Punjab & Haryana H.C : The petitioner in partnership with Kartar Singh was carrying on business under the name and style of M/s Sadhu Singh Harbans Singh. The firm was registered under s. 185(1)(b) of the IT Act (hereinafter referred to as “the Act”).

Counsel Appeared

S.S. Mahajan, for the Petitioner : L.K. Sood, for the Respondents

SUKHDEV SINGH KANG, J.:

This order will dispose of CWP No. 4366 of 1984 and CWP No. 4500 of 1985 as common questions of law and fact are involved. Reference shall be made to the facts in CWP No. 4366 of 1984.

The petitioner in partnership with Kartar Singh was carrying on business under the name and style of M/s Sadhu Singh Harbans Singh. The firm was registered under s. 185(1)(b) of the IT Act (hereinafter referred to as “the Act”).

The petitioner filed the return of income of the assessee-firm for the asst. yr. 1973-74, on 14th Sept., 1973 and declared an income of Rs. 33,810. The ITO, after discussing the case with the petitioner, framed an agreed assessment accepting the net income of the petitioner as Rs. 36,000.

The business premises of petitioner were searched under s. 132(1) of the Act, on 22nd June, 1976, and certain account books and documents were seized. The petitioner filed a revised return for the asst. yr. 1973-74, on 1st July, 1981. It showed a difference of assets over liabilities of Rs. 39,373. The petitioner received a notice under s. 148 of the Act on 21st Sept., 1981, for reopening the petitioner’s assessment. The petitioner filed a duplicate/revised return of income for the asst. yr. 1973-74 declaring the income at Rs. 75,373. A notice under s. 143(2) of the Act dt. 20th Nov., 1981, was received by the petitioner. After various adjournments, the assessment was framed by the ITO on 24th Feb., 1982. on an income of Rs. 77,450.

It is stated in the petition that without initiating penalty proceedings against the petitioner, a complaint under s. 277 of the Act and under s. 193 of IPC was filed by the ITO on 30th March, 1982, on the allegations that the petitioner had made a false declaration in the verification of the return of income and delivered accounts and statements which were false or which he did not believe to be true. This assertion has been denied by the respondents in the return wherein it is categorically stated that the true position is that while completing the assessment on 24th Feb., 1982, penalty proceedings under s. 271(1)(c) for concealment of income were also initiated by issuing notice under s. 274 r/w s. 271(1)(c) on 22nd Feb., 1982, which was served upon the petitioner on 23rd Feb., 1982. Thus, after completing the assessment and also after initiating penalty proceedings under s. 271(1)(c) for concealment of income a complaint under s. 277 of the Act and s. 193 of the IPC was filed before the Chief Judicial Magistrate, Amritsar, on 30th March, 1982. It is averred in the writ petition that the petitioner had already moved an application under s. 245C of the Act before the Settlement Commission for settlement of his case on 17th Nov., 1981/23rd Nov., 1981, and this petition has been admitted and is pending consideration before the Settlement Commission. It is pleaded that the matter involved in the complaint and in the settlement petition pending before the Settlement Commission is the same and if the Settlement Commission decides the matter in favour of the petitioner, the proceedings taken on the basis of the complaint would become redundant. The learned Magistrate is continuing with the trial of the case and the petitioner’s prayer for the adjournment of the case sine die has not been accepted. The petitioner filed a petition under s. 482 of the CrPC for quashing the proceedings and the same were withdrawn because the petitioner was advised to challenge the vires of ss. 277 and 279 of the Act.

The respondents have appeared and resisted the writ petition. The broad facts stated in the petition have been admitted in the manner stated above. It is further pleaded that the provision of ss. 277 and 279 of the Act are legal, valid and constitutional. The criminal Court was not obliged to stay the proceedings in the complaint case merely on the plea that an application under s. 245C of the Act for settlement of cases has been filed and was pending before the Settlement Commission.

The facts in CWP No. 4500 of 1985 are similar. The only difference is that there is no pleading that the petitioner had made an application under s. 245C of the Act for settlement of cases and this relates to the asst. yr. 1976-77. Mr. S. S. Mahajan, learned counsel for the petitioner, has raised three points before me : (i) that ss. 277 and 279 of the Act are unconstitutional. They confer unguided discretion on the CIT to pick and choose assessees. There are no guidelines for the exercise of the plenary discretion vested in the CIT; (ii) that as the Settlement Commission was, on an application filed by the petitioner, seized of the matter, the Criminal Court could not go on with the trial of the complaint during the pendency of the proceedings before the Settlement Commission; and (iii) that criminal proceedings under ss. 277 and 279 of the Act cannot be sanctioned and initiated before the conclusion of penalty proceedings.

10. These arguments have not impressed me. The Final Court had upheld the vires of s. 52 of the Act of 1922 in T. S. Baliah vs. T. S. Rangachari, ITO (1969) 72 ITR 787 (SC) : TC48R.189. The provisions of s. 52 of the 1922 Act are analogous to the provisions of ss. 277 and 279 of the 1961 Act. The ratio of that decision equally applies to the present case and for the reasons given in that judgment, ss. 277 and 279 of the Act cannot be held to be unconstitutional. Chapter XIX-A incorporates special provisions for the settlement of cases. It is a complete code in itself. It provides the procedure and mechanism for the settlement of disputes. Sec. 245F of the Act spells out the powers of the Settlement Commission. Sub-s. (4) thereof provides that in the absence of any express direction by the Settlement Commission to the contrary, nothing in Chapter XIX-A shall affect the operation of the provisions of the Act in so far as they relate to any matters other than those before the Settlement Commission. So, the mere filing of the application for settlement under s. 245C will not have the effect of staying the operation of the other provisions of the Act, like those providing for the prosecution of the assessee in concealing and making incorrect and false statement in the return. Admittedly, in the present case, the Settlement Commission has not passed any orders staying the proceedings in the criminal complaint. In the absence of such an order, the Magistrate was duty bound to try and decide the case in accordance with law.

The third plea of Mr. Mahajan runs directly in the face of the ratio of the decision of the Apex Court in P. Jayappan vs. S. K. Perumal, First ITO (1984) 42 CTR (SC) 180 : (1984) 149 ITR 696 (SC) : TC48R.501. It has been held therein : “There is no provision in law which provides that a prosecution for the offences under s. 276C or s. 277 of the IT Act cannot be launched until reassessment proceedings initiated against the assessee are completed.” So this plea must also fail.

13. For the reasons recorded above, there is no merit in the two writ petitions and the same are dismissed but with no order as to costs.

[Citation : 171 ITR 23]