TMI Blog1984 (3) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Code, he has recorded the evidence of one witness for the prosecution. At that stage the accused filed an application requesting the court to discharge them, contending, inter alia, that the complaint of the ITO is based on his assessment order, ex. P-37, that they, the accused, have challenged that order in appeal before the statutory authority and the same was pending ; that they have also preferred a petition under art. 226 of the Constitution of India in the High Court of Karnataka and that Court has granted a stay staying the recovery proceedings of the ITO and that, in these circumstances, the prosecutions were premature and, therefore, they may be discharged. The complainant opposing the application of the accused contended that the pendency of the appeal or the writ petition was no bar to the prosecution ; that the charges or accusations levelled against the accused in the matter are required to be gone into by the court independently of the findings, if any, of the income-tax statutory authorities, under the Act or of the superior courts on the writ side that there was also no bar in law for the continuation of this prosecution and that, in these circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner. We have also to remember the acts (or omissions) of the assessee that would constitute an offence. Offences under ss. 276C and 277 of the Act arise only when he does or omits to do something in the discharge of his statutory obligation. The acts or omissions are integrally connected with what he, assessee, may do or may not do in the matter of his assessment under the Act. Whether he has evaded payment of tax, interest or penalty chargeable or imposable under the Act as provided under s. 276C or made a false statement on verification, etc., as provided under s. 277 of the Act, are required to be first ascertained on an examination of all the facts and circumstances of the case by the concerned ITO who is saddled with this responsibility under the Act. The Commissioner, only on being satisfied that the person concerned has done the acts complained of, can take steps to prosecute the persons concerned. Normally, and perhaps invariably, the facts that may lead to an offence under the aforesaid two provisions are collected by the concerned income-tax authority while examining the liability of the person concerned to pay tax for the year in question. In the process of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n offence under s. 277 of the Act, on the allegation that the assessee had filed false returns, ought to be quashed in view of the findings of the Income-tax Appellate Tribunal that the returns filed were not false. To understand the implication of this judgment, a few more facts, in brief, have to be noted. In Uttam Chaff [1982] 133 ITR 909 (SC) the assessee claimed to be a firm validly constituted. The ITO had granted registration to that firm. At the instance of one of the alleged partners, the ITO proceeded to examine the genuineness of the firm and by his order dated February 8, 1972, having come to the conclusion that the firm was not a genuine one, cancelled the registration and passed consequential orders for several years of assessment. The assessee having failed before the AAC, had applied to the Income-tax Appellate Tribunal. In the meanwhile, the Revenue had filed a complaint against the assessee for offences under s. 277 of the Act and ss. 193, 196, 467 and 471 read with 109, 114, 34 and 37 of the Indian Penal Code and the offences alleged pertained to the assessment year 1963-64. The assessee succeeded before the Income-tax Appellate Tribunal in the appeals it had pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the complaint filed by the Revenue against the assessee. The very basis of foundation on which the prosecution rests disappears. In the case on hand, if these accused-assessees succeed before the Appellate Tribunal, the result would be as in Uttam Chand. Is it fair or proper to proceed with the prosecution in the meanwhile or to allow it in the court below to be pending till the findings in the assessment order, on the basis of which this prosecution has been launched, reaches a finality ? To pursue the prosecution in the criminal court during the pendency of such proceedings on the Revenue side would amount to prosecuting on uncertain facts which cannot even be countenanced under our system of administration of justice. Even to allow that complaint pending in the court below awaiting the decision in the appeals, revision, etc., if any, filed and pending, would, according to me, amount to an abuse of the process of the court. Revenue is not helpless in the matter. There is no bar of limitation in the case of such prosecutions. The legislature has wisely exempted these prosecutions from the purview of s. 468 of the Code. [See the Economic Offences (Inapplicability of Limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in the meanwhile with a prosecution hanging on his head? If the case proceeds and ends in conviction, what would happen in the event of his succeeding in the appeal on the Revenue side ? The result would indeed be very unfortunate. And apart from this, even to keep the proceeding pending, as already stated by me based on uncertain facts, would not be fair or just. The reason is that that amounts to interfering with the " life " of the person concerned. Under article 21 of our Constitution, " life " in its broader perspective, as observed in Board of Trustees v. Dileep Kumar, Raghavendranath Nadkarni, AIR 1983 SC 109; [1983] 1 SCC 124, " does not merely connote animal existence or a continued drudgery through life, but has much wider meaning. " It includes, as observed therein, the reputation of the person concerned. Why squeeze that " life " and finish it when the complainant himself is not so sure of the very authenticity of the facts, facts that had prompted him to pursue this course against the assessee ? I am, therefore, in the circumstances, of the view that the continuation of the prosecution against these persons in the court below will amount to an abuse of the process ..... 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