Allowed

Ashish Agarwal v. Income Tax Department

Rajasthan HC4 Aug 2022CRLMP/3106/2022

Case brief

AI extract

What is this about?

The High Court quashed trial court cognizance orders taken for tax evasion under Section 276-CC of the Income-tax Act. The court held the trial court misread the complaint which only alleged procedural delay, not evasion, and the advance rulings of departmental orders do not bar the writ court's jurisdiction to correct errors palpable on the face of the record.

What did the court decide?

Impugned order of cognizance dated 21.02.2018 in each of the 80 cases is quashed and set aside. Petitioners directed to appear before trial Court.

Ashish Agarwal Vs Income Tax Department — Income Tax | Rajasthan HC (2022)

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[CRLMP-3106/2022]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Criminal Misc(Pet.) No. 3106/2022

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Ashish Agarwal S/o Shri Hariram Agarwal, Aged About 36 years, R/o Bachhawaton Ka Mohalla, Bikaner (Raj.)

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----Petitioner

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Versus

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Income Tax Department, through Assistant Income Commissioner, Central Circle, Income Tax Department, Bikaner.

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----Respondents

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For Petitioner(s)	: Mr. Mahaveer Bishnoi with
	Mr. Jayram Saran
For Respondent(s)	: Mr. K.K. Bissa

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JUSTICE DINESH MEHTA

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Order

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04/08/2022

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Instant petition and those mentioned in the Schedule, involve identical issue of law and facts, hence all of them are being decided by this common order. The facts of S.B. Criminal Misc. Petition No.3106/2022 (Ashosh Agarwal Vs. Income Tax Department) are being taken into consideration for the purpose of disposal of these cases.

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The petitioner is an assessee under the Income-Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’) and is having Permanent Account No.AGAPA5596A.

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A search and seizure was conducted at petitioner’s business and residential premises on 24.02.2016, in furtherance whereof, a notice under Section 153-A of the Act of 1961, requiring him to file return of income-tax within 30 days came to be issued.

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(2 of 9)

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It is the case of the petitioner that on receipt of the notice, the petitioner had sent a letter dated 28.07.2016 and requested the Dy. Commissioner, Income-tax to provide copies of the statements recorded during the course of search and other relevant documents so that a return as demanded under Section 153-A of the Act of 1961 can be filed.

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Later on, the petitioner filed the return of income on 04.07.2016.

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The Commissioner, Income-tax (Central) thereafter issued a show cause notice dated 28.02.2017 under Section 279(1) of the Act of 1961 and asked him why not prosecution under Section 276-CC of the Act of 1961, for failure to file return of Income-tax in time be launched against him.

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In response to the show cause notice aforesaid, the petitioner filed a reply and explained the delay of 72 days inter alia contending that there was no intentional delay in filing the return and the petitioner was prevented by sufficient cause, as the requisite documents were not supplied to him despite being demanded. It was also stated that the demand of tax is meagre. And hence, the prosecution sanction be not granted.

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The petitioner did not hear anything until he came to receive summons issued by the Additional Chief Metropolitan Magistrate, Jodhpur Metro (hereinafter referred to as ‘the trial Court’) requiring the petitioner to appear on 28.05.2022. 9. On inquiry being made, the petitioner came to know that the trial Court had taken cognizance of offence under Section 276-CC of the Act of 1961 prima facie finding to be a case made out against the petitioner.

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The petitioner has assailed the aforesaid order dated 21.02.2018, whereby cognizance has been taken against him so also the proceedings pending before the trial Court.

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Learned counsel for the petitioner highlighted the fact that the petitioner had furnished his return of income for the Assessment Year 2013-14 and it was only pursuant to search and seizure, which was conducted at petitioner’s premises on 24.02.2016, the Income-Tax Department issued a notice under Section 153-A of the Act of 1961 to the petitioner and asked him to furnish return (revised return).

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Mr. Bishnoi, learned counsel, invited Court’s attention towards the complaint submitted by the Income-Tax Department and pointed out that the department had prayed for petitioner’s prosecution for late filing of return, as provided under Section 276-CC(ii) of the Act of 1961, whereas the trial Court has treated it to be a case of evasion of tax and has taken cognizance as such. He argued that the order taking cognizance is mechanical and without application of mind to the facts of the case.

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He navigated the Court through the short order by which cognizance has been taken and submitted that the trial Court has found the case to be a case of evasion of income-tax, whereas the facts pleaded were otherwise. While submitting that the return of income-tax was ultimately filed with a small delay of 72 days, learned counsel emphasized that no additional demand was raised against the petitioner let-alone penalty, and, therefore, it cannot be said that the petitioner had, in any manner, evaded incometax.

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He argued that since the departmental authorities themselves have found that no income-tax was evaded by the

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petitioner, neither the learned Commissioner of Income-tax should have accorded prosecution sanction nor should the trial Court have taken cognizance against the petitioner.

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Learned counsel submitted that immediately on receipt of the notice under Section 153-A of the Act of 1961, the petitioner had requested the Dy. Commissioner, Central Circle, Bikaner to provide copies of the statements recorded during the search proceedings so that the return could be filed and until the same were provided, the return could not be filed. The petitioner was not guilty of filing the return belatedly for which, he can be prosecuted, vehemently contended Mr. Bishnoi.

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Though copy of the order granting prosecution has not been placed on record, learned counsel argued that the Principal Commissioner of Income-tax has proceeded arbitrarily and has adopted a rather strict approach and granted permission to prosecute. He prayed that prosecution sanction be quashed. 17. Mr. Bissa, learned counsel appearing for the Department, at the outset raised a preliminary objection that against the impugned order dated 21.02.2018, whereby the trial Court has taken cognizance, the petitioner is required to file a revision petition as provided under Section 397 of the Code of Criminal Procedure and invoking inherent jurisdiction of this Court under Section 482 of the Code directly is not proper.

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While emphasizing that the cognizance has been taken under Section 276-CC of the Act of 1961, which includes evasion of income-tax so also delay in filing return, learned Standing Counsel submitted that the grounds which the petitioner has canvassed before this Court, can very well be raised before the trial Court at

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(5 of 9)

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the time of framing of the charges. He argued that no interference is warranted at this stage.

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Mr. Bissa, learned counsel further argued that admittedly there is a delay of 72 days in filing the return. While contending that the provisions of Sections 279(1) and 276CC of the Act of 1961 are mandatory, he argued that the prosecution in question has been rightly launched against the petitioner.

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He argued that unless the order of the Principal Commissioner, Income-tax, granting prosecution is challenged, no fault can be found in the proceedings being undertaken by the trial Court including the order by which the cognizance has been taken.

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Heard learned counsel for the parties.

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A simple look at the complaint filed by the respondentIncome-tax Department (Annex.2) leaves no room for ambiguity that the Department wanted petitioner’s prosecution under Section 276-CC(ii) of the Act of 1961, as is evident from the caption of the application. If the application is read, it is apparent that the Income-tax Department had desired petitioner’s prosecution for 72 days’ delay in filing the return. There is not even a whisper of evasion of income-tax, whereas the learned trial Court, claiming to have perused the record, has observed that the accused (petitioner herein) has not filed his return of income for 2013-14 and has evaded the income-tax.

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In the opinion of this Court, the order of the cognizance shows clear misreading of the complaint and the same suffers from manifest error of law, for which it is liable to be quashed and set aside.

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Mr. Bissa may be correct in saying that the petitioner ought to have preferred a revision petition under Section 397 of the Code but then, considering that the petitioner and his group has filed about 80 petitions of identical nature, relegating the petitioners to file revision petition(s), that too when the order impugned suffers from palpable error of law and facts, would lead to multiplicity of litigation and passing of dockets from this Court to the Revisional Court.

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The preliminary objection raised by the Income-Tax Department is thus, over-ruled.

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In view of the aforesaid discrepancy and considering that not only the notice issued to the petitioner before granting prosecution sanction, even the complaint filed by the Department alleges delay in filing return, while eliciting prosecution under Section 276-CC (ii) of the Act of 1961, this Court is of the view that the cognizance, which has been taken for evasion of tax is ex-facie erroneous and deserves to be quashed and set aside.

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The order granting prosecution sanction has neither been challenged in the present petition nor can the same be permitted to be questioned before this Court in its jurisdiction under Section 482 of the Code. Because, the act of granting prosecution sanction is an administrative or statutory exercise of powers.

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In view of the discussion foregoing, instant petition so also those enumerated in the appended scheduled are allowed. The cognizance order in each of the case is hereby quashed and set aside.

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The petitioners shall appear before the trial Court on 03.09.2022 either personally or through counsel.

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(7 of 9)

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[CRLMP-3106/2022]

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The trial Court shall consider the submissions of the Incometax Department/complainant so also present petitioners (accused) and then, take into account and then pass a speaking order, against which remedies of both the parties shall stand reserved. 31. The petitioners shall be free to challenge order granting prosecution sanction in accordance with law, if so advised.

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The stay applications also stand disposed of accordingly.

(DINESH MEHTA),J

321-402-skm/-

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[CRLMP-3106/2022]

Schedule

S. No. 1	CRMLP No. 3885/2022	Petitioner(s) Ashish Agarwal	Respondent(s) Income Tax Deptt
2	3886/2022	Ashish Agarwal	. Income Tax Deptt.
3	3887/2022	Ashish Agarwal	Income Tax Deptt.
4	3888/2022	Ashish Agarwal	Income Tax Deptt.
5	3890/2022	Ashish Agarwal	Income Tax Deptt.
6	3911/2022	M/s Bhikharam Chandmal Bhujiawala Pvt. Ltd. & Ors. M/s Bhikharam Chandmal Bhujiawala	Income Tax Deptt.
7	3912/2022	Pvt. Ltd. & Ors.	Income Tax Deptt.
8	3918/2022	Anand Agarwal	Income Tax Deptt.
9	3919/2022	Anand Agarwal	Income Tax Deptt.
10	3920/2022	Anand Agarwal	Income Tax Deptt.
11	3921/2022	Anand Agarwal	Income Tax Deptt.
12	3922/2022	Anand Agarwal	Income Tax Deptt.
13	3923/2022	Anand Agarwal	Income Tax Deptt.
14	3924/2022	M/s Bhikharam Chandmal Bhujiawala Pvt. Ltd. & Ors.	Income Tax Deptt.
15	3925/2022	M/s Bhikharam Chandmal Bhujiawala Pvt. Ltd. & Ors.	Income Tax Deptt.
16	3926/2022	M/s Bhikharam Chandmal Bhujiawala Pvt. Ltd. & Ors. M/s Bhikharam Chandmal Bhujiawala	Income Tax Deptt.
17	3927/2022	Pvt. Ltd. & Ors.	Income Tax Deptt.
18	3928/2022	Kishore Kumar Agarwal	Income Tax Deptt.
19	3929/2022	Mohini Food Product Pvt. Ltd. & Ors.	Income Tax Deptt.
20	3930/2022	Mohini Food Product Pvt. Ltd. & Ors.	Income Tax Deptt.
21	3931/2022	Mohini Food Product Pvt. Ltd. & Ors.	Income Tax Deptt.
22	3932/2022	Mohini Food Product Pvt. Ltd. & Ors.	Income Tax Deptt.
23	3933/2022	Kishore Kumar Agarwal	Income Tax Deptt.
24	3934/2022	Kishore Kumar Agarwal	Income Tax Deptt.
25	3935/2022	Mohini Food Product Pvt. Ltd. & Ors.	Income Tax Deptt.
26	3936/2022	Kishore Kumar Agarwal	Income Tax Deptt.
27	3937/2022	Mohini Food Product Pvt. Ltd. & Ors.	Income Tax Deptt.
28	3938/2022	Kishore Kumar Agarwal	Income Tax Deptt.
29	3939/2022	Kishore Kumar Agarwal	Income Tax Deptt.
30	3940/2022	M/s Sunshine Food Products & Ors.	Income Tax Deptt.
31	3941/2022	Smt. Ratan Devi Agarwal	Income Tax Deptt.
32	3942/2022	M/s Sunshine Food Products & Ors.	Income Tax Deptt.
33	3943/2022	Smt. Ratan Devi Agarwal	Income Tax Deptt.
34	3945/2022	Smt. Ratan Devi Agarwal	Income Tax Deptt.
35	3946/2022	M/s Sunshine Food Products & Ors.	Income Tax Deptt.
36	3947/2022	Smt. Ratan Devi Agarwal	Income Tax Deptt.
37	3948/2022	Smt. Ratan Devi Agarwal	Income Tax Deptt.
38	3949/2022	M/s Sunshine Food Products & Ors.	Income Tax Deptt.
39	3950/2022	Smt. Ratan Devi Agarwal	Income Tax Deptt.
40	3951/2022	M/s Sunshine Food Products & Ors.	Income Tax Deptt.
41	3952/2022	Jai Prakash Agarwal	Income Tax Deptt.
42	3953/2022	Jai Prakash Agarwal	Income Tax Deptt.
43	3954/2022	M/s Sunshine Food Products & Ors.	Income Tax Deptt.
44	3955/2022	Hari Ram Agarwal	Income Tax Deptt.
45	3956/2022	Hari Ram Agarwal	Income Tax Deptt.
46	3957/2022	Hari Ram Agarwal	Income Tax Deptt.
47	3958/2022	Hari Ram Agarwal	Income Tax Deptt.
48	3959/2022	Jai Prakash Agarwal	Income Tax Deptt.
49	3961/2022	Hari Ram Agarwal	Income Tax Deptt.

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(9 of 9) [CRLMP-3106/2022]

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50	3962/2022	Jai Prakash Agarwal	Income Tax Deptt.
51	3963/2022	Hari Ram Agarwal	Income Tax Deptt.
52	3964/2022	Jai Prakash Agarwal	Income Tax Deptt.
53	3966/2022	Navratan Agarwal	Income Tax Deptt.
54	3967/2022	Jai Prakash Agarwal	Income Tax Deptt.
55	3968/2022	Navratan Agarwal	Income Tax Deptt.
56	3969/2022	Navratan Agarwal	Income Tax Deptt.
57	3970/2022	Smt. Lalita Devi Agarwal	Income Tax Deptt.
58	3971/2022	Navratan Agarwal	Income Tax Deptt.
59	3972/2022	Smt. Lalita Devi Agarwal	Income Tax Deptt.
60	3973/2022	Smt. Lalita Devi Agarwal	Income Tax Deptt.
61	3974/2022	Navratan Agarwal	Income Tax Deptt.
62	3975/2022	Smt. Lalita Devi Agarwal	Income Tax Deptt.
63	3976/2022	Smt. Lalita Devi Agarwal	Income Tax Deptt.
64	3977/2022	Smt. Lalita Devi Agarwal	Income Tax Deptt.
		M/s Bhikharam Chandmal Marketing
65	3978/2022	Pvt. Ltd.	Income Tax Deptt.
66	3979/2022	M/s Bhikharam Chandmal Marketing Pvt. Ltd.	Income Tax Deptt.
		M/s Bhikharam Chandmal Marketing
67	3980/2022	Pvt. Ltd.	Income Tax Deptt.
		M/s Bhikharam Chandmal Marketing
68	3981/2022	Pvt. Ltd.	Income Tax Deptt.
69	3982/2022	Smt. Saroj Devi Agarwal	Income Tax Deptt.
70	3983/2022	M/s Bhikharam Chandmal Marketing Pvt. Ltd.	Income Tax Deptt.
71	3984/2022	M/s Bhikharam Chandmal Marketing Pvt. Ltd.	Income Tax Deptt.
72	3985/2022	Smt. Saroj Devi Agarwal	Income Tax Deptt.
73	3986/2022	Smt. Saroj Devi Agarwal	Income Tax Deptt.
74	3987/2022	Smt. Saroj Devi Agarwal	Income Tax Deptt.
		M/s Navhari Food Products Pvt. Ltd. &
75	3988/2022	Ors.	Income Tax Deptt.
76	3989/2022	Smt. Saroj Devi Agarwal	Income Tax Deptt.
77	3990/2022	M/s Navhari Food Prodcuts Pvt. Ltd. & Ors.	Income Tax Deptt.
78	3991/2022	M/s Navhari Food Prodcuts Pvt. Ltd. & Ors.	Income Tax Deptt.
79	3992/2022	M/s Navhari Food Prodcuts Pvt. Ltd. & Ors.	Income Tax Deptt.
80	3993/2022	M/s Navhari Food Prodcuts Pvt. Ltd. & Ors.	Income Tax Deptt.
		M/s Navhari Food Prodcuts Pvt. Ltd. &
81	3994/2022	Ors.	Income Tax Deptt.

Ashish Agarwal v. Income Tax Department

Case brief

What is this about?

What did the court decide?

Ashish Agarwal v. Income Tax Department

Case brief

What is this about?

What did the court decide?

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