Income Tax adjudication proceedings and prosecution proceedings are independent of each other: Madras HC.
R.Revathy Vs. The Assistant Commissioner of Income Tax (Crl.O.P.No.18477 of 2021 and Crl.M.P.No.10136 of 2021)
- A search and seizure operation took place on 18.08.2011, revealing gold ornaments and jewelry at the petitioner’s residence.
- The petitioner was issued a notice under Section 153C of the Income Tax Act for the assessment years 2006-07 to 2011-12. The petitioner filed a return of income for the assessment year 2012-13, admitting a total income of Rs.24,09,170/-.
- During assessment proceedings, the petitioner revised the memo of taxable income, admitting Rs.48,39,044/- as an investment made in gold. An order was passed on 25.03.2014 determined the total income at Rs.72,75,218/- towards undisclosed investment, with a penalty imposed under Section 271(1)(c) of the Income Tax Act.
- Prosecution proceedings were also launched under Sections 276C(1) & 277 of the Income Tax Act for the assessment year 2012-2013.
- The penalty was challenged and eventually deleted on 15.11.2019 by the High Court, citing reconciliation of the quantum of jewelry.
- The Principal Commissioner of Income Tax has however reopened the proceedings, and the petitioner challenged it in W.P.No.15854 of 2021, which was rejected.
- The petitioner argues that the entire prosecution case cannot be sustained since the penalty was set aside by the High Court.
- The department has contended that the prosecution proceedings have to be continued since re-assessment proceedings are pending with the Assessment Officer.
Hon Madras HC held as below:
- The proceedings have not attained finality. The pendency of proceedings under Section 263 of the Income Tax Act indicates that the reconciliation of jewelry has not concluded.
- The adjudication proceedings and criminal prosecution are independent. The findings in adjudication are not binding on criminal prosecution.
- The petition is dismissed.
The copy of the order is as under: