respondent would submit that the allegations do make out the offences and they cannot be quashed for the aforesaid reasons. in this regard, he relied upon the decision in p. jayappan v. s. k. perumal, first ito : [1984]149itr696(sc) , in which the apex court had held 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. the apex court has also held that the criminal court has no doubt 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 proceedings in the light of an order passed under the act but it does not mean that the result of a proceedings under the act would be binding on the criminal court and the criminal court has to judge the case independently on the evidence placed before it. in ajantha biscuit co. v. asstt. collector of central excise [1992] 40 ecc 202; [1993] lw (crl.) 575 (mad), i have taken a similar view. in view of the decision of the apex court, the ratio of which is clearly applicable to the facts of this case, the complaint cannot be quashed at the threshold. regarding instructions or guidelines given to the income-tax department relating to the prosecution of persons above a certain age and above certain limits of penalties, mr. k. ramaswamy, learned standing counsel for the respondent, has rightly pointed out that those instructions and guidelines cannot override the specific provisions of the income-tax act. 6. for the reasons stated above, the complaint cannot be quashed. in the result, this petition fails and shall stand dismissed.