TMI Blog1989 (3) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years, namely, 1980-81 and 1981-82. The further allegation is that in the returns filed for the aforesaid years, pursuant to notice under section 148 of the Act, the total income declared in the prescribed pro forma, as signed by Joginder Kaur, one of the partners of the firm, was understated, and in that connection, the Income-tax Officer concerned entered upon a detailed enquiry and called upon the assessee to produce the books of account, purchase and sale vouchers, etc., but they were not produced on the plea that the accountant who had access to these books of account and other documents was not available and that his whereabouts were not known or that the said books of account had been burnt. The contention is that the Income-tax Officer was thus prevented from examining the books of account and other documents on the basis of which the assessee had declared its income and had to fall back upon his post-search enquiries. It has been further alleged that one of the documents that had been recovered during the course of the search operation and seized was a certificate issued by the chartered accountant, Shri Ashok Mahata, disclosing huge discrepancies in the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 148 of the Act was illegal, and as such all the proceedings initiated pursuant thereto or the orders passed by the Income-tax Officer in respect of the returns filed by the assessee were liable to be set aside, the plea being that there was no basis left for prosecution of the accused on the allegation of understatement of income or fabrication of accounts or false verification, etc., because once the notice had been held to be not sustainable, then the income-tax returns, filed in response to the said notice, have to be treated as non est and thus there was no material for prosecution of the accused and the ends of justice required that the said proceedings be dropped and the complaint dismissed. This application was rejected by the Additional Chief Metropolitan Magistrate on the view that the mere fact that the Commissioner of Income-tax (Appeals) had set aside the assessment and had directed reassessment after fresh notice under section 148 of the Act, in conformity with the provisions of the Act, would not have any consequence for the criminal proceedings based on the complaint instituted by the Income-tax Officer for the reason that the complaint is to be decided ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact that reassessment has been undertaken after fresh notice under section 148 of the Act for all the assessment years under reference, it was a fit case for dropping the present proceedings and the complainant could take further steps depending upon the result of the reassessment proceedings. Reliance has been placed on a judgment of this court, W. L. Kohli v. CIT [1985] 152 ITR 154 (Delhi), wherein the plea of the accused for dropping the proceedings was held entitled to consideration on the ground that it was in the fitness of things that unless the reassessment is completed, there could not be any deduction or inference of concealment of income or falsification of accounts. Mr. Mathur pleaded that the present case was also of an identical nature and here also, since the assessment itself has been quashed and all the proceedings have been held to be invalid, there was no basis for prosecution of the petitioner and the proceedings in these complaint cases were liable to be quashed. Mr. D. K. Jain, appearing for respondent No. 1, in these proceedings, countered the arguments of Mr. Mathur, firstly, in respect of his plea that there was no material against the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hartered accountant which, on the face of it, revealed vast difference in the amounts of sales shown in the books of account which the accused produced during the original assessment, as against those reflected by this certificate, the petitioners were on a wrong footing when they asserted in these petitions or in the application before the Additional Chief Metropolitan Magistrate that, after the order of the Commissioner of Income-tax (Appeals) dated April 1, 1987, setting aside the assessment orders on the view that the notices under section 148 of the Act were illegal, there was no material against them justifying the prosecution in these complaint cases. He reiterated that there were definite allegations in paragraphs 5, 8 and 11 of the complaint as to discovery of incriminating documents and books of account during the search operations, particularly the certificate of the chartered accountant, and failure on the part of the assessee to produce the books of account and documents on the basis of which they had declared their income earlier as also their failure to produce the chartered accountant and that there was understatement of income by falsification of account books, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he returns filed after notice under section 148 of the Act, there are allegations that the original returns for the assessment years which are the subject-matter of the criminal complaints also suffered from the same vices, and further that there was independent evidence of existence of false books of account, and other documents, with the intention of evading income, recovered during the search operations. Mr. Jain conceded that all these allegations shall have to be proved by the complainant before the criminal court, but asserted that the departmental authorities were in a position to do so, and that the proceedings cannot be throttled at this stage simply because notice under section 148 of the Act was quashed on a technical view, necessitating fresh notice and reassessment proceedings. Mr. Jain also placed reliance on a judgment of the Andhra Pradesh High Court, Ashok Biscuit Works v. ITO [1988] 171 ITR 300, enunciating the same proposition to the effect that the criminal court has to adjudge the case independently, on the evidence placed before it, and that where the allegation was that the books of account contained false entries or that there were discrepancies showing at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or dropping of the proceedings on the threshold only when the order summoning the accused was passed. Apart from the fact that there is abundant authority for the view, as noticed above, that the plea of the accused for dropping of the proceedings on the ground of reassessment having been ordered or such proceedings being pending, was not tenable, otherwise also, it would not be ordinarily desirable to interfere with the proceedings before the criminal court, in exercise of power under section 482 of the order Criminal Procedure, at such an early stage when only proceedings have been initiated, an order for summoning the accused having been passed, and the court has yet to appreciate the evidence. It has been impressed upon by the Supreme Court in a very recent judgment, State of Bihar v. Murad Ali Khan, AIR 1989 SC 1, that when the High Court is called upon to exercise its inherent jurisdiction under section 482, Criminal Procedure Code, to quash a proceeding at the stage of the Magistrate taking cognizance of an offence, such a power should be used very sparingly, and that unless it is manifest on record that the allegations in the complaint or the charge sheet do not, in law, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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