TMI Blog2023 (10) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the sanction is accorded to the Deputy Director of Income Tax for initiating prosecution and not to the Assistant Director of Income Tax. In view of the above discussion, this Court is of the considered opinion that it is a fit case to quash the proceedings against the petitioner. - Honourable Smt G. Anupama Chakravarthy For the Petitioner : R.S. Associates For the Respondent : K Mamata ORDER: This petition is filed under Section 482 of Code of Criminal Procedure (for short 'Cr.P.C.') by the petitioner/accused seeking to quash the proceedings in C.C.No.263 of 2017, pending on the file of the Special Judge for Economic Offences, Nampally, Hyderabad. 2. The respondent herein is the complainant, who has a complaint under Section 190 R/w. Section 200 of Cr.P.C. for the offences punishable under Sections 276C(1) and 278B of the Income Tax Act, 1961 (for short the Act ). 3. The facts culled out from the complaint are that a survey operation under Section 133A of the Act was carried out on 25.05.2016 by the D.D.I.T.(Inv), Unit-II, Hyderabad in case of certain assessees. During the course of the survey it was found that the petitioners herein h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tas at Budvel Village, Rajendranagar Mandal, Ranga Reddy District, for a total sale consideration of Rs. 9.115 crores as against stamp duty value of Rs. 62.36 crores. Accordingly, a final survey report was prepared and forwarded to respective Assessing Officers. Subsequently, for the financial year 2014-2015 relevant to the Assessment Year 2015-2016, scrutiny assessment under Section 147 of the Act was completed on 26.12.2019 by adopting the stamp duty value as full value of consideration received as per Section 43CA R/w Section 50C of the Act and added back the duties in the sale consideration of Rs. 48,69,00,000/- (Rupees Forty Eight Crores Sixty Nine Lakhs Only) to the income tax admitted resulting in a demand of Rs. 31,57,78,025/- (Rupees Thirty One Crores Fifty Seven Lakhs Seventy Eight Thousand Twenty Five Only). Later, a rectification was passed under Section 164 of the Act on 19.08.2021 revising the total demand to Rs. 31,74,66,956/- (Rupees Thirty One Crores Seventy Four Lakhs Sixty Six Thousand Nine Hundred and Fifty Six Only). The survey operation was conducted on 21.05.2016 and later it was noticed that during the financial years 2014-2015 and 2015-2016, relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint, is lower in rank to the Deputy Director of Income Tax. 11. On the other hand, it is the specific contention of the learned standing counsel that, as per Section 319(1)(a) of the Act, every person being company or firm, shall, on or before due date, furnish a return on its income during the previous year in the prescribed form and verified in the prescribed manner and setting forth any such other particulars as may be prescribed. And as the petitioner-company has not filed the returns of the income tax for the assessing year 2015-2016 within the stipulated time, the authorities have every right to initiate prosecution against the petitioner-company. 12. It is further contended by the learned counsel for the respondent that except the sanction of the Principal Commissioner of Income Tax, there cannot be any prosecution and in the present case, the Principal Director of Income Tax (Inv.) has issued sanction and as per Section 2(16) of the Act, Commissioner means the person appointed to be the Commissioner of Income Tax or the Director of Income Tax or a Principal Commissioner of Income Tax or a Principal Director of Income Tax under sub-section (1) of Section 117, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the condition precedent. 9. The Apex Court in the case of Anirudh_Sinhji Karan Sinhji Cinhii ladeia Jadeja Vs. State of Gujarat, MANU/SC/0473/1995 (1995) 5 SCC 302 has held that if a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If discretion is exercised under the direction or in compliance with some higher authorities instruction, then it will be a case of failure to exercise discretion altogether. As per the above precedent it is evident that if a statutory authority has been vested with jurisdiction, he has to exercise it accordingly and if discretion is exercised under the directions or in compliance of some higher authority s instruction, then it would be a case of failure to exercise discretion altogether. 15.2 The judgment of the Madras High Court in the case of P.R.P. Granites Vs. Check-Post Officer/Assistant Commercial Tax Officer, Puzhal Check-Post(Incoming), Chennai [2003 SCC OnLine Mad 1045] and brought to the notice of this Court paragraph No.15 which reads as under: 15. The respondent is hereby directed to release the goods along with the vehicles, which are the subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or confessions made to him. The ratio formulated as per the above precedent is that if a statute has conferred a power to act and has laid down the method, any power must be exercised discreetly, which prohibits doing of act in any another manner. Which means, if a sanction has been granted to the Deputy director to launch prosecution against the petitioner-company, it is for the Deputy Director alone to launch the prosecution but not the Assistant Director. 15.4 The judgment of the Hon'ble Apex Court in the case of Suresh Kumar Bhikamchand Jain Vs. Pandey Ajay Bhushan and Others [(1998) 1 Supreme Court Cases 205] and brought to the notice of this Court paragraph No.24 which reads as under: 24. In Matajog s case, 1995 (2) SCR 925 the Constitution Bench held that the complaint may not disclose all the facts to decide the question of applicability of Section 197, but facts subsequently coming either on police or judicial inquiry or even in the course of prosecution evidence may establish the necessity for sanction. In S.B. Saha s case (1979 (4) SCC 177, the court observed that instead of confining itself to the allegations in the complaint the Magistrate can take i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of sanction can be considered at any stage of the proceedings. 16. On the other hand, the learned Standing Counsel for Income Tax relied on the judgment of the Hon'ble Apex Court in the case of P. Jayappan Vs. S.K. Perumal, First ITO [1984] 19 Taxman 1 (SC) . The ratio formulated in the said judgment is that reassessment proceedings cannot act as bar for initiation of criminal prosecution and there cannot be quash of proceedings under Section 482 of Cr.P.C. The above citation is not applicable to the facts and circumstances of the case, as the petitioner is challenging the fact that the respondent No.1 did not have any power to launch the prosecution proceedings as the sanction was granted to the Deputy Director. 17. Perusal of the entire record, rival contentions of both the parties and the precedents relied upon by them, it is evident that once sanction has been given to a particular authority, i.e., the Deputy Director of Income Tax, the prosecution has to be launched by him alone and not by the Assistant Director of Income Tax, who did not have the power to launch the prosecution proceedings. Though it is the contention of the learned Standing Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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