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TMI Blog2023 (2) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on the same day. A proposal was submitted with the Pr.CIT, C-1, Kolkata. Then a letter was issued by him to the Ministry of Law and Justice to seek legal opinion in this regard. Thereafter, a letter was issued for necessary approval to the DGIT(Inv.) WB., Sikkim & NER. In the meantime the date for filing a criminal revision expired on 10.07.2018. Then the Ministry of Law and Justice accorded consent to move this Court. Soon thereafter necessary approval was obtained from the DGIT(Inv.) WB., Sikkim & NER. Accordingly, an approval was given by the Pr.CIT, C-1, Kolkata to file revision before this Court. Thereafter, a letter was issued to the Ministry of law requesting to appoint a government counsel. Then, a letter was received from them regarding appointment of government counsel. Conferences were held and a draft was made ready by the learned counsel. The draft was given to the Pr.CIT, C-1, Kolkata for examination. Learned counsel thereafter asked for the details of the dates for filing application for condonation of delay. List of dates regarding the movement of the file was made available to the learned counsel soon thereafter. Some time went for drafting the application for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order dated 15.02.2018 passed by the learned Additional Chief Judicial Magistrate, Alipore in connection with case no. AC 2829 of 2016 and discharging the accused from the case. Similarly, the petitioners in CRR 3199 of 2018 challenged the same order by which the accused opposite parties were discharged by the learned revisional Court in Criminal Motion no. 74 of 2018, thereby setting aside the order dated 15.02.2018 passed by the learned Trial Court in connection with case no. AC 2736 of 2016 and discharging the accused from the case. 10. On 12.07.2010 a search and seizure operation under Section 132 of the Income Tax Act was conducted at the residential property of one Bhaskar Ghosh, culminating in the seizure of Rs. 35 lakhs. A statement of the said Bhaskar Ghosh was recorded according to which the seized cash amount belonged to KPC Medical College and Hospital. On the same day a survey operation in terms of Section 133 of the Income Tax Act was conducted at the office premises of the said medical college and hospital. According to the income tax authorities, the college and hospital was found to have received corpus fund in the guise of donations from the KPC foundation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order dated 09.04.2018, set aside the order of the learned Trial Court and discharged the accused. While the foundation and its trustees were the accused in the matter which pertains to CRR 3198 of 2018, in case of CRR 3199 of 2018 the Medical College and Hospital and its directors were the ones who were discharged. 11. Mr. Vipul Kundalia, learned counsel appearing on behalf of the petitioner, submitted as follows. A search and signature under Section 132 of the Income Tax Act at the residence of an individual led to a survey operation. All these pointed to the fact that the KPC College and Hospital had received corpus funds in the guise of donations from the said KPC foundation for the assessment year 2011-2012. The assessee was the ultimate beneficiary of Rs. 1.41 crores. The assessee declared nil income for the said year and only subsequently filed a revised return of Rs. 1.41 crores on 6th March, 2013, after being served with notices under Section 133 (2) and 142 (1) of the said Act. Subsequently, the authorities imposed a penalty under Section 271 (1) (C) for a sum of Rs. 43,56,900/-. Sections 276C (1) and 276C (2) used the words 'wilfully attempts' to evade tax or evade pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 SCC Online Cal 497, Kumar Jagadish Chandra Sinha Vs. CIT, 1981 SCC Online Cal 316 and CIT Vs. Balarampur Chini Mills, 2015 SCC Online Cal 1524. The judgments relied upon by the accused in this regard being G. Viswanathan, Vinaychandra Chandulal Shah and Bindra Chandra Patel were clearly distinguishable on facts. At the time of filing prosecution under Section 276C of the Income Tax Act, what was required to be seen was that there was a prima facie case that the accused parties had wilfully attempted to evade tax. Subsequent disclosures made at the fag end of the proceeding under Section 153 (C) could not absolve the accused parties from being prosecuted. Once such a complaint was filed, the trial Court ought to presume under Section 278 (E) the existence of a culpable mental state on the part of the accused. Reliance was placed on Prakash Nath Khanna vs. Commission of Income Tax, (2014) 9 SCC 686 and on Sasi Enterprises vs. Assistant Commissioner of Income Tax (2014) 5 SCC 139. The case tried to be made out by the accused was that they had not filed the return in March 2013 to have the undisclosed income taxed. But, such income which would have been eligible for exemption in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his behalf was invited to G.Viswanathan Vs. ITO, (1987) 167 ITR 103 (Ker), Vinaychandra Chandulal Shah vs. State of Gujrat, (1995) 213 ITR 307 (Guj) and Vinochandra C. Patel Vs. State of Gujrat, (2002) 253 ITR 289 (Guj). A mere reference to the complaint would show that no case was made out as regards evasion of the payment of any tax, penalty or interest after such tax, penalty or interest was charged/imposed. Thus, it fell for consideration whether a prima facie case for prosecution for commission of an offence under sub-section (1) of Section 276C was made out. Before this Hon'ble Court it was contended on behalf of the Revenue that subsequent to search and seizure against one Bhaskar Ghosh and survey against the Society, the Society had filed a disclosure petition dated September 8, 2010 disclosing an income of Rs. 8,50,00,000/-; that in the returns filed under Section 153C on December 20, 2011, the Society did not incorporate the amount so disclosed; that it was only at the fag end of the assessment proceedings when the Revenue unearthed the undisclosed income that the society on March 6, 2013 filed revised returns for the assessment years 2007-08, 2008-09 and 2009-10 offering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad to be used for the promotion of its charitable objects. However, in terms of Section 11(1) (d) read with Section 12(1) of the Act, voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution shall not be treated as income. The society was required to spend 85% of its income including voluntary contributions (other than corpus donations) for charitable purpose. Except for the assessment years 2007-08, 2008-09 and 2009-10 for which the society withdrew its claim for exemption, the society had all along been assessed as an institution entitled to exemption under Section 11 of the Act. Since the trust was also engaged in charitable purpose, it was granted registration under Section 12AA of the Act with effect from April 1, 2004. As in the case of the society, the trust was also entitled to the exemption under Section 11. Voluntary contributions constituted income of the Trust except where the contribution was made with a specific direction that it shall form part of the corpus of the Trust. The Trust was required to spend 85% of its income including voluntary contributions (other than corpus donations) for charitable pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or companies. However, the said five companies had in the meantime been dissolved under orders dated March 16, 2012, of this Hon'ble Court in CP Nos. 78 to 82 of 2012 in members' voluntary liquidation. In such circumstances, in order to buy peace of mind, the society decided not to claim the exemption under Section 11 for the assessment years 2007-08, 2008-09 and 2009-10, the consequence of which was that the exemption under Section 11 (1) (d) of the Act in respect of the corpus donations became unavailable and the society became liable for income tax. Having so decided, on March 6, 2013, the society filed revised returns in which the claim for exemption under Section 11 as a charitable institution was not made. As such, by giving up the claim for exemption, the society also gave up the benefit under Section 11(1) (d) read with Section 12(1) of the Act in terms of which corpus donations were not regarded as income. By withdrawing the claim for exemption, the society did not say that the money received was not by way of corpus donation or that it was undisclosed income nor did the society say that it had concealed the particulars of its income or furnished any inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assessing Officer had unearthed undisclosed income because of which the society and the Trust were compelled to file revised returns is not borne out from the assessment orders. It was necessary to mention that the penalty imposed upon the society under Section 271(1) (c) of the Act for the assessment years 2007-08, 2008-09 and 2009-10 and upon the Trust for the assessment year 2011-12 was confirmed up to the stage of the Tribunal. The appeal of the Trust under Section 260A of the Income Tax Act, 1961 against the order of the Tribunal, being ITAT 106 of 2015, was admitted by this Hon'ble Court on August 26, 2015. On the other hand, the appeals of the society under Section 260A of the Act, being ITAT 105, 107 and 108 of 2015, were not admitted and dismissed at the admission stage by this Hon'ble Court on August 7, 2015. The Society had preferred SLP(C) Nos. 3229-3231/2015 against such dismissal. On March 14, 2016, the Hon'ble Supreme Court disposed of the Special Leave Petitions by granting liberty to the society to file an application for review before this Hon'ble Court pointing out the fact that the appeal of the Trust had been admitted. The Hon'ble Supreme Court made i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. 17. Now comes the question of existence of a prima facie case. For getting an answer, one may need to sift evidence and materials on record albeit for the limited purpose of finding out whether a prima facie case is made out against the accused or not. After all, the proceeding is not pending at an initial stage, but is one step away from trial. 18. The starting point of the present prosecutions is the alleged seizure of a sum of money from the residential property of one Bhaskar Ghosh. It appears that subsequently he recanted the statement and claimed such money to be his own during assessment proceeding and the income tax authorities apparently did not dispute the same. 19. The only other statement allegedly appearing in favour of the prosecution is that of one Kamala Shankar Pandey, a former common director of the companies. However, he is there no more. As such, his statement made before the income tax authorities would hardly be of much consequence. He will not depose in this case and his statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f expedience, the relevant provisions of Sections 271 (1) and 276C of the IT Act are quoted as under _ Section 271 (1) (C). "Failure to furnish returns, comply with notices, concealment of income, etc. - (1) If the [Assessing Officer] or the [Commissioner(Appeals)] [or the [Principal] Commissioner or Commissioner]] in the course of any proceedings under this Act, is satisfied that any person - (b) has failed to comply with the notice [under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under sub-section (1) of section 142] or sub-section (2) of section 143 [or fails to comply with a direction issued under sub-section (2A) of section 142], or (c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or] (d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars or such fringe benefits,] he may direct that such person shall pay by way of penalty, - (ii) in the cases referred to in clause (b), [in addition to tax, if any payable] by him, [a sum of ten thousand rupees] for each such failure;] (iii) in the cases referred to in [clause (c) or clause (d)], [in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment thereof. 24. As was argued on behalf of the Revenue, it is settled law that 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. 25. It is quite clear from the above that something more is required to haul up an assessee under Section 276C of the Act than under Section 271 (1) (C). "Wilful" is the key word that sets these provisions apart, besides the core ingredients making them up and therefore, there has to be some additional material or averment of fact in this regard. Otherwise, a prosecution would be an automatic fallout of such a penalty proceeding, perhaps depending solely on the generosity of the officer concerned about whether such charges would be pressed. But, this is not what law envisages. 26. It may not be sufficient in the present facts for the Revenue to raise a plea that here presumption under Section 278E would be applicable. A presumption like this is an exception to the general rule of burden of proof and may shift the onus of proof on an accused during trial. But, the initial onus of showing that a prima facie case is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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