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Case Law Details

Case Name : Suman Paper & Boards Ltd. Vs JCIT (Gujarat High Court)
Appeal Number : R/Criminal Misc. Application No. 3438 of 2004
Date of Judgement/Order : 17/03/2023
Related Assessment Year :
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Suman Paper & Boards Ltd. Vs JCIT (Gujarat High Court)

Gujarat High Court held that as per provisions of section 276-C prosecution can be launched only if there is willful admits to evade any tax, penalty or interest chargeable or imposable under the Income Tax Act. Prosecution in absence of willful admits is unsustainable

Facts- The premises of applicant No.1 – a Public Limited Company and its Directors (other applicants) were raided on 1.12.1995 and a search was carried out by the respondent Income Tax Department u/s. 132 of the Income Tax Act.

Pursuant to Notice u/s. 158BC of the Income Tax Act, the applicant had filed a return for the Block Period 1.4.1985 to 5.1.1996, declaring undisclosed income of Rs.20,31,055/-. AO vide an order dated 31.1.1997, determined the undisclosed income at Rs.62,61,623/-.

The applicant filed an Appeal before Tribunal and the Tribunal granted certain reliefs and whereas few additions have been set aside for re-adjudication. It appears that under the re-adjudication, the undisclosed income was computed as Rs.23,36,144/-.

The applicants thereafter received a show-cause notice from the Department, asking it to show cause as to why the applicants should not be prosecuted for not showing the amount of Rs.20,31,055/- in the returns u/s. 139 of the Act for the respective years. The applicants submitted that Block Assessment Period is a single unit of Assessment comprising a period of 10 years and hence, income taxed in a Block Assessment could not be stated to be related to any particular year, that there was no finding of any concealment in the regular assessment orders and, therefore, there could not be any prosecution in respect of the regular assessment, more particularly on account of Section 158BF of the Act, no interest or penalty could be levied for the block returns filed, hence, as a necessary corollary the prosecution could not have been launched.

The respondent No.2 had sanctioned the prosecution by order dated 8.6.2000 u/s. 279(1), stating that all the applicants had knowledge about the concealment and thereby committed offence u/s. 276C(1), Section 277 read with Section 278B of the Act, and Criminal Case No.2707 of 2000 has been launched in the Court of learned Chief Judicial Magistrate, Surat, which is sought to be quashed by the present applicants in the present Application.

Conclusion- In the considered opinion of this Court, the Criminal Complaint has been filed by the Department inter alia alleging commission of offences punishable under Section 276C, Section 277 read with Section 278B of the Act. A bare perusal of Section 276(1) would reveal that punishment is to be imposed for willful attempt to evade tax, penalty or interest and whereas the heads of income under which there has been any alleged willful attempt as per the Scheme of the Section does not hold any special relevance.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. Heard learned Advocate Mr. Manish J. Shah appearing with learned Advocate Mr. Premal Joshi for the applicants, learned Advocate Mr. Nikunt Raval appearing with learned Advocate Mrs. Kalpana Raval for respondent Department and learned APP Ms. M.D. Mehta for the respondent State in all the four applications.

2. Since facts and law involved in the all the four applications are common and similar in nature, they are disposed of by this common judgement. For the sake of convenience, Criminal Misc. Application No.3438 of 2004 is taken as the lead matter for deciding the issues involved.

3. Facts :-

3.1. The premises of the applicant No.1 – a Public Limited Company and its Directors (other applicants) were raided on 1.12.1995 and search was carried out by the respondent Income Tax Department under Section 132 of the Income Tax Act and the search was concluded on 5.1.1996. It appears that pursuant to a Notice under Section 158BC of the Income Tax Act, the applicant had filed return for the Block Period 1.4.1985 to 5.1.1996, declaring undisclosed income of Rs.20,31,055/- on 26.2.1996. The Assessing Officer vide an order dated 31.1.1997, determined the undisclosed income at Rs.62,61,623/-. The applicants herein filed an Appeal before the Income Tax Appellate Tribunal (‘ITAT’ for short) and vide order dated 18.5.1998, the Tribunal had granted certain reliefs and whereas few additions have been set aside for re-adjudication. It appears that pursuant to the re-adjudication, the undisclosed income was computed as Rs.23,36,144/-.

3.2. The applicants thereafter received a show-cause notice from the Department, asking it to show cause as to why the applicants should not be prosecuted for not showing the amount of Rs.20,31,055/- in the returns under Section 139 of the Act for the respective years. The applicants submitted their reply dated 7.1.1999 to the show cause notice inter alia contending that Block Assessment Period is a single unit of Assessment comprising a period of 10 years and hence, income taxed in a Block Assessment could not be stated to be related to any particular year, that there was no finding of any concealment in the regular assessment orders and, therefore, there could not be any prosecution in respect of the regular assessment, more particularly on account of Section 158BF of the Act, no interest or penalty could be levied for the block returns filed, hence, as a necessary corollary the prosecution could not have been launched.

The respondent No.2 had sanctioned the prosecution by order dated 8.6.2000 under Section 279(1), stating that all the applicants had knowledge about the concealment and thereby committed offence under Section 276C(1), Section 277 read with Section 278B of the Act, and Criminal Case No.2707 of 2000 has been launched in the Court of learned Chief Judicial Magistrate, Surat, which is sought to be quashed by the present applicants in the present Application.

4. Learned Advocate Mr. Shah, at the outset, would submit that the issue raised in the present group of applications stand covered by decision of a learned Coordinate Bench (Coram: 276Mr. Justice Anant S. Dave) in Criminal Misc. Application No.3437 of 2004 dated 26.10.2018. Learned Advocate would submit that the said application was part of the present group and whereas issues decided by the learned Coordinate Bench are the very selfsame issues raised in the present applications. Learned Advocate would, therefore, submit that based upon the law laid down by the learned Coordinate Bench, the present applications may be allowed.

4.1. Learned Advocate Mr. Shah for the applicants would submit, on merits, that the complaint is in respect of the returns under Section 139 and assessments under Section 143 of the Act and the Assessing Officer, who had passed the orders under the said Section, had neither given any finding with regard to concealment of income/furnishing inaccurate particulars, nor were there any proceedings under Section 271(1)(c) with regard to penalty and, therefore, prosecution for the act of omission or commission could not be initiated. Learned Advocate Mr. Shah would draw the attention of this Court to the Notice for prosecution under Section 276C(1) and 278B of the I. T. Act issued by the respondent Department and would submit that the respondent Department had determined a total of Rs.62,61,623/- as undisclosed income, which was challenged by the applicants before the learned ITAT, Ahmedabad. Learned Advocate Mr.Shah would submit that after considering various additions and undisclosed income as computed by the Assessing Officer, the learned ITAT, Ahmedabad had, after granting certain relief, set aside certain additions for re-adjudication, resulting in revision of the undisclosed income as Rs.23,36,144/-. Learned Advocate Mr.Shah would further submit that after filing return for the undisclosed income of Rs.20,31,055/- as block assessment, an amount to the tune of Rs.3,05,089/- would be the difference and in spite of the same, the respondent Department had issued the above Notice dated 30.11.1998 under Section 276C(1) and 278B of the I. T. Act for prosecution for an undisclosed amount of Rs.20,31,055/- on the ground that the said amount was not shown in the original return, which is not permissible.

4.2. Learned Advocate Mr.Shah would submit that the original return for every financial year and return for block period of ten years for undisclosed income are different and separate, and whereas the respondent Authorities are trying to put the undisclosed income of the block period in the original return so as to make the applicants liable for prosecution.

4.3. Learned Advocate Mr.Shah would thereafter submit that at the relevant point of time, Section 158BF of the I.T. Act was applicable to the cases of raid between 1.7.1995 to 1.1.1997. According to learned Advocate, as per Section 158BF, no interest under the provisions of Section 234A, 234B or 234C or penalty under the provisions of Clause (c) of Sub-section (1) of Section 271 or Section 271A or Section 271B could be levied or imposed on the assessee in respect of the undisclosed income determined in the block assessment and as such, there was no penalty/interest levied upon the applicants. Mr.Shah would, therefore, submit that as there were no proceedings for levying penalty, prosecution against the applicants is out of question. Relying upon the decision of this Court in case of Alkesh S. Shah Vs. State of Gujarat and Another, reported in (1995) 212 ITR 255(Guj) (Criminal Revision Application No.132 of 1989), learned Advocate Mr.Shah would submit that once the position having been accepted by the Department and the income having been accepted as income from undisclosed sources, it could not have been urged by the Department that there was a willful attempt on the part of the applicants – assessees. Learned Advocate Mr.Shah would submit that, as reiterated by this Hon’ble Court in the aforesaid decision, as no penalty proceedings for concealment of income or for showing incorrect particulars in the return were initiated, the prosecution could not have been launched on the basis of a view which, right from the initiation, was even according to the Department in favour of the applicants.

4.4. Learned Advocate Mr.Shah would further submit that neither the Assessing Officer had opined concealment of income in his report, nor had the learned ITAT, Ahmedabad held so in its order, rather the learned ITAT, Ahmedabad had, after giving certain relief and setting aside certain additions for re-adjudication, quantified the undisclosed income for the block assessment and, therefore, it is not now open for the Department to initiate criminal prosecution under the said Sections. Learned Advocate Mr.Shah appearing for the applicants thereafter would take this Court through the complaint filed by the Department and would submit that a perusal of the complaint itself would reveal that the applicants had already submitted details of all the income, disclosed and undisclosed and barring minor errors, the applicants had never concealed any income as alleged by the Department. Learned Advocate Mr.Shah would submit that the respondent Department ought not to have clubbed the original returns for individual financial years with the block assessment, as both the assessments stand on different footing. Learned Advocate Mr. Shah would draw the attention of this Court to Chapter XIV-B of the IT Act, more particularly Section 158B, the definition of block assessment, computation of undisclosed income etc., to fortify his arguments. Having regard to such submissions, learned Advocate would request this Court to quash the impugned complaints.

5. Per contra learned Advocate Mr.Nikunt Raval for the Department would submit that the block assessment, which is over and above the regular assessment is not an amnesty scheme, which was granted to the Assessee and, therefore, once returns were filed and accepted, he could not say Section 276C/278B would not apply ipso facto, unless there is some evidence. Learned Advocate Mr.Raval would submit that after returns under Section 139 of the Act, the Assessing Officer has two alternatives; (I) if he is not satisfied with the returns filed by the assessee, he issues notice under Section 143(2) of the Act, for more information to justify the deduction. Thereafter, he passes the order under Section 143(3), and if there is no response, he can proceed under Section 144. Learned Advocate Mr.Raval would submit that if the Assessing Officer is of the opinion that the assessee is deliberately suppressing some information, then the respondent Department has two alternatives; either to conduct search under Section 132 of the Act or conduct a survey under Section 133A. Mr.Raval would submit that for such purpose there is no requirement of sanction per se. Learned Advocate Mr.Raval would submit that under search proceedings, the search team are allowed to collect whatever material available with the assessee and, at the same time, can also record statements, and that is what had happened in the present case. It is submitted that the assessee initially had filed his returns for the relevant years. Subsequently in the year 1995, a search was conducted and in his opinion, this is where Section 158B comes into play. Learned Advocate Mr.Raval would submit that after end of search, there are two options, either reopen previous assessment or to do block-assessment. Mr.Raval would submit that as a result of search, it was detected that there was undisclosed income and, therefore, the process which was to be followed was as if for the entire ten years’ period, there was undisclosed income and that has to be assessed.

5.1. According to Mr.Raval, since there was undisclosed income unearthed during the search, either interest can be levied or penalty can be imposed, or the third option is to prosecute the assessee. It is submitted that as there was undisclosed income, it was required for the assessee to disclose the same within the specified time period after filing the returns as envisaged in the law or else rigors of prosecution comes into force. Learned Advocate Mr.Raval would submit that Section 276C of the Act provides that if the assessee willfully attempts evade tax, then he can be prosecuted. According to learned Advocate Mr.Raval, the Department can go ahead with prosecution, if there was any income, which the assessee was supposed to disclose but not disclosed or he has under-reported or he has not at all reported. In the instant case, at the relevant point of time between 1995-97, the highest slab was 30% and there was a lump sum scheme to encourage willful disclosure of the income and under the block-assessment, as a lump sum, double the amount as tax was charged, which included all other components and, therefore, separate penalty proceeding was not there. Learned Advocate Mr.Raval would submit that Section 271 provides for penalty for concealment of income and he would further submit that as there was no penalty imposed during 1995-97 in terms of the said Section and mere factum of penalty not being imposed does not mean that prosecution cannot be initiated, as prosecution is an independent action. Learned Advocate would submit that the present case is at a stage of complaint and Section 278E presumes that the defence must discharge the burden of there being no mens rea more particularly since the provision presumes such existence against the accused. Learned Advocate Mr.Raval would submit that once there is prima facie case that there was some undisclosed income, and assessee did not file return or under-reported, it is up to the assessee to prove that the under-reported income or undisclosed income was not deliberate and such aspect is a matter of trial. Mr.Raval refers to complaint, more particularly paragraph 3 onwards (Page 13-14 of Criminal Misc. Application No.3438 of 2004) in support of his submission. Learned Advocate Mr.Raval would further draw the attention of this Court to paragraph 10 of the complaint and would submit that it clearly appears from the complaint that the applicants were well aware of the fact and, therefore, this Court may not interfere with the prosecution.

5.2. Learned Advocate Mr.Raval appearing for the Department relies upon the decision of High Court of Patna in case of Deepak Engineering Works Vs. Commissioner of Income Tax, reported in [2012] 20 taxmann.com 689 (Patna), more particularly paragraphs 12 and 13 and upon the decision of High Court of Jammu and Kashmir in case of Arun Arya Vs. Income Tax Officer, reported in [2018] 98 taxmann.com 470, more particularly paragraphs 10 and 11, in support of his submission. Advocate Mr.Raval, then, relying upon the decision of High Court of Delhi in case of V.P. Punj Vs. Assistant Commissioner of Income Tax, reported in [2001] 119 Taxman 543 (Delhi)s, would submit that in any prosecution for any offence under the Income Tax Act, the Court may presume the existence of mens rea and it is for the accused to prove to the contrary and that too beyond reasonable doubt. Mr.Raval would also rely upon the decision of the High Court of Patna in case of Raghunath Pandey Vs. State of Bihar, reported in [1998] 99 Taxman 371 (Patna), and would submit that mere factum of no penalty imposed upon the assessee would not be a ground for not initiating prosecution and the Commissioner or Principal Commissioner, as the case may be, has a discretion ‘to or not to’ initiate prosecution.

5.3. Advocate Mr.Raval, then, relying upon the decision of High Court of Delhi in case of V.P. Punj Vs. Assistant Commissioner of Income Tax, reported in [2001] 119 Taxman 543 (Delhi)s, would submit that in any prosecution for any offence under the Income Tax Act, the Court may presume the existence of mens rea and it is for the accused to prove to the contrary and that too beyond reasonable doubt. Mr.Raval would also rely upon the decision of the High Court of Patna in case of Raghunath Pandey Vs. State of Bihar, reported in [1998] 99 Taxman 371 (Patna), and would submit that mere factum of no penalty imposed upon the assessee would not be a ground for not initiating prosecution and the Commissioner or Principal Commissioner, as the case may be, has a discretion ‘to or not to’ initiate prosecution.

5.3. Mr.Raval would further submit that prosecution under Section 158BA is initiated only on the basis of search, meaning thereby that there were some undisclosed income, which was not forming part of the original returns. Mr.Raval would submit that insofar as the partners are concerned, specially when there is some averment of their involvement, the present applications cannot be considered for quashing of the complaint. Relying upon the decision of this Court in case of N. R. Agarwal Industries Ltd. Vs. JCIT, reported in (2019) 416 ITR 578 (Guj), more particularly concluding paragraphs 26 and 27, Mr.Raval would submit that the Court has not been taken to Section 278E in that case, wherein the Court had observed that there was no deliberate attempt on the part of the parties. Mr.Raval would submit that if the submission made by learned Advocate Mr. Shah is to be considered in the trial proceedings, one can say that he would be absolutely right in doing so, but at the stage of complaint, as the present case, such averments are not substantially enough or to say, at this stage, we have no sufficient proof of mens rea, which would fall flat on the face of what the provisions require.

5.4. Learned Advocate Mr.Raval would submit that insofar as decision of learned Coordinate Bench in Criminal Misc. Application No.3437 of 2004, the Court in the said case referred to, the stock holding which was not disclosed and in the instant case, there are commission charges, licencing charges, stock holdings, and various other commissions. Learned Advocate would submit that since there was material difference insofar as the heads of income which were not disclosed, the findings of the learned Coordinate Bench would not be applicable. Learned Advocate would further submit that the ratio of that judgement can not be applied to the facts of the present case, more particularly Section 278E was not considered by the Court while passing the said decision.

6. Learned Advocate Mr.Shah, in rejoinder, would submit that insofar as the decisions, referred to by the learned Advocate Mr.Raval, of Patna High Court and J & K High Court are concerned, there are no specific allegations in the complaint and, therefore, the said decisions are not applicable to the facts of the present case. Learned Advocate would, therefore, request this Court to quash the impugned complaints.

7. Heard learned Advocate for the respective parties, who have not submitted anything further.

8. At the outset, the primary question, which would be required to be answered by this Court would be whether law laid down by this Court in decision dated 26.10.2018 in Criminal Misc. Application No.3437 of 2004 would be applicable in the facts of the present case. In the considered opinion of this Court, it would be only after the above question being decided in negative that the Court would be required to give its findings on the issues raised by the learned Advocates for the respective parties.

9. Before adverting to the facts of Criminal Misc. Application No.3437 of 2004 and comparing them to the facts of the present applications, it would be relevant to mention that a perusal of the orders passed in Criminal Misc. Application No.3441 of 2004 (part of the group) would reveal that originally Criminal Misc. Application No.3437 of 2004 and Criminal Misc. Application No.3441 of 2004 had been listed together and a common order of issuance of notice had been passed by a learned Coordinate Bench of this Court (Coram: Hon. Mr. Justice S. D. Dave) on 19.4.2004. It further appears that as in Criminal Misc. Application No.3437 of 2004, rule had been issued as in the present group of applications vide an order dated 5.10.2004 and interim relief had also been granted. Thus, it would appear that initially five applications had been moved by the petitioners and whereas up to some time, the applications were heard together and whereas it would appear that Criminal Misc. Application No.3437 of 2004 got detagged and was heard separately and decided by the learned Coordinate Bench vide an order dated 26.10.2018.

10. As far as the facts are concerned, it would appear that as in the present case, a search had been carried out on the business premises of the group Companies of one M/s.N. R. Agrawal Group. The said fact being noticeable from the paragraph of the Criminal Complaint in the present applications, whereas similar averments appear to have been made as in the Complaint impugned in Criminal Misc. Application No.3437 of 2004, more particularly as noted by the learned Coordinate Bench in the judgement concerned. It would appear that pursuant to the search in question, a notice under Section 158BC of Income Tax Act had been issued and whereas return for block period from 1.4.1985 to 5.1.1996 declaring undisclosed income of Rs.20,31,055/- was filed on 26.2.1996. It appears that the Assessing Officer had passed a block assessment order on 31.1.1997 assessing the undisclosed income at Rs.62,61,623/-. It appears that in case of the decision in Criminal Misc. Application No.3437 of 2004, the Assessing Officer had not believed the block assessment filed by the applicant – assessee therein. It would appear that as in case of the present lead application i.e. Criminal Misc. Application No.3438 of 2004, as well as in the other applications, the assessment had not been believed by the Assessing Officer, as can be seen from different assessment orders and whereas all the assessment orders were subject matter of challenge before the learned Income Tax Appellate Tribunal, Ahmedabad Bench. It would appear that the learned ITAT had granted certain reliefs and whereas a few additions by the Assessing Officer were set aside for re-adjudication. It would appear that vide an order dated 30.7.1998, the Assessing Officer had passed the order giving effect to the learned ITAT’s order and whereas the undisclosed income had been revised as Rs.23,36,144/-. It would appear that as in case of Criminal Misc. Application No.3437 of 2004, a show-cause notice had been issued to the Company on the very same day i.e. 30.11.1998, asking the Company to show cause as to why prosecution proceedings should not be initiated against it. The show cause being with regard to the Company for not showing undisclosed income of Rs.20,31,055/- shown for the block period in the original returns. It would appear that like in the case of Criminal Misc. Application No.3437 of 2004, a reply had been sent by the present applicants also through their Chartered Accountants on 7.1.1999 and whereas the same having not been considered and sanction under Section 279(1) of IT Act having been granted by the Commissioner on 8.6.2000 the impugned complaint came to be filed before the learned Chief Judicial Magistrate, Surat being Criminal Case No.270 of 2000.

10.1. As far as the contentions are concerned, it appears that the principal contention of the applicants as in the present case, relying upon Section 158BF of the Act as applicable at the relevant point of time, have been recorded by the learned Coordinate Bench, relevant portion of which is reproduced herein below for benefit:-

“6.4 … It is emphatically submitted by learned counsel for the  applicants that though raid was carried out on the business premises of petitioner no.1 and resident of directors on 1.12.1995, at the relevant point of time a new Chapter XVIB was introduced in the Act, 1961  which provided special procedure for search cases with effect from 1.7.1995 and was applicable in cases of raid carried out between 1.7.1995 to 1.1.1997. That relevant Section 158-BF provided that no  interest under the provisions of Section 234A, 234B or 234C or penalty under the provisions of Clause (C) of Sub-section (1) of Section 271 or  Section 271A or Section 271B shall be levied or imposed upon the assessee in respect of the undisclosed income determined in the block assessment.

That above provision was made inapplicable after 1.1.1997 by virtue of newly inserted Section 158 BF(A) of the Act 1961. That petitioner no.1 filed a block return showing income of rupees-nil for the period 1.4.1985 to 5.1.1996 and the Assessing Officer passed a block assessment order on 31.1.1997 and computed the income of Rs.3,33,000/-. In appeal, the Tribunal passed an order on 18.5.1998 reducing the income to Rs.2,33,100/- and, thus, it was finally assessed income. Since above order attained finality, notice dated 30.11.1998 was received by the petitioner no.1 to show cause as to why the petitioner should not be prosecuted for not showing any returns under Section 139 of the Act 1961, for the respective years, the income of Rs.2,33,000/- sustained by the Tribunal. A reply dated 7.1.1999 was filed by the petitioner to the show cause notice and submitted that in regular assessments for the assessment years falling in the block period, the returns were accepted by the then assessing officer  and all the assessments were of loss and there was no finding of any  concealment in the regular assessment orders and, therefore, no  prosecution can be lodged or instituted in respect of regular assessment,  particularly, when provisions of Section 158BF was inoperative. Thus,  according to learned counsel for the applicants it is clear that if there can  be no penalties, a fortiori there cannot be prosecution. Therefore, sanction  given by respondent no.2 vide order dated 8.6.2000 under Section 279 (1)  is illegal and consequently, institution of criminal proceedings against the  applicants also deserve to be quashed and set aside.” (Emphasis supplied)

10.2. As noted herein above, this has been the principal issue which has been urged by the learned Advocate for the applicants that when provisions of Section 158BF was holding the field, more particularly when amended Section 158BFA had not been introduced, therefore, for block assessment between the period 1.7.1995 to 1.1.1997, even penalties could not be imposed, therefore, a fortiori there cannot be prosecution. The said question had been answered by the learned Coordinate Bench vide judgement dated 26.10.2018 at paragraph 25, relevant portion is quoted herein below:-

“25. In view of above order dated 18.5.1998 passed by ITAT, Ahmedabad Bench, in Appeal No.71/1997 deduction was given under Section 80IA of the Act to the extent of Rs.99,900/- and refused undisclosed income so assessed to Rs.2,33, 100/- and no surcharge was to be levied at present and revised demand notice was to be issued. The assessee has also replied to notice dated 30.11.1998 issued by Deputy Director of Income Tax (Prosecution) Surat, by reply dated 7.1.1999, wherein it was contended that “undisclosed income in Section 158 B (b) include any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of accounts or other documents or transactions where such asset, entry or other document or transaction repaying wholly or partly income or property which has not been or would not have been disclosed for the purposes of the Act. Therefore, what the assessee had already disclosed or would have disclosed is not to be treated as undisclosed income. Besides, reference was made to Chapter XIV-B of the Act, whereby the undisclosed income incorporated into the scheme with effect from 1.7.1995 to 30.12.1996 was deleted and, accordingly, search was required to be assessed separately, for which budget note for the year 1995-96 were also relied on. The assessee tried to justify that the block assessment period was, therefore, a single unit of assessment year comprising a period of ten years and, hence, the income tax in the block assessment would not be said to be relating to the particular year of regular year of assessment. It was with this objective only the concept of block assessment was introduced. The assessee also relied on various other provisions. By relying on comparison of provisions for block assessment for the period 1.7.1995 to 31.12.1996 and similar provisions which were made effective from 1.1.1997, the prosecution was never intended by the Legislature, it was clear according to assessee that the period covering the search of the assessee for which no time limit was prescribed for filing the returns of income tax in Form No.2B under Section 158BC of the Act, which was amended by introducing Section 158BC (a) (ii) of the Act from 1.1.1997. At the same time, there was no provision for payment of tax which was  amended by introducing Section 158BFA from 1.1.1997 and,  therefore, during the period from 1.7.1995 to 31.12.1996, the tax was  to be paid at the time of determination of income irrespective of the  date of filing the return of undisclosed income and irrespective of the  amount of undisclosed income. It was also clear that had there been  any intention of levying any penalty or prosecution, the legislature  would have been specific or would have introduced the provisions of Section 158 BC (a) (ii), and Section 276 CCC, since the provisions of  Section 276 CCC was introduced from 1.1.1997 for prosecution for  willful failure to furnish the return of income in such cases and by  specific proviso contained in the Section provided that no person shall  be punished for any failure to this Section in respect of search initiated  under Section 132 or books of accounts or other documents etc. requisitioned under Section 132A after 30.6.1996 but before 1.1.1997.  Therefore, specific exemption for the block period covering the case of the assessee-company indicated that if there was any intention of the  legislature the specific provision for prosecution would have been introduced for such cases but in absence of such provision, it could be  easily inferred that the legislature intended to grant immunity for the  block period covering the case of the assessee company. Reliance was also placed under Section 158B (i) of the Act read with Section 158 BC whereby what is assessed is the undisclosed income of the block period and not total income of any previous year and the determination of the undisclosed income is the income, which was not disclosed or determined in the regular assessments. Therefore, what was concealed for regular assessment is taxed as undisclosed income in the block assessment. Even it was pleaded that there was no willful attempt to evade any tax so as to bring provisions under Section 276 (c) (i) of the Act and immunity granted by Section 158 BF from levy of interest and penalty under Section 271 (1) (c), 271 (A), 271-B of the Act. That there is no mention of Section 276-C in Section 158BF of the Act and, as a matter of fact, a careful reading of Section 276-C transpires that if a person willfully admits to evade any tax, penalty or interest chargeable or imposable under the Act, 1961 then only prosecution can be launched.” (Emphasis supplied)

11. From the above discussion, it clearly appears to this Court that the issue involved in the present group of applications and Criminal Application No.3437 of 2004 decided by the learned Coordinate Bench of this Court appears to be substantially similar and whereas under such circumstances, the law laid down by the learned Coordinate Bench would also cover the issue in question in the present group of applications.

12. It would be pertinent to mention here that the learned Advocate appearing on behalf of the respondent Department had attempted to argue that attention of learned Coordinate Bench had not been drawn to Section 278E and, therefore, the law laid down by the learned Coordinate Bench may not be binding on this Court, in the considered opinion of this Court, such a submission cannot be countenanced. As far as the contention of Mr.Raval that a particular section or provision was not brought to the notice of the Court, though the same was not reflected in the order, normally it is deemed and presumed that the Court had considered it. It would be relevant to mention here that the learned Coordinate Bench had inter alia held that upon introduction of Section 158BFA and Section 158BC(a)(ii) and Section 276CCC from 1.1.1997, the legislature had envisaged prosecution for willful failure to furnish return of income in search cases, and whereas in absence of a specific provision between the period from 1.7.1995 to 1.1.1997, it could be inferred that the legislature had intended to grant immunity in such type of cases. Essentially what has been emphasized is the lack of any provisions to prosecute an assessee during the period between 1.7.1995 to 1.1.1997, which period covers the present cases also.

12.1. Furthermore, by relying upon Section 278E of the IT Act 1961, learned Advocate for the respondent Income Tax Department intends to submit that the said Section envisages existence of culpable mental state in a prosecution for any offence and whereas, the defence has been imposed with a burden of rebutting such prosecution. It was intended to be submitted that such rebuttal could only be at the trial stage of the complaint and, therefore, an application for quashing complaint under Section 482 may not be the remedy. In the considered opinion of this Court, as noted herein above, since the learned Coordinate Bench has taken a view as regards there being no provision existing at the relevant point of time whereby the Income Tax Department could launch a prosecution as regards income disclosed in block assessment for the period between 1.7.1995 to 1.1.1997, automatically and as a direct consequence, quashing of prosecution is the only necessary corollary. Having come to such a conclusion, there was no requirement for the learned Coordinate Bench to have discussed with regard to applicability of Section 278E of the Act and whereas in the considered opinion of this Court, therefore, the submission of the learned Advocate for the Income Tax Department cannot be accepted.

13. Furthermore, insofar as the submission of the learned Advocate for the Income Tax Department that the decision in Criminal Misc. Application No.3437 of 2004 would not be applicable on the ground that the heads on which incomes were not disclosed were different than the heads of undisclosed incomes in the present case, therefore, the same may not be applicable. In the considered opinion of this Court, the Criminal Complaint has been filed by the Department inter alia alleging commission of offences punishable under Section 276C, Section 277 read with Section 278B of the Act. A bare perusal of Section 276(1) would reveal that punishment is to be imposed for willful attempt to evade tax, penalty or interest and whereas the heads of income under which there has been any alleged willful attempt as per the Scheme of the Section does not hold any special relevance.

13.1. In this regard it would also be relevant to note that while it is undoubtedly true that the learned Coordinate Bench of this Court had made observations with regard to the heads of income in the judgement dated 26.10.2018, but at the same time what would be necessary to note is the fact that having decided the preliminary issue as regards there being no power vested with the Income Tax Department to launch a prosecution with regard to undisclosed income for block assessment for the period between 1.7.1995 to 1.1.1997, the necessary consequence would be quashment of the Complaints. The latter observations would not have made any difference to the final finding on the issue. Under such circumstances, in the considered opinion of this Court, the fact of heads on which income had not been disclosed being different and distinct in the present group of cases and the decision by the learned Coordinate Bench in Criminal Misc. Application No.3437 of 2004 would not be of any material consequence and hence, the said submissions is also not countenanced.

14. In view of the above discussion, more particularly since this Court has come to a conclusion that the decision of the learned Coordinate Bench dated 26.10.2018 in Criminal Misc. Application 3437 of 2004, substantially and essentially covers the issue raised in the present group of applications and whereas since the law laid down by the learned Coordinate Bench being binding upon this Court, therefore, the present group of applications also require consideration.

15. Consequently, the impugned Criminal Complaints No.2707 of 2000, 2708 of 2000, 2709 of 2000 and 2710 of 2000 pending in the Court of learned Chief Judicial Magistrate, Surat are hereby quashed and set aside. The present applications are allowed accordingly. Rule is made absolute to the aforesaid extent.

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