The Jharkhand High Court quashed the criminal proceedings under the Income Tax Act, 1961 as the income tax refund was adjusted against outstanding demands.
Gunwant Singh Saluja, the petitioner filed the petition to quash the entire criminal proceedings including the order taking cognizance passed by the Special Judge, Economic Offences, Ranchi, whereby, cognizance under Section 276CC of the Income Tax Act, 1961 has been taken against the petitioner, pending in the Court.
The complaint case was filed by opposite party no.2 alleging therein that a search under Section 132 of the Income Tax Act was undertaken in Mongia Group of cases by the Investigating Wing, Jharkhand.
During the search operation, various incriminating documents relating to the petitioner were found and seized. It was further alleged that notices under Section 153A of the Income Tax Act for filing of returns of income for the Assessment Year 2005-06 to 2009-10 and 2010-11 were issued by the Assistant Commissioner of Income Tax, Central Circle, Dhanbad.
It was also alleged that the petitioner was granted time till 15.04.2011 and further till 05.05.2011 for compliance, but there was no compliance. It was alleged that under the circumstances, the Assessing Officer issued a show-cause notice under Section 276 of the Income Tax Act on 19.07.2011 for initiation of prosecution proceedings for non-filing of return of income in time.
It was also alleged that the Commissioner of Income Tax, Central Circle, Patna gave his opinion that the petitioner has failed to comply with the notices of the Assessing Officer without assigning any reasons and has also failed to file the return of income and, thus, there was willful omission on the part of the petitioner in filing returns of his income and, as such, accorded sanction under Section 279 of the Income Tax Act for launching prosecution under Section 276CC of the Act for not filing returns of income without giving any reasonable cause and non-compliance of the notices of the Assessing Officer.
The matter was remanded to the Appellate Court who in turn determined a refund of Rs.80,82,799/- to the petitioner. The Appellate Authority confirmed a demand of Rs.20,61849/- against the petitioner. It was submitted that for the block assessment period, the refund was found to be refundable to the petitioner and refunds were already adjusted against the outstanding demand of the petitioner, despite thereof, the respondents are proceeding with the prosecution under Section 276CC of the Income Tax Act.
The CIT (Appeals) set aside the demands for the period 2004-05 and after the passing of the appellate order, the appeal was given effect and an amount of Rs.16,65,986/- was found to be refundable to the petitioner. The petitioner challenged the said order before the ITAT, Ranchi and vide its order, a demand of Rs.87,58,494/- was confirmed against the petitioner.
The Court of Justice Sanjay Kumar Dwivedi held that “the entire criminal proceedings arising out of Complaint Case No.09 of 2012 including the order taking cognizance dated 04.06.2012 passed by the learned Special Judge, Economic Offences, Ranchi, pending in the Court of the learned Special Judge VII, Economic Offences, Ranchi is quashed.”
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