Prabir Kumar Shaw vs. UOI (Patna High Court)

COURT:
CORAM:
SECTION(S): , , ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: August 5, 2019 (Date of pronouncement)
DATE: January 27, 2021 (Date of publication)
AY: 1994-95
FILE: Click here to download the file in pdf format
CITATION:
S. 482 CrPC: Prosecution launched in 2008 u/s 276C, 277 & 278B of the Income-tax Act, 1961 for alleged tax evasion in AY 1994-95 deserves to be quashed because the assessee has paid the tax and the penalty & also taking into account the year in which the alleged offence was committed. The assessee has been paying income-tax regularly & has not been prosecuted for any false disclosure either earlier or thereafter. It would only be in the nature of harassment to the petitioners, and an abuse of the process of the Court, if this case is allowed to be continued. (Note: The Supreme Court has directed issue of notice on the Dept's SLP)

ITEM NO.31 Court 6 (Video Conferencing) SECTION II-A

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

SPECIAL LEAVE PETITION (CRIMINAL) Diary No(s). 15166/2020

(Arising out of impugned final judgment and order dated 05-08-2019
in CRLM No. 42017/2019 passed by the High Court Of Judicature At
Patna)

UNION OF INDIA Petitioner(s)

VERSUS

PRABIR KUMAR SHAW & ANR. Respondent(s)
(FOR I.R. and IA No.84779/2020-CONDONATION OF DELAY IN FILING and
IA No.84781/2020-EXEMPTION FROM FILING C/C OF THE IMPUGNED
JUDGMENT)

Date : 20-11-2020 This petition was called on for hearing today.

CORAM : HON’BLE MR. JUSTICE ASHOK BHUSHAN
HON’BLE MR. JUSTICE R. SUBHASH REDDY
HON’BLE MR. JUSTICE M.R. SHAH

For Petitioner(s) Mr. N. Venkataraman, ASG
Ms. Sairica Raju, Adv.
Mr. V. Chandrashekhar, Adv.
Mr. Manish Pushkarna, Adv.
Mrs. Anil Katiyar, AOR
For Respondent(s)

UPON hearing the counsel the Court made the following
O R D E R
Learned counsel for the petitioner contends that merely because the penalty and tax have been paid, the prosecution under Sections 276C, 277 and 278B of the Income Tax Act could not have been quashed. He further submits that similar issues are already under consideration by this Court in SLP (Crl) D. No. 7377/2019.

Issue notice on the special leave petition as well as on the application for condonation of delay. Signature Not Verified Digitally signed by MEENAKSHI KOHLI Date: 2020.11.20 14:55:39 IST Reason: Tag with SLP (Crl) D. No. 7377/2019.

(MEENAKSHI KOHLI) (RENU KAPOOR) ASTT. REGISTRAR-cum-PS COURT MASTER


IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.42017 of 2019
Arising Out of PS. Case No.-247 Year-2008 Thana- GOVERNMENT OFFICIAL COMP.
District- Patna
======================================================
1. Prabir Kumar Shaw @ Sri. Prabir Kumar Shaw, aged about 67 years, male,
Son of Late Madan Mohan Shaw, Resident of Flat No.601 Grand Shere
Apartment, Exhibition Road, P.S.-Gandhi Maidan, District-Patna-800001.
2. Provat Kumar Shaw @ Sri. Pravat Kumar Shaw, aged about 69 years, male,
Son of Late Madan Mohan Shaw, Resident of Flat No.701 Grand Shere
Apartment, Exhibition Road, P.S.-Gandhi Maidan, District-Patna-800001.
… … Petitioner/s
Versus
The Union of India through Assistant Commissioner of Income Tax, Circle-5,
Patna.
… … Opposite Party/s
======================================================
Appearance :
For the Petitioner/s : Mr. P.K. Shahi, Sr. Adv.
Mr. Satyabir Bharti, Adv.
Mr. Alok Chandra, Adv.
Mr. Prince Kumar Mishra, Adv.
For the Opposite Party/s : Mr. Rishi Raj Sinha, SC
======================================================
CORAM: HONOURABLE MR. JUSTICE ASHUTOSH KUMAR
ORAL ORDER
2 05-08-2019 Heard Mr. P.K. Shahi, learned Senior Advocate for
the petitioners and Mr. Rishi Raj Sinha, learned Standing
Counsel, Income Tax.
2. The petitioners seek quashing of the entire
Patna High Court CR. MISC. No.42017 of 2019(2) dt.05-08-2019
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prosecution arising out of Complaint Case No. 247-C of
2008 and particularly the order dated 25.07.2008 passed by
the learned Presiding Officer, Special Court, Economic
Offences, Patna, whereby cognizance has been taken against
them for the offences under Sections 276C, 277 and 278B
of the Income Tax Act, 1961.
3. From the perusal of the complaint, it appears
that with respect to the Assessment Year 1994-95 (Financial
Year 1993-94), lesser tax liability was shown by the
petitioners and, therefore, a prosecution has been launched
against them by the Income Tax Department.
4. It has been submitted on behalf of the
petitioners, without going into the details of the complaint,
that the penalty which was imposed upon the petitioners was
paid along with the entire tax liability. It has been submitted
that at the pre-charge stage, the case continued and only
adjournments were granted on several dates. It has further
been submitted that the provisions of the Income Tax Act,
1961 (in short the Act) though provide for criminal
prosecution for wrong information or concealment of
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information with respect to tax liability and the punishment
is on the criminal mental culpability, but no useful purpose
would be served in allowing the prosecution to continue at
this stage when the complaint is of the year 2008 with
respect to some anomaly in the disclosure of the petitioners
for the Assessment Year 1994-95 (Financial Year 1993-94)
and also when all the tax liabilities fixed on the petitioners
have been paid.
5. It has further been submitted on behalf of the
petitioners that the main accused person of this case has
died and it has not been shown in the complaint petition nor
at any stage of the prosecution that the petitioners were
directly responsible for furnishing of such statement which
could have attracted the Penal provisions under the Act,
especially Sections 276C, 277 and 278B.
6. As opposed to the aforesaid contentions, Mr.
Rishi Raj Sinha, learned Advocate for the Income Tax, has
submitted that it matters not if the tax liability and the
penalty have been paid. Offence does not get liquidated by
payment of fine or tax liability. The punishment is to
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prevent any further false disclosure in the circumstance
when self-certification is the basis for fixing tax liability. In
such a situation even the delay in concluding the prosecution
should not come to the avail of the petitioners and the case
be allowed to be proceeded further.
7. It has further been submitted by Mr. Sinha,
learned Advocate, that in a summons case which is tried in
accordance with the provisions contained in Chapter-XX of
the Code of Criminal Procedure, 1973 (in short the Cr.P.C.),
there is no provision for discharge at any early stage and
after the substance of the accusation is stated to the accused
persons, it is open for them to plead guilty. In that event, a
conviction is to be recorded. In case, plea of guilt is not
taken by the accused person, the Magistrate has to proceed
to hear the prosecution and take all evidence as may be
produced in support of the prosecution and hear the accused
and take all such evidence as is produced in his defense.
The only stage where a Magistrate is required to stop the
proceedings midway is at the stage of Section 258 Cr.P.C.
where a Magistrate may, for the reasons to be recorded by
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him, stop the proceedings at any stage without pronouncing
any judgment and where such stoppage of proceeding is
made after the evidence of the principal witness has been
recorded, a judgment of acquittal is required to be
pronounced and in which case, the accused persons are
required to be released, which release has the effect of
discharge.
8. It has thus been urged on behalf of the Income
Tax Department that if the Magistrate is of the view that the
proceedings be stopped, nothing prevents the Magistrate
from passing such an order and it would be open for the
petitioners to approach the Magistrate on such grounds of
delay in conclusion of the proceeding or of the petitioners
having paid their tax liability along with the penalty to the
satisfaction of the Income Tax Department for stoppage of
proceedings.
9. After hearing the learned counsel for the parties,
this Court is of the view that no useful purpose would be
served in allowing this prosecution to be continued any
further. Even if the prosecution is taken to be for the
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purposes of retribution, sufficient penalty has been imposed
upon the petitioners, which, on litigation also, has remained
inviolate and the same has been paid. The tax liability also
is stated to have been paid, which statement has not been
disputed by the learned counsel for the Income Tax
Department. In fact, it has been admitted in the counter
affidavit that a “No Dues Certificate” has been given to the
petitioners by the Department.
10. Without going into the merits of the complaint
with respect to the complaint being silent about the specific
role played by the petitioners and the inference of culpable
mental state of the petitioners in their capacity as partners
of the firm, this Court, taking into account the year in which
the offence was committed and the tax liability having been
paid along with penalty, deems it appropriate to quash the
proceedings and all such orders arising from the complaint
and the order of cognizance.
11. This Court, in a number of cases, has defined
the scope and ambit of the powers under Section 482
Cr.P.C. A High Court, exercising its power under the
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aforesaid section, has an inherent power to act ex debito
justitiae to do real and substantial justice, for the
administration of which alone it exists, or to prevent the
abuse of the process of the Court. It has been clarified that
the inherent powers of the Court under Section 482 Cr.P.C.
can be exercised to give an effect to an order under the
Cr.P.C., to prevent the abuse of the process of the Court and
to otherwise secure the ends of justice. No doubt, a caution
has been laid that such powers are to be exercised sparingly,
carefully and with much circumspection, but in a case of this
kind, where the entire liability has been paid to the
Government and there has not been any loss to the public
exchequer, allowing this case to be continued after eleven
years would only be an abuse of the process of the Court.
12. In State of Karnataka Vs. L. Muniswamy &
Ors.; (1977) 2 SCC 699, the Supreme Court has observed
that the wholesome powers under Section 482 Cr.P.C.
entitles the High Court to quash a proceeding when it comes
to the conclusion that allowing the same to continue would
be an abuse of the process of Court or that the ends of
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justice require that the proceeding ought to be quashed.
Such inherent powers are necessarily to be exercised when
no useful purpose appears to be served by continuing with
such prosecution.
13. The offences against the petitioners are
pertaining to wrong disclosure with respect to their income.
Though criminal prosecution has been provided for in the
Act; nonetheless the elements of the offence veer around
civil liability/liability attracting penalty of tax. Under such
circumstance, when the petitioners have been paying income
tax on an yearly basis and have not been prosecuted for any
false disclosure either earlier to this prosecution or
thereafter, it would only be in the nature of harassment to
the petitioners if this case is allowed to be continued.
14. The provision contained in Section 482 Cr.P.C.
stands tall amongst all provisions of the Code and nonexercise
of the same also, where it is needed, results in
miscarriage of justice.
15. For the reasons aforestated, viz., finding no
good ground for allowing the prosecution to continue, this
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Court deems it appropriate to quash the order of cognizance
dated 25.07.2008 and all the criminal prosecution arising
out of the same.
16. The petition stands allowed accordingly.
Praveen-II/-
(Ashutosh Kumar, J)
U T

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