Income Tax Prosecution u/s 276CC – Discharge of accused u/s 245 of CrPC denied by Trial Court

Income Tax Prosecution u/s 276CC discharge of accused denied by Trial Court since plea of accused u/s 251 CrPC had been recorded and recording of evidence already commenced

ABCAUS Case Law Citation:
ABCAUS 2652 (2018) (11) AC

Important Case Laws Cited/relied upon:
Subramanium Sethuraman V. State of Maharashtra: 2005 SCC (Crl) 242.

The instant petition for criminal revision was filed against the order passed by the Trial Court declining to drop the proceedings or to discharge the accused in view of the dictum laid down by Hob’ble Supreme Court.

A prosecution under Section 276CC of Income Tax Act 1961 (the Act) for failure to furnish return if income was filed against the revisionist before the learned trial court. Cognizance was taken by the Trial Court and the accused was summoned.

The Trial Court heard the arguments of accusation and the accused was served with notice under Section 251 Cr.P.C. holding that he had contravened Section 153A of the Act punishable under Section 276CC of the Act and case was accordingly put to trial.

However, after CW1 entered into witness box and was under cross-examination, the accused moved an application, ostensibly, pari materia with Section 245 Cr.P.C., seeking dropping of the proceedings/discharge.

Under the section 245 of CrPC,  the Magistrate if, upon taking all the evidence, for reasons to be recorded of the view that no case is made out against the accused to warrant his conviction, the Magistrate has the power to discharge the accised.

The Trial Court sought reply from Income Tax Department. The trial court observed that since plea of accused in terms of Section 251 Cr.P.C. had already been recorded and the recording of evidence had already commenced, it was beyond its power to drop the proceedings or to discharge the accused in view of the dictum laid down by Hob’ble Supreme Court.

Accordingly, by the impugned order such application was dismissed.

The accused approached the Hon’ble High Court and filed a Petition under Section 482 Cr.P.C. against the impugned order. However, the accused withdrew the Petition where the Hon’ble Bench permitted the petitioner to assail the impugned order by way of revision petition.

This is how the instant revision petition was came to be filed.

The prime ground of the accused/revisionist was that in view of the order passed by Income Tax Settlement Commission (ITSC) in another case, the revisionist should also be shown complete parity with it.

The revisionist asserted that in view of the order dated passed by ITSC, it cannot be said that there was any willful or deliberate delay in furnishing the return in question and, therefore the prosecution was misconceived and should not be permitted to continue.

The Revenue contended that revisionist had been prosecuted as an individual and, therefore, cannot seek any parity, even otherwise the order of ITSC was in context of a company which was separate legal entity whereas instance prosecution of revisionist was as an individual and not as Director or incharge or as officer of such company.

It was also claimed that the instant case was virtually at the fag end of trial and the learned trial court would, on the basis of evidence led by the parties, eventually decide whether the ingredients of Section 276-CC of IT Act are made out or not and whether revisionist is entitled to the alleged equal treatment or not.

The Special Judge (Appellate Court) observed that it was very much evident from the facts and also from the bare perusal of the trial court record that learned trial court had crossed the stage of service of notice under Section 251 Cr.P.C. So much so, the prime witness of the complainant department had also been examined and, therefore, keeping in mind the settled legal position, it was, even otherwise, not possible for the learned trial court to have dropped the proceedings mid-way. Learned trial court was fully justified in relying upon the Hon’ble Supreme Court.

The Appellate Court thus disposed off the revision petition with liberty to revisionist to address all the issues, which had been agitated before it, before the learned trial court at the stage of final arguments to be rebutted by the Department.

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