Delhi H.C : These four matters arise from the same proceedings and so I am disposing of them by this judgment.

Counsel Appeared

Kapil Sibbal with Atul Chitale & P.G. Gokhale, for the Petitioner : D.K. Jain & D.C. Taneja, for the Respondents

P.K.BAHRI, J. :

These four matters arise from the same proceedings and so I am disposing of them by this judgment.

2. Facts, in brief, are that Shri N. Kumar, ITO, Central Circle XIX, New Delhi, had filed a criminal complaint against 10 accused for offences committed by them under ss. 276C(1) and 278 of the IT Act, 1961. Accused No. 1 is Electric Construction and Equipment Co. Ltd., accused No. 2 is the President of that company while accused Nos. 3 to 9 are the directors of the said company and accused No. 10 is an employee of that company. Accused No. 1 is engaged in the manufacture of various electric items. For the asst. yr. 1981-82, the accused company filed its return of income on June 29, 1981, in the prescribed form and verified under the signature of accused No. 7. The return was accompanied by printed audited balance-sheet, P & L a/c and other details which were signed by accused Nos. 3, 4, 5, 6 and 9 in their capacity as directors. The matter regarding the assessment of income was pending and a notice was issued on July 8, 1983, to the accused calling for further information in detail but, in the meanwhile, the Central Excise authorities searched the premises of accused No. 1 in between the period October 27 and October 28, 1983, at various places and the said search and the inquiries revealed that during the relevant year, 15 consignments, each containing 7,000 pieces of tubelights, were taken out from the factory premises at Sonepat while 13 consignments were transported, vide invoices and challans, details of which are given in the complaint. This information was passed on to the IT authorities and it was revealed that the said consignments were despatched from the factory at Sonepat to Ram Nagar depot but in spite of requiring the accused to show that these goods have been accounted for, the accused failed to show that these goods have been accounted for in their account books. It was pleaded that the conduct of the accused and their failure to furnish any proof with regard to the consignment of the goods referred to above shows that all the accused have caused circumstances to exist which will have the effect of enabling them to evade tax, penalty or interest chargeable or imposable under the Act and thus they were stated to have committed the offences punishable under s. 276C(1) of the IT Act, while accused No. 10 has committed offence under s. 278 of the Act. The accused have been summoned and are facing trial for the said offences. Accused No. 1 and its president, accused No. 2, filed Criminal Revision Petition No. 214 of 1985 praying that the said criminal case be quashed and the accused be discharged. Six accused, who are the directors of the said company, have filed Criminal Miscellaneous (M) No. 764 of 1985 praying for the same relief. Shri P. D. Pasari, accused No. 8, one of the directors, also filed separate Criminal Miscellaneous (M) No. 594 of 1985 seeking the same relief.

3. The accused have filed Criminal Revision No. 162 of 1986 praying that the order passed by the Addl. Chief Metropolitan Magistrate refusing to stay/adjourn/postpone the proceedings till the reassessment proceedings are completed by the IT authorities be set aside and proceedings be also quashed and the accused be discharged or in the alternative, it be directed that trial shall stand stayed till the reassessment proceedings are completed by the IT authorities in respect of the assessment year in question. Shri Kapil Sibbal, senior counsel, and Shri Atul Chitale, who appeared in Criminal Revision No. 214 of 1985, and Shri P. G. Gokhale, who appeared for the petitioners in other petitions, withdrew the petitions seeking the quashing of the proceedings and they have confined their prayer only to the effect that the trial in the case should be stayed till the reassessment proceedings are finalised in respect of the relevant year by the IT authorities. This prayer is opposed by learned counsel for the respondent, Shri D. K. Jain. Sec. 276C(1) lays down that if a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any provision of this Act, be punishable and the punishments have been enumerated in the section. This section has nothing to do with assessment proceedings pending before the IT authorities. Counsel for the petitioners have vehemently argued that the assessment proceedings for the relevant year, if completed and no concealment of income is found, then the present complaint would become infructuous and thus it is highly in the interest of justice that proceedings in the criminal case should be stayed till the reassessment proceedings are completed by the IT authorities. On the other hand, learned counsel for the respondents have argued that the averments made in the complaint show that the accused have tried to evade the duty by not accounting for the goods taken out from their factory in their account books and thus the ingredients of the offence covered by s. 276C(1) of the Act are prima facie made out and the result of the reassessment proceedings may or may not have any effect on the criminal trial and it would not be in the interests of justice to stay the criminal trial till the reassessment proceedings are completed. He has placed reliance on P. Jayappan vs. S. K. Perumal (1984) 42 CTR (SC) 180:(1984) 149 ITR 696 (SC). It has been held in this judgment by the Supreme Court that the pendency of the reassessment proceedings could not act as a bar to the institution of criminal prosecution for the offences punishable under s. 276C or s. 277 of the IT Act. Nor could the institution of the criminal proceedings, in the circumstances, amount to an abuse of the process of the Court. It was further observed that there is no provision in law which provides that a prosecution for the offences under s. 276C or s. 277 of the Act cannot be launched until reassessment proceedings against the assessee are completed and mere expectation of success in some proceedings under the IT Act cannot come in the way of the institution of criminal proceedings.

4. It has also been laid down in this very judgment that the criminal Court, no doubt, has to give due regard to the result of any proceedings under the IT Act, having a bearing on the question in issue and, in a proper case, it may drop the proceedings in the light of an order passed under the Act. However, it does not mean that the result of a proceeding under the Act would be binding on the criminal court as the criminal court has to judge the case independently on the evidence placed before it. It was also held in this very judgment that in appropriate cases, the criminal court may adjourn or postpone the hearing of the criminal case in exercise of its discretionary power under s. 309 of the CPC if the disposal of any proceedings under the IT Act which has a bearing on the proceedings before it is imminent so that it may take into consideration also the order to be passed therein. It was further observed that there is no rigid rule which makes it necessary for a criminal court to adjourn or postpone the hearing of a case before it indefinitely or for an unduly long period only because some proceeding which may have some bearing on it is pending elsewhere. The above observations of the Supreme Court clearly apply to the facts of the present case. The trial in the criminal cases should take priority and it is always desirable that evidence which the prosecution has to lead in support of the complaint should be led as early as possible so that the evidence is not lost with the passage of time. The interests of justice required that the criminal trial should proceed expeditiously and be completed at the earliest. So, there is no question of staying the trial of the criminal complaint completely as is desired by the petitioners. However, if the criminal trial has reached the final stage after parties have led evidence and the possibility of reassessment proceedings being completed are imminent, then a prayer be made to the Court concerned and the Court may exercise its discretion in postponing the final decision till the order in the reassessment proceedings by the IT authorities is made. The trial Court, obviously, shall exercise its discretion keeping in view the facts and circumstances appearing in the case at that time. With this observation, I dismiss all these petitions.

[Citation : 177 ITR 16]