TMI Blog2023 (2) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 271 of the Income Tax Act is distinctly different from a prosecution for alleged offences under Sections 276C of the said Act. Not only are the procedures for and the implications of imposition of penalty and for prosecution in a criminal case are different, but the scope and ambit of the purported wrong doings that are contained in the respective provisions are also not similar. Therefore, the instant criminal proceedings cannot be said to be barred under Section 300 of the Code of Criminal Procedure. Also if an entity is legally entitled to file a revised return of tax, even in terms of Section 153C, within a period and if it does so within such period, the same cannot attach any further disadvantage to the entity for having done so. In this regard the stand of the Revenue that the assessee tried to evade penalty tax by revising return is also not quite tenable. Penalty proceedings can continue even after disclosure of concealed income. But, one has to test this in respect of a prosecution and that too, in the particular facts of the case. It is quite clear from the above that something more is required to haul up an assessee under Section 276C of the Act than und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to make out a prima facie case that the opposite parties wilfully tried to evade tax or evade payment of tax, especially considering the fact that the fund was substantially disclosed and only an exemption was claimed, which was waived within the time for filing a revised return. When the opposite parties have been given the benefit of an order of discharge by the first revisional Court, there has to be cogent and convincing grounds on which such an order can be set aside. This Court is not convinced with the points raised by the petitioner in this regard. No merit in these applications. The same are, therefore, dismissed. - CRR 3198 of 2018 With CRAN 1 of 2018 (Old No. CRAN 3116 of 2018) And CRR 3199 of 2018 With CRAN 1 of 2018 (Old No. CRAN 3117 of 2018) - - - Dated:- 7-2-2023 - The Hon ble Justice Jay Sengupta For the Petitioner : Mr. Vipul Kundalia Mr. Anirban Mitra Mr. Anurag Roy ..... Advocates For the OPs : Mr. J.P. Khaitan Ms. Swapna Das Mr. Partha Ghosh Mr. Siddharth Das .....Advocates ORDER Jay Sengupta, J.: 1. As the two revisional applications are connected ones and involve the same parties and the same questions of law, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay in preferring the revisional applications along with the applications for condonation of delay. However, as is required, the petitioner/Revenue has provided even the minute details of the movement of files leading to the passage of time beyond the stipulated one for filing criminal revision. 5. It is alright to term bureaucratic red-tapism as the root cause for delay in governmental work and indeed there is much room for improvements even in the existing circumstances. However, giving approvals and consent and deciding on issues involve taking into consideration not only the questions of legal tenability, but also the practicability and the finances. In any event, our system does suffer from a poor ratio not only in respect of judicial officers, but also as regards public servants. 6. In Collector, Land Acquisition, Anantnag Ors. vs. Mst Katiji Ors., (1987) 2 SCC 107, the Hon ble Apex Court held that the question of condoning delay can be considered liberally in certain cases and quite equally for the State. 7. In view of the above and upon considering the painstacking manner in which the details of the steps taken were explained, I am inclined to allow the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(2) of the IT Act. The petitioner thereafter issued notice to the assessee under Section 142 (1) of the IT Act. In 2013 the assessee filed revised return of income under Section 153 (C) of the IT Act for the year 2011-2012, declaring net income of 1.41 crores, but not claiming any exemption. Thereafter, penalty proceedings were initiated under Section 271AA. On 30th September, 2013 the Income Tax Authorities passed penalty order under Section 271 (1) (C) of the said Act and not under Section 271AA as there had been no search and seizure under Section 132. A minimum penalty of Rs. 43,56,900/- was imposed. On 05.08.2015 a show cause notice under Sections 276C (1), 276C (2) of the IT Act was issued against the assessee. But, no reply came. In successive appeals, the CIT (A) and the Income Tax Appellate Tribunal confirmed the penalty orders. Thereafter, this Court dismissed the applications for admission of appeal against the order passed by the IT Act. On 18.01.2016, Complain Case No. 2829 of 2016 was filed against the assessee before the Chief Judicial Magistrate, Alipore under Sections 276 (1) and 276 (2) read with Section 2 (35) of the IT Act for willingly and intentionall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 276 (B) or Section 276 (C) or Section 276 (CC) or Section 277 or Section 278 shall be deemed to be non-cognizable within the meaning of the Code. Moreover, as per Section 279 (3) of the IT Act, the statement of the said Kamala Shankar Pandey about providing accommodation entries was admissible in evidence and corroborated the charges. The learned revisional Court overlooked the fact that the assessee filed income tax return on 14th October 2011 and only revised undisclosed income at the fag end of the assessment proceeding that is, on 6th March 2013. It was clear by then that the undisclosed income had been unearthed by the department. The assessee tried to evade both the normal tax payable as well as the penalty taxes by revising the return. Section 276C (1) was applicable because there was a wilful attempt to evade tax at the last stage of self-assessment. The income received which would otherwise not be exempted as donation under Section 12AA was made to be shown as corpus donation by the accused trusts. Five shell companies were involved, which were subsequently wound up. Upon survey, when it was imminent to the accused that they were getting exposed, the accused tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences (Inapplicability of Limitation) Act, 1974. This principle was reiterated in the cases of Friends Union Oil Mills and Ors. vs. Income Tax Officer, and Ors., 1975 SCC Online Ker 116 and in Sayarmull Surana Versus Income Tax Officer, 2018 SCC Online Mad 3505. The judgments relied on by the accused in this regard in Kishan Singh, Uday Kumar Awasthi and Lalita Kumari were related to economic offences and were, thus, distinguishable. 12. Mr. J.P. Khaitan, learned senior counsel representing the respondents in both the revisions submitted as follows. Sub-section (1) of Section 276C was applicable if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable .....under this Act . Sub-section (2) of Section 276C was applicable where a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act. It was apparent from the use of the words chargeable or imposable in sub-section (1) of Section 276C that it dealt with the situation prior to the charging or imposition of any tax, penalty or interest i.e., prior to the stage of passing of the order charging or imposing tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society as a person made a disclosure. The disclosure was made by a Group and it was considered a vague disclosure. It was not correct to say that the society offered any undisclosed income to tax in course of the assessment proceedings. In the return filed on March 6, 2013, the society did not claim the exemption under Section 11 as a result of which the corpus donations, which were exempt under Section 11, became taxable. Such taxation was not because of any income being offered to tax as undisclosed income. The Revenue s contentions completely overlooked and did not deal with the finding of the learned Additional Sessions Judge that the income of both the society and M/s. Kali Pradip Chaudhuri Foundation, a Trust registered under the Indian Trusts Act, 1882 (hereinafter referred to as the Trust ) was exempt under Section 11 of the Act and the question of wilful attempt to evade tax did not arise. The finding of the learned Additional Sessions Judge was that both the Trust and the Society were entitled to exemption under section 11 and income was not subject to tax in their hands and as such, the question of evasion of tax did not arise. Since the society was engaged in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or charitable purpose by making the same over to the society. Reference in this behalf is invited to the Division Bench judgment of this Hon ble Court in CIT (Exemption) Vs. Nawal Kishore Kejriwal Charity Trust, 2022 (2) TMI 534, where it was held that it was permissible for a charitable institution to donate to another charitable institution with the direction that the donation was towards its corpus and in such a case the provisions of Section 11(1) (a) of the Act stood complied with. It would thus be apparent that neither the Trust nor the society was liable for any tax in respect of the donations received by them. In so far as the Trust was concerned, it had received the funds from the five companies and in its turn spent it on charity by making corpus donations to the society. All income of the Trust and the society including by way of donations was exempt under Section 11 of the Act. The requirement of the Section that 85% of the income should be spent for charitable purposes was duly fulfilled by the Trust when it made over the entire amount received as corpus donation to the society. Section 11 did not require the society to spend the corpus donation received by it. Thus, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. It would be relevant to mention that the said cash of Rs. 35,10,400/- was not added to the society s income since Bhaskar Ghosh accepted it as his. At pages 8 and 9 of the assessment order, the Assessing Officer extracted and summarized the stand of the assessee in the submissions filed before him that the donations were genuine and not bogus or accommodation entry. A perusal of the aforesaid assessment orders passed in the society s case would also show that the only material adverted to therein is the alleged statement dated August 30, 2010, of Kamala Shankar Pandey. At the same time, the orders went on to state that Prabir Banerjee, the other common Director of the said five companies, had stated that the donations were genuine and there was no accommodation entry. It was mentioned in the assessment orders that Prabir Banerjee stated before the Assessing Officer that Kamala Shankar Pandey had expired, and he filed a copy of the death certificate. Kamala Shankar Pandey having died is no longer available as a witness. The alleged statement of Kamala Shankar Pandey, which had not been tested, could not be relied upon. Reliance on behalf of the petitioner on Section 279(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the delay to prosecute the opposite parties either in the complaint filed under Section 200 of Cr.PC or in the instant petition filed before this Hon ble High Court. The unexplained delay of six years is fatal. Reliance in this behalf was placed on the following decisions:- (i) Kishan Singh Vs. Gurpal Singh, AIR 2010 SC 3624; (ii) Uday Shankar Awasthi Vs. State of Uttar Pradesh, (2013) 2 SCC; (iii) Lalita Kumari Vs. Government of U.P., (2014) 2 SCC 1 13. I heard the learned counsels for the parties and perused the petition, the affidavits and written notes of arguments. 14. First, the offences alleged are covered by the Economic Offences (Inapplicability of Limitation) Act, 1974. Even otherwise, the purported delay in lodging the prosecution is not fatal, especially considering that the accused were aware of the constituent facts so that any prejudice can be ruled out. 15. It appears that the prime thrusts of the impugned order were that the impugned proceedings amounted to double jeopardy vis-a-vis the penalty proceedings and that no prima facie case was made out against the accused. 16. It is settled law that double jeopardy would be attracted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation to explain the source of the funds was actually that of the five companies. However, the concerned authorities did not pursue the same and not even with their directors and in the meantime, the said companies were dissolved by an order of this Court in the members voluntary liquidation. In this light, the stand of the assessee that there was no attempt to evade tax or penalty cannot be totally ignored. The accused contended that the corpus fund was not suppressed. Only an exemption was claimed for the particular financial year. Such an act is not even covered by the Explanation after Section 276C. This became an issue and purportedly to buy peace of mind, the society filed a revised return in which the claim for exemption was not made. While doing so, apparently the society did not admit that the money received was an undisclosed income. It is the further case of the accused that had the society persisted with the claim for exemption, it would have resulted in long drawn and costly litigations. As a result, a larger income became taxable. The accused further claimed that it was the understanding of the trust that it would not be penalised any more. Yet, punitive proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where the amount sought to be evaded [or tax on underreported income] exceeds [twenty-five hundred thousand rupees], with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to [two years] and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to [two years] and shall, in the discretion of the court, also be liable to fine. Explanation. For the purposes of this Section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person (i) has in his possession or control any books of account or other documents (being books of account or other documents relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed having been rendered ineffective, what is left for the prosecution is the purported wrong claiming of exemption by the accused. On the other hand, the accused purportedly retained their status of charitable entities and filed revised return within the stipulated time, waiving exemption and paying tax. 29. It is one thing to suffer a penalty under Section 271 (1) (c) of the Income Tax Act for avoiding to pay tax or penalty. But, it is quite another to be prosecuted for wilfully trying to evade tax or evade payment of tax. The facts of the case as referred to above, for argument s sake, may be at the best sufficient for inviting a penalty under Section 271 (1) (c) of the Act, but appear to be grossly insufficient for making out a prima facie case of an wilful attempt to evade tax or evade payment of tax. 30. As would be evident from the above, the prosecution has even otherwise failed to make out a prima facie case that the opposite parties wilfully tried to evade tax or evade payment of tax, especially considering the fact that the fund was substantially disclosed and only an exemption was claimed, which was waived within the time for filing a revised return. 31. When th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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