2011 (12) TMI 373 - HC - Income Tax

Revision application - concealment of Income - penalty proceedings initiated u/s 271(1)(c) by the Department was quashed by ITAT - Held that - Once the finding of the assessing authority that the assessee made a false statement is set aside by ITAT the criminal proceedings would not be sustainable because the finding of the ITAT is conclusive. See H. T. Power Structure Pvt. Ltd. v. R. P. Sharma 2007 (9) TMI 206 - GUJRAT HIGH COURT - All revision applications are dismissed.

Summary

Issues:
- Discharge of the non-applicant based on the decision of the Income-tax Appellate Tribunal.
- Quashing of criminal proceedings under sections 276C and 277 of the Income-tax Act, 1961.

Analysis:

1. The judgment deals with the disposal of multiple matters through a common judgment and order. The revision applicant sought to quash a judgment and order passed by the Second Additional Sessions Judge, Nagpur, in a criminal revision application. The case involved a criminal complaint filed by the Income-tax Officer alleging offenses under sections 276C and 277 of the Income-tax Act, 1961. The non-applicant had applied for discharge based on the decision of the Income-tax Appellate Tribunal setting aside the penalty. The trial court rejected the application, leading to the filing of a revision application before the Sessions Judge, Nagpur, who discharged the non-applicant.

2. During the hearing, it was argued that the penalty proceedings initiated by the Department under section 271(1)(c) of the Income-tax Act were quashed by the Income-tax Appellate Tribunal. Reference was made to various legal precedents, including the case of G. L. Didwania v. ITO, where the Supreme Court held that if the finding of the assessing authority regarding false statements is set aside by the Tribunal, criminal proceedings would not be sustainable. Similarly, in the case of K. C. Builders v. Asst. CIT, it was established that before imposing a penalty, it must be proven that the assessee consciously made concealment or furnished inaccurate particulars of income. The judgment also referred to the case of H. T. Power Structure Pvt. Ltd. v. R. P. Sharma, where it was concluded that when the penalty is set aside by the Income-tax Appellate Tribunal, the prosecution cannot be sustained.

3. Considering the legal precedents and the arguments presented, the judge found no merit in the revisions and dismissed all revision applications. The rulings cited established that once the Income-tax Appellate Tribunal sets aside the finding of the assessing authority, criminal proceedings based on alleged concealment of income cannot be sustained. The judgment reaffirmed the principle that matters settled by the Tribunal need not be pursued in criminal courts unless the appellant's actions are deemed culpable.