TMI Blog2005 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... revision application has been preferred by the petitioner against the order dated July 19, 2003, passed by the Special Judge (Economic Offence) at Jamshedpur in Case No. C/1-441 of 1992, whereby and whereunder, he refused to discharge the accused persons under section 245 of the Cr. P. C. for the offence punishable under sections 276C and 277 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The petitioner of the present case in M/s. T.R.F. Ltd., a company registered under the Indian Companies Act (hereinafter referred to as "the company"), having its works at Burmamines, Town Jamshedpur, District-Singhbhum (East). The case of the petitioner is that the company filed its income-tax return for the financial year 1982-83 (assessment year 1983-84) on September 23, 1983. In the said return, the company declared a total loss of Rs. 1,80,85,820. Income was assessed under section 143(3) of the Act at a total income of Rs. 16,85,510. The company claimed deduction of Rs. 1,77,03,141 being the demand on account of excise duty raised by the Superintendent of Central Excise during the financial year 1982-83. An amount of Rs. 9,23,000 was also debited in the profit and lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand is in respect of the contract executed by the company relating to the earlier years and up to December 31, 1981. The claim of the accused company was not allowed and a sum of Rs. 1,77,03,141 was added to the total income of the assessee company. It was also alleged that an amount of Rs. 9,23,000 was debited in the profit and loss account of the company under the head "Provision for warranty expenses". It was disallowed and added to the total income of the asses-see-company. For this addition, a penalty proceeding under section 271(1)(c) of the Act was initiated during the course of the assessment proceeding and a penalty of Rs. 1,00,05,500 was imposed. It was pleaded that the facts and circumstances established that the accused persons wilfully attempted to evade tax by furnishing incorrect particulars of income. The return was signed and verified by the accused Shri H. P. Bodhiwala, director, on behalf of the accused. It was also alleged that as the accused persons had made a statement in verification of return under the Act and under the rules framed thereunder and the statement made was false which they either knew or believed to be false or did not believe to be true and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to warranty expenses afresh and pass fresh order in accordance with law. On July 7, 1994, the Deputy Commissioner of Income-tax passed consequential order under section 250 of the Act complying with the order and the decision of the Income-tax Appellate Tribunal and relief was allowed to the assessee-company, deducting an amount of Rs. 1,77,03,141. The Revenue, i.e., the Income-tax Department thereafter filed a miscellaneous case registered as M.A. No. 26 (Patna) 1994 for rectification of the order dated March 25, 1994, on the ground that certain facts, judicial pronouncement, evidence, etc., were not taken into consideration by the Bench while accepting the claim of the assessee. The said M.A. No. 26 (Patna) of 1994 was disposed of on October 19, 1995. A Bench of the Tribunal directed for readjudication of the claim of the assessee. The assessee-company, thereafter prayed to the Vice-President of the Tribunal that the issue be readjudicated altogether by a different Bench since it apprehended that a definite view was formed by the Bench which passed the order on the miscellaneous petition filed by the Department. Accordingly, another Bench was constituted to readjudicate the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished, the continuance of the prosecution is illegal and unjustified. Mr. K. K. Jhunjhunwala, learned counsel for the Revenue, submitted that the matter relating to warranty expenses of Rs. 9,23,000 was not pressed by the petitioner, at the time of hearing, before the Commissioner of Income-tax (Appeals). In spite of the same, the Tribunal remanded the issue for determination by the Commissioner of Income-tax (Appeals). He relied on a decision of the Supreme Court in the case of P. Jayappan v. S. K. Perumal, First ITO [1984] 149 ITR 696, wherein the Supreme Court observed that the result of a proceeding under the other Act may not be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it. Counsel for the State referred to section 279(1A) of the Act to suggest that the company is not entitled to claim protection under the said provision, which reads as follows: "A person shall not be proceeded against for an offence under section 276C or section 277 in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him under clause (iii) of sub-section (1) of section 271 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf take out the case from the purview of furnishing inaccurate particulars. Mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In order that a penalty under section 271(1)(iii) may be imposed, it has to be proved that the assessee has consciously made the concealment or furnished inaccurate particulars of his income." While interpreting the provision of section 276C of the Act, which deals with wilful attempt to evade tax, etc., and the provision of section 277, which deals with false statement in verification, etc., and section 278B which deals with the offences by a company, the following observation was made by the Supreme Court in the aforesaid case: "In the instant case, the penalties levied under section 271(1)(c), were cancelled by the respondent by giving effect to the order of the Income-tax Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unsustainable and unquestionable." In the present case, the part of the assessment as was originally made against the assessee-company for the financial year, in question, was set aside by the Appellate Tribunal and certain reliefs were granted. So far as the amount of Rs. 9,23,000 towards warranty expenses is concerned, the Tribunal remanded the matter before the Commissioner of Income-tax (Appeals) for a fresh decision and the matter is pending. The original order of assessment having been modified and the assessment of the financial year in question, thereafter, having not reached its finality, the question whether the assessee-company evaded tax or not, cannot be determined at this stage. Counsel for the Revenue could not lay his hands on any order or record to suggest that after remand, a fresh order of assessment has been passed by the assessing authority. No order imposing penalty can be passed till a fresh assessment order is issued. In the case of K. C. Builders [2004] 265 ITR 562, the Supreme Court has observed that where addition or alteration is made in the assessment order, on the basis of which penalty for concealment was levied, there remains no basis at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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