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2018 (10) TMI 1737 - GUJARAT HIGH COURTDefault or violation committed u/s 279 (1) - undisclosed income on account of excess of stock viz. imported waste worth and also of imported pulp lying in the factory premises and such undisclosed income - complaint being lodged under Section 276 C (1) and 277 read with Section 278B - HELD THAT:- Specific exemption for the block period covering the case of the assessee-company indicated that if there was any intention of the legislature the specific provision for prosecution would have been introduced for such cases but in absence of such provision, it could be easily inferred that the legislature intended to grant immunity for the block period covering the case of the assessee company. Reliance was also placed under Section 158B (i) r.w.s. 158 BC whereby what is assessed is the undisclosed income of the block period and not total income of any previous year and the determination of the undisclosed income is the income, which was not disclosed or determined in the regular assessments. Therefore, what was concealed for regular assessment is taxed as undisclosed income in the block assessment. Even it was pleaded that there was no willful attempt to evade any tax so as to bring provisions under Section 276 (c) (i) of the Act and immunity granted by Section 158 BF from levy of interest and penalty under Section 271 (1) (c), 271 (A), 271-B of the Act. No mention of Section 276-C in Section 158BF of the Act and, as a matter of fact, a careful reading of Section 276-C transpires that if a person willfully admits to evade any tax, penalty or interest chargeable or imposable under the Act, 1961 then only prosecution can be launched. None of the authorities gave clear finding about evading tax willfully and on the contrary deduction was given under Section 80IA by ITAT Bench to the extent of ₹ 99,900/-. A company having past turnover and shown in third annual report 1995-96, C.I.F. value of imports of row-material and capital goods to be considered in quantity, it was 6138.894 for the value of ₹ 7,24,23,783/-. Minor lapse on the part of the assessee of not mentioning such a stock, undisclosed income in the facts of this case do not attract launch of prosecution under Section 276-C (i) and 277 read with Section 278-B of the IT Act, 1961. Validity of sanction of prosecution can be gone into by the trial Court for which powers to quash the complaint may not be exercised and, in a given case, dehors the order setting aside penalty proceedings by the Tribunal, the criminal proceedings can go on, but here in the facts of this case, it cannot be said that with mala fide intention and to evade the tax, stock in the stock book was not shown by the assessee and keeping the above factor in mind, vis-a-vis Sections 143, 158 BC, 158 BF, 271 (1)(c), 271-A, 271- B read with Sections 276-C(i), 277 and 278-Band parameters of Section 482 of Criminal Procedure Code, allowing criminal case to proceed would subject assessee to rigmarole of trial resulting into unavoidable hardships and to secure end of justice - present application is allowed by quashing and setting aside the impugned criminal proceedings launched by respondent no.1 in the Court of Chief Judicial Magistrate, Surat, so far as present applicant is concerned.
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