Union of India & Anr. Vs. Banwari Lal Agarwal
EmailAppeal: Criminal Appeal Nos. 1087-1090 of 1998.
( Arising out of SLP (Crl.) Nos. 2830-2833/1997 )
( From the Judgment and Order dated 4.2.97 of the Allahabad High Court in Crl.M.A.Nos. 3505-08 of 1990 )
( Arising out of SLP (Crl.) Nos. 2830-2833/1997 )
( From the Judgment and Order dated 4.2.97 of the Allahabad High Court in Crl.M.A.Nos. 3505-08 of 1990 )
Petitioner: Union of India & Anr.
Respondent: Banwari Lal Agarwal
Apeal: Criminal Appeal Nos. 1087-1090 of 1998.
( Arising out of SLP (Crl.) Nos. 2830-2833/1997 )
( From the Judgment and Order dated 4.2.97 of the Allahabad High Court in Crl.M.A.Nos. 3505-08 of 1990 )
( Arising out of SLP (Crl.) Nos. 2830-2833/1997 )
( From the Judgment and Order dated 4.2.97 of the Allahabad High Court in Crl.M.A.Nos. 3505-08 of 1990 )
Judges: M.K. MUKHERJEE & B.N. KIRPAL , JJ.
Date of Judgment: Oct 16, 1998
Appearances:
Mr. Ranbir Chandra , Ms. Kanupriya Mittal , Advocates for Mr. B.K. Prasad , Advocate for the appellants.
Mr . N.K. Kantawala , Advocate for Mr. Bharat Sangal , Advocate for Respondent .
Head Note:
CRIMINAL LAW
Income Tax Act, 1961
Sections 279(2) , 482 – Prosecution – Delay in filing returns – Plea of mutual understanding that no penal action would be taken – Nothing on record to show that understanding was given – Af-fording of opportunity – If necessary before launching prosecu-tion – Held that High Court was in error in holding that an opportunity was to be given before initiating prosecution . Orders set-aside .
Held:
There was a delay in filing of the returns . The Income disclosed was much less than the income assessed . Furthermore , there is nothing on the record which could lead to the conclusion that any understanding was given to the respondent that no penal action could be taken . The question whether there was any under-standing or not , even if it could have been there , is one of the fact which will have to be proved before the Trial Court . There is no warrant in interpreting this sub-section to mean that before any prosecution is launched , either a show cause notice should be given or an opportunity afforded to compound the mat-ter . The enabling provision cannot give a right to a party to insist on the Chief Commissioner or the Director General to make an offer of compounding before the prosecution is launched . ( Para 6 & 7 )
JUDGEMENT:
O R D E R
1 . Leave granted .
2 . In respect of the Assessment Years 1978-79 , 1979-80 and 1980-81 returns were filed by the respondent , after search and seizure had taken place under Section 132 of the Income-tax Act . Returns were filed belatedly and the assessments which were made were at a figure more than what was the returned income .
3 . Prosecution was launched against the respondent alleging that he had committed an offence under Section 276-C of the said act , since his returns had been filed much after the date of search and he had wilfully attempted to evade tax chargeable or imposable under the Act .
4 . The respondent thereafter moved an application under section 482 before the Allahabad High Court . It was contended before the Court that the assessment which was made was on the basis of a compromise arrived at between the respondent and the Income-tax Commissioner , Kanpur and there was also an understanding that no penal action would be taken against the respondent . A further contention which was raised was that before any prosecution is launched , an opportunity of hearing should have been afforded . This contention was sought to be raised on the basis of the respondent’s interpretation of sub-section (2) of Section 279.
5 . The High Court came to the conclusion that the assessment made was in pursuance of a mutual understanding therefore , no penal action could be taken against the respondent and , further , that he was not afforded an opportunity to compound the matter under Section 279(2) prior to the institution of the prosecution and therefore it ‘s initiation was not valid .
6 . In our opinion , the decision of the High Court is clearly without any legal basis . Firstly , it appears to be undisputed that there was a delay in filing of the returns . There does not seem to be an averment in the petition under Section 482 , and certainly no discussion by the High Court , to the fact that the Income disclosed was much less than the income assessed . Furthermore , there is nothing on the record which could lead the High Court to the conclusion that any understanding was given to the respondent that no penal action could be taken . The learned counsel for the respondent is also unable to draw our attention to any provision of the Income-tax Act , whereby a compromise assessment could have been arrived at between the respondent and the Commissioner of Income-Tax . The High Court , in our view , was clearly in error in proceeding to accept the said contention of the respondent’s counsel . The question whether there was any understanding or not , even if it could have been there , is one of the fact which will have to be proved before the Trial Court .
7 . We further find that sub-section (2) of Section 279 is a provision which enables the Chief Commissioner or the Director General to compound any offence either before or after the institution of proceeding . There is no warrant in interpreting this sub-section to mean that before any prosecution is launched , either a show cause notice should be given or an opportunity afforded to compound the matter . The enabling provision cannot give a right to a party to insist on the Chief Commissioner or the Director General to make an offer of compounding before the prosecution is launched .
8 . The decision of the High Court is clearly untenable . The same is accordingly set aside and the application under Section 482 filed by the respondent before the High Court would accord-ingly stand dismissed .
9 . The Trial Court is now directed to proceed with the case in accordance with law as expeditiously as possible .
10 . The appeals are allowed .
1 . Leave granted .
2 . In respect of the Assessment Years 1978-79 , 1979-80 and 1980-81 returns were filed by the respondent , after search and seizure had taken place under Section 132 of the Income-tax Act . Returns were filed belatedly and the assessments which were made were at a figure more than what was the returned income .
3 . Prosecution was launched against the respondent alleging that he had committed an offence under Section 276-C of the said act , since his returns had been filed much after the date of search and he had wilfully attempted to evade tax chargeable or imposable under the Act .
4 . The respondent thereafter moved an application under section 482 before the Allahabad High Court . It was contended before the Court that the assessment which was made was on the basis of a compromise arrived at between the respondent and the Income-tax Commissioner , Kanpur and there was also an understanding that no penal action would be taken against the respondent . A further contention which was raised was that before any prosecution is launched , an opportunity of hearing should have been afforded . This contention was sought to be raised on the basis of the respondent’s interpretation of sub-section (2) of Section 279.
5 . The High Court came to the conclusion that the assessment made was in pursuance of a mutual understanding therefore , no penal action could be taken against the respondent and , further , that he was not afforded an opportunity to compound the matter under Section 279(2) prior to the institution of the prosecution and therefore it ‘s initiation was not valid .
6 . In our opinion , the decision of the High Court is clearly without any legal basis . Firstly , it appears to be undisputed that there was a delay in filing of the returns . There does not seem to be an averment in the petition under Section 482 , and certainly no discussion by the High Court , to the fact that the Income disclosed was much less than the income assessed . Furthermore , there is nothing on the record which could lead the High Court to the conclusion that any understanding was given to the respondent that no penal action could be taken . The learned counsel for the respondent is also unable to draw our attention to any provision of the Income-tax Act , whereby a compromise assessment could have been arrived at between the respondent and the Commissioner of Income-Tax . The High Court , in our view , was clearly in error in proceeding to accept the said contention of the respondent’s counsel . The question whether there was any understanding or not , even if it could have been there , is one of the fact which will have to be proved before the Trial Court .
7 . We further find that sub-section (2) of Section 279 is a provision which enables the Chief Commissioner or the Director General to compound any offence either before or after the institution of proceeding . There is no warrant in interpreting this sub-section to mean that before any prosecution is launched , either a show cause notice should be given or an opportunity afforded to compound the matter . The enabling provision cannot give a right to a party to insist on the Chief Commissioner or the Director General to make an offer of compounding before the prosecution is launched .
8 . The decision of the High Court is clearly untenable . The same is accordingly set aside and the application under Section 482 filed by the respondent before the High Court would accord-ingly stand dismissed .
9 . The Trial Court is now directed to proceed with the case in accordance with law as expeditiously as possible .
10 . The appeals are allowed .
