Ritesh Agarwal S/o Jugal Kishore Garg Vs Union of India (Rajasthan High Court)
The Rajasthan High Court considered a petition filed under Section 482 of the Code of Criminal Procedure seeking quashing of the criminal proceedings arising from Criminal Case No. 336/2017 (150/2017) pending before the Chief Metropolitan Magistrate (Economic Offences), Jaipur City, for the alleged offence under Section 276C(1)(i) of the Income-tax Act, 1961.
The case arose from a search under Section 132(1) of the Income-tax Act conducted on 04.09.2013 at the petitioner’s residential and business premises, during which documents were seized. The petitioner admitted that ₹7.22 crore, representing cash advances, constituted his undisclosed income for Financial Year 2013-14 and disclosed the amount in his return filed under Section 139(1) for Assessment Year 2014-15. The income was assessed under Section 143(3) at ₹12,96,93,610, and the Assessing Officer imposed a penalty of ₹2,16,60,000 under Section 271AAB.
The petitioner’s appeal before the Commissioner of Income Tax (Appeals)-4, Jaipur was dismissed on 06.03.2018. However, the Income Tax Appellate Tribunal, by order dated 09.07.2018, set aside the penalty, observing that the preconditions for imposing the penalty were not satisfied and that the Department could not establish any concealment.
Meanwhile, the Department had filed a complaint on 31.03.2017 under Section 276C(1)(i) alleging a wilful attempt to evade tax. The trial court took cognizance of the complaint on 06.04.2017. The petitioner submitted that although the Department had filed an appeal under Section 260A against the ITAT’s order, no interim stay had been granted. Consequently, the penalty remained annulled and there was no operative finding of concealment or wilful tax evasion against the petitioner.
The petitioner further relied upon the cases of Nagendra Choudhary and Vijay Jain, in which searches had also been conducted on 04.09.2013. In Nagendra Choudhary’s case, the penalty imposed under Section 271AAB was set aside by the ITAT on 10.06.2019, and despite the Department’s appeal, no interim order was granted. The criminal proceedings initiated under Section 276C(1) were subsequently quashed by a Coordinate Bench of the Rajasthan High Court in Nagendra Choudhary Vs. Union of India & Anr., decided on 26.11.2025, holding that continuation of the prosecution would amount to an abuse of the process of law.
The petitioner also referred to the case of Vijay Jain, where the ITAT, by order dated 23.09.2019, held that there was no case of undisclosed income in the context of Section 271AAB. Criminal proceedings had nevertheless been initiated, and in Writ Petition No. 6640/2021, the High Court granted an interim order staying further criminal proceedings.
The petitioner’s counsel submitted that the facts of the present case were identical to those in Nagendra Choudhary and that the petition should be decided on the same terms. Counsel for the respondents did not dispute this submission and fairly conceded that the issues involved were fully covered by the earlier decision.
After considering the submissions and the material on record, the High Court held that the controversy in the present petition was identical to that decided by the Coordinate Bench in Nagendra Choudhary. Accordingly, the Court allowed the petition on the same terms as that earlier decision.
The High Court quashed and set aside the criminal proceedings in Criminal Case No. 336/2017 (150/2017) pending before the Chief Metropolitan Magistrate (Economic Offences), Jaipur City. The stay application and all pending applications, if any, were also disposed of.
Recent Cases Discussed
- Nagendra Choudhary Vs. Union of India & Anr. (Rajasthan High Court), S.B. Criminal Misc. Petition No. 4839/2019, pronounced on 26.11.2025
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. The present petition has been filed under Section 482 of Cr.PC, seeking quashing of entire criminal proceedings arising from Criminal Case No.336/2017 (150/2017) pending before the Court of learned Chief Metropolitan Magistrate (Economic Offences), Jaipur City, Jaipur (hereinafter to be referred as ‘the trial Court’) for alleged offence under Section 276C(1)(i) of the Income Tax Act, 1961 (hereinafter to be referred as ‘the Act of 1961’).
2. Succinctly stated, the facts of the present case are that a search under Section 132(1) of the Act of 1961 was carried out on 04.09.2013 at the petitioner’s residential and business premises, leading to the seizure of documents. The petitioner admitted that the amount of Rs.7.22 Crore in the form of cash advances was his undisclosed income for the Financial year 2013-14 and accordingly, declared it in his return under Section 139(1) of the Act of 1961 for Assessment Year 2014-15. Considering the same, petitioner’s income was assessed under Section 143(3) of the Act of 1961 at Rs. 12,96,93,610/- and a penalty of Rs.2,16,60,000/-was imposed by the Assessing Officer under Section 271AAB of the Act of 1961, which was challenged by the petitioner by way of filing first appeal before the CIT(A)-4, Jaipur and same was dismissed vide order dated 06.03.2018. Feeling aggrieved, the petitioner preferred second appeal before the Income Tax Appellate Tribunal (hereinafter to be referred as ‘ITAT’) and the ITAT vide its order dated 09.07.2018 set aside the penalty, by observing that the preconditions for its imposition were not satisfied, nor could the department establish any sort of concealment.
3. During the pendency of these proceedings, the Department initiated prosecution by way of filing complaint on 31.03.2017 under Section 276C(1)(i) of the Act of 1961 alleging willful attempt to evade tax by the petitioner. It is contended that although the Department has preferred an appeal under Section 260A against the order passed by the ITAT, yet there is no interim stay against the order of the ITAT and thus, the penalty remains annulled without any operative finding of concealment or willful evasion as of today against the petitioner. Overlooking such crucial effect of annulment of the penalty, cognizance was taken on aforesaid complaint by the trial Court vide order dated 06.04.2017, which has materially affected the rights of the petitioner and occasioned failure of justice.
4. It is notable that on the same day i.e. 04.09.2013, when the search was carried out at the residential and business premises of the present petitioner Ritesh Agarwal, the Department has also carried out search under Section 132(1) of the Act at the residential and business premises of Nagendra Choudhary and Vijay Jain. A sum of Rs.1,74,44,610/- was found to be undisclosed income of Nagendra Choudhary and a penalty of Rs.15 lacs was imposed upon him by the Assessing Officer, which was challenged by way of an appeal before CIT(A)-4, Jaipur and the same was dismissed vide order dated 15.12.2017. Against the said order, an appeal was preferred by Nagendra Choudhary before ITAT and the ITAT set aside the penalty vide order dated 10.06.2019. The Department filed an appeal against the order dated 10.06.2019, but since no interim order was passed in the said appeal, the penalty remains annulled without any operative finding of concealment or willful evasion against said Nagendra Choudhary. Despite the aforesaid facts situation, cognizance was taken against Nagendra Choudhary on the complaint of the Department by the trial court vide order dated 06.04.2017. It is also notable that the criminal proceedings against Nagendra Choudhary were set aside by a Co-ordinate Bench of this Court in S.B. Criminal Misc. Petition No.4839/2019 titled as Nagendra Choudhary Vs. Union of India & Anr., pronounced on 26.11.2025, while holding that the continuation of criminal proceedings under Section 276(C) (1) of Income Tax Act, 1961 would amount to an abuse of the process of law.
In the case of Vijay Jain also, learned ITAT vide its order dated 23.09.2019 held that there is no case of undisclosed income in context of Section 271AAB. Despite that, criminal case for offence under Section 276(C)(1) of the Act was lodged against Vijay Jain, wherein cognizance was taken. Writ Petition No.6640/2021 was filed by Vijay Jain against the initiation of criminal proceedings against him, in which, this Court vide order dated 06.04.2017 granted interim order in favour of Vijay Jain while staying the further criminal proceedings pending against him.
5. Learned counsel appearing for the petitioner submits that the facts of the present petitioner are completely identical to the facts of the case of Nagendra Choudhary (supra) and thus, the present case is squarely covered by the decision of a Co-ordinate Bench of this Court passed in the case of Nagendra Choudhary (supra) and therefore, it is prayed that the present misc. petition may be decided in same terms of the aforesaid decision of Nagendra Choudhary (supra).
6. Learned counsel appearing for the respondents does not dispute the aforesaid submissions and fairly concedes that issues arising in the present misc. petition stand fully covered by the decision in Nagendra Choudhary (supra).
7. Having considered the submissions advanced and upon perusal of the material available on record, this Court is of the considered view that the controversy involved in the present misc. petition is identical to that adjudicated upon by the Co-ordinate Bench of this Court in Nagendra Choudhary (supra). Hence, the present misc. petition is allowed in the same terms as directed by the Co-ordinate Bench of this Court in the said decision.
8. Accordingly, the criminal proceedings in Criminal Case No.336/2017 (150/2017) pending before the Court of learned Chief Metropolitan Magistrate (Economic Offences), Jaipur City, are hereby quashed and set aside.
Stay application and pending application(s), if any, stand disposed of.
