Facts
Before the jurisdictional Metropolitan Magistrate, there were pending 12 complaints and cases lodged against one Bhupen Champaklal Dalal and another (the Respondents) for offences punishable under the Income Tax Act, 1961 (Act). At the same time, appeals against assessment of income by the Assessing Officer (AO) were preferred before either the CIT(A) or the ITAT. Therefore, the Respondents had filed for a stay of criminal proceedings on the basis of the reasoning that appeal proceedings were pending before the authorities under the Act, which would have an effect and be relevant to the criminal proceedings instituted against the Respondents.
The Metropolitan Magistrate, after considering the position of law and the possibility of conflict passed an interim order putting a stay upon the framing of charge and discharge or acquittal but allowing collection of evidence, for the period of pendency of appeals against the assessment. Revision petitions were filed against the said order before the Sessions Court, by those aggrieved by it. However, the Sessions Court chose not to interfere with the order passed by the Metropolitan Magistrate and dismissed the review petitions. Thereafter on appeal by the way of a writ petition to the jurisdictional High Court, a plethora of decisions on the subject were taken into consideration and the High Court passed an interim order granting a stay of proceedings before the MetropolitanMagistrate.
It was against the impugned interim order of the High Court that special leave petitions were filed before the Supreme Court of India.
Issue
Whether a stay of proceedings can be granted in a criminal prosecution when appeals against an assessment order are pending before authorities under the Act?
View
The prosecution under criminal law and proceedings arising out of assessments under the Act are, undoubtedly, independent in nature and there is no legal encumbrance against the initiation of criminal proceedings vis-à-vis the pendency
of appellate proceedings under the Act. However, a wholesome rule must be employed in cases where courts have taken the view that each set of proceedings would have bearing upon the conclusions reached by the courts. Reliance was placed upon a decision of the same court in G. L. Didwania v. ITO 1995 Sup (2) SCC 724 wherein the fact pattern was similar to the present case.
Held
Dismissing the petitions of the revenue department, the Hon’ble Supreme Court held that in the event that the ultimate result of the proceedings before the appellate authorities had a definite bearing on the cases alleged against the Respondents, the High Court would be justified in granting interim stay when the quantum appeals were pending before the appellate authorities under the Act. The Hon’ble Supreme Court held that despite the stay on criminal prosecution, the work of recording of evidence would proceed during the pendency of the appeals. Therefore, it was held that there was no reason for interference in the interim order passed by the High Court and the appeals were dismissed. (SLP (Cr. No. 2430/2995 & 3141 of 2000 dt. 17-2-2001)
Editorial: The decision of the Bombay High Court in Bhupen Champaklal Dalal
- Sandeep Kapoor [2001] 248 ITR 827 was affirmed, with a reference made to
P.Jayappan v. S.K Perumal, ITO (1984) 149 ITR 696 (SC).
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