– Tribunal reminding matter to CIT (A) for fresh adjudication – Prosecution launched when proceedings pending before Tribunal – No wilful evasion of tax – Discharge of accused assessee from prosecution. 

 

Facts : The assessee has filed return declaring income amounting to Rs. 48,150.00 for the A. Y. 1998-99. The department conducted investigation and found that his total income was Rs. 29,05,126.00 and determined tax payable including interest at Rs. 16,02,601.00. On appeal, CIT (A)  determined total income at Rs 26,69,470.00 & tax payable at Rs 14,84,199.00. The assessee filed appeal before Tribunal. The tribunal dismissed the stay application of assessee. The prosecution U/s 276C was launched against the assessee for non payment of determined tax. 

 

On summons, the assessee appeared before the magistrate and prosecution was commenced in terms of provisions of Code of Criminal Procedure, 1974. On behalf of the Department, 3 witnesses were examined and they were cross examined by the assessee. After the Department closed pre-charge evidence, the assessee filed application for discharge U/s 245(2) of Cr. P. C. which has been dismissed by the Trial Court, aggrieved by which the accused approached High Court. 

 

In the meantime, the Tribunal set aside the order of CIT (A) holding that the order was passed without giving an opportunity to the assessee to present his case and remanded the matter back to CIT (A) for fresh adjudication. The CIT (A) subsequently computed the income at Rs. 2,82,650.00 consequently reducing amount of demand to Rs. 1,10,402.00.

 

Held : Allowing the Revision,  the the High Court stated that the very edifice on which the prosecution was launched against the assessee has crumbled like a pack of cards. There was no necessity for the Department to launch the prosecution hurriedly. In fact, even in the complaint, the AO had stated that the assessee has approached the ITAT. Thus, in the peculiar circumstances, it cannot be stated that the assessee was willfully evading payment of tax. The assessee was discharged from prosecution. 

 

In the Judgment of Madras High Court dated 14.12.2018 in Sayarmull Surana Vs ITO, Chennai Criminal Revision Case 111 of 2011 with Criminal Misc. Petition No. 1 of 2011.