Punjab & Haryana H.C : This is a petition for quashing the complaint annexure P-15, dt. 30th March, 1984, filed by the ITO, Central Circle-III, Ludhiana, under s. 277 of the IT Act, 1961

High Court Of Punjab & Haryana

Raja Mechanical Works vs. M.K. Marani, ITO

Sections 277, Criminal Procedure Code, 1973, s. 482

Asst. Year 1973-74

Mrs. Bakhshish Kaur, J.

Crl Misc. No. 26683-M of 1997

6th July, 2000

Counsel Appeared

Sunil Chadha, for the Petitioner : R.P. Sawhney with Rajesh Bindal, for the Respondent


Bakhshish Kaur, J.:

This is a petition for quashing the complaint annexure P-15, dt. 30th March, 1984, filed by the ITO, Central Circle-III, Ludhiana, under s. 277 of the IT Act, 1961 (in short “the Act”), pertaining to the asst. yr. 1973-74.

2. The brief facts of the case are recapitulated as under : Raja Mechanical Works, the accused (hereinafter referred to as “the petitioner”), is a registered firm engaged in the manufacture and sale of cycle parts at Ludhiana. The constitution of the firm is as under : Narinder Singh 65 per cent Harbans Lal 35 per cent The return of income for the asst. yr. 1973-74 filed on 15th Sept., 1973, was duly verified by Narinder Singh, partner, by means of a declaration dt. 14th Sept., 1973. The total income shown was Rs. 31,608 under the head “Business income”. It was accompanied by a trading account, P&L a/c and balance-sheet. On 14th Nov., 1975, the CIA staff, Ludhiana, had seized the account books of the petitioner-firm. Cash book and ledger for the financial year 1973-74, summoned by Shri R.D. Mann, ITO, under s. 131 of the Act, were produced by the CIA Staff, Ludhiana, and these taken were into possession as per order passed under s. 131(3) of the Act dt. 7th March, 1980. On the examination of the impugned books, it was revealed that the total value of the plant and machinery shown as on 31st March, 1983, in the balance-sheet was Rs. 1,06,729.41 as against the value of Rs. 1,71,323.13. The total sundry debtors in the balance-sheet filed with the return have been shown at Rs. 1,02,857.28 as on 31st March, 1973, as against Rs. 1,19,885.37 in the list prepared from the impounded books. It is, therefore, alleged that the assessee-firm by overstating its liabilities and understating its assets in the balance-sheet has concealed particulars of its actual income and has also made a false statement in the verification, rendering itself liable under s. 277 of the Act for the asst. yr. 1973-74.

The petitioner seeks the quashing of the complaint, annexure p-15, on the grounds that there was no assessment order in existence on the date of filing of the complaint, nor was there cause of action on the basis of which the complaint could be filed. Secondly, a plain reading of the case does not make out a case against the petitioner as the assessment made by the ITO underwent a sea-change. Thirdly, a fresh assessment for the asst. yr. 1973-74 had been made and the ITO again found the taxable income as Rs. 2,85,140 which had been further appealed against and the CIT(A) granted relied out of the said amount to the extent of Rs. 1,64,000 apart from other rebates.

Against this order, the petitioner has filed an appeal for further relief to which he entitled. It is further alleged that the complaint is barred by time under s. 468 of the CPC (in short “the Code”).

The respondent in its written reply has admitted the factual position of this case but it is denied that the complaint is barred by time. Inter alia, it is pleaded that the case in hand relates to the economic offence which is covered under the Act. Therefore, the period of limitation mentioned in s. 468 of the Code would not apply as is clear from the inapplicability of limitation mentioned in the Economic Offences Act, 1968. It is also averred that the basis of prosecution is the concealment of income found/false statement made by the assessee in the return of income and that the criminal Court has to decide the case on the basis of evidence before it. Therefore, the petition under s. 482 of the Code is not competent.

I have heard Shri Sunil Chadha, learned counsel for the petitioner, and Shri R.P. Sawhney, senior advocate assisted by Shri Rajesh Bindal, advocate.

In the petition, the petitioner has prayed for quashing of Complaint No. 418/3, dt. 14th Sept., 1983, annexure P-16, and Complaint No. 209/3, dt. 30th March, 1984, annexure P-15, but during the course of arguments, learned counsel restricted his arguments to the complaint dt. 30th March, 1984, annexure P-15, for the asst. yr. 1973-74. The petitioner is quite voluminous and it runs into several pages and references to certain orders passed by the assessing authority have been made which of course relate to different complaints but as already point out the discussion in this case would be limited to the complaint annexure P-15, i.e., for the asst. yr. 1973-74.

The petitioner’s case in short is that so far as the assessment pertaining to the year 1973-74 is concerned, the assessment order had been passed on 30th March, 1976, annexed as annexure P-1 and the tax liability had been duly paid. The assessment had been reopened after a gap of 15 years from the date of filing of the order, i.e., 15th Sept., 1973, and 12 years approximately from the date of passing of the assessment order. Therefore, the complaint is also barred by time. Shri Sunil Chadha contended that for the asst. yr. 1973-74, certain amount has been added and the ITO had against directed that penalty notices under ss. 271(1)(a), 271(1)(b), 271(1)(c) and 273(c) of the Act be issued, but till date no penalty proceedings have been initiated as the matter is sub judice before the CIT(A). Annexure P-14 is a copy of the order dt. 29th March, 1988, relating to the asst. yr. 1973-74. Since the appeal preferred by the petitioner is pending before the CIT(A) and the matter being sub judice, the complaint cannot proceed rather and it is liable to be quashed on the point of limitation as well as on the point of making additions.

9. The submissions made by learned counsel do not appear to be convincing and there is hardly any ground to invoke the inherent provisions of s. 482 of the Code. Exercise of jurisdiction under the inherent power as envisaged in s. 482 of the Code to have the complaint or the charge-sheet quashed is an exception rather than a rule as has been observed by the apex Court in Medhol Chemicals & Pharma (P) Ltd. vs. Biological (P) Ltd. (2000) 2 RCR (Cri) 122. A bare reading of the complaint, annexure P-15, discloses a prima facie case and this is not the stage to go into the allegations made in the complaint and quash the same by exercising inherent power under s. 482 of the Code because it is a settled principle of law that to exercise the power under s. 482 of the Code, the complaint in its entirety shall have to be examined on the basis of the allegations made in the complaint and the High Court at the stage has no authority to go into that matter or examine its correctness. Whatever appears on the face of complaint shall be taken into consideration without any critical examination of the same, as has been held in Medhol Chemicals & Pharma (P) Ltd. vs. Biological (P) Ltd. (2000) 2 RCR (Cri) 122 (SC).

10. There are catena of decisions on the point and the apex Court has observed a number of times that for the purpose of exercising its power under s. 482 of the Code to quash an FIR or a complaint, the High Court would have to proceed in the matter on the basis of the allegations made in the complaint or the documents accompanying the same per se; it has no jurisdiction to examine the correctness or otherwise of the allegations. In Satyinder Kaur vs. State (Government of NCT of Delhi) (1999) 4 RCT (Criminal) 503 (SC), the law enunciated by the apex Court for quashing of FIR has been summed up. Also it had been observed that while exercising the jurisdiction under s. 482 of the Code, the Court should bear in mind what has been observed in State of Kerala vs. O.C. Kuttan, AIR 1999 SC 1044 : (1999) 1 JT 486 (SC) to the following effect : “Having said so, the Court gave a note of caution to the effect that the power of quashing the criminal proceedings should be exercised very sparingly with circumspection and that too in the rarest of rate cases; that the Court will not be justified in embarking upon an inquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice. It is too well settled that the first information report is only an initiation to move the machinery and to investigate into a cognizable offence and, therefore, while exercising the power and deciding whether the investigation itself should be quashed, utmost care should be taken by the Court and at that stage it is not possible for the Court to shift the materials or to weigh the materials and then come to the conclusion one way or the other. In the case of State of U.P. vs. O.P. Sharma (1996) 2 JT 488 (SC), a three-Judges Bench of this Court indicated that the High Court should be loath to interfere at the threshold to thwart the prosecution exercising its inherent power under s. 482 of the Code or under Arts. 226 and 227 of the Constitution of India, as the case may be, and allow the law to take its own course. The same view was reiterated by yet another three-judges Bench of this Court in the case of Rashmi Kumar vs. Mahesh Kumar Bhada (1996) 11 JT 175 SC, where this Court sounded a word of caution and stated that such power should be sparingly and cautiously exercised only when the Court is of the opinion that otherwise there will be gross miscarriage of justice. The Court had also observed that social stability and order is required to be regulated by proceeding against the offender as it is an offence against the society as a whole.”

11. Having regard to the case law as above and the allegations contained in the complaint that the assessee-firm by overstating its liabilities and understating its assets in the balance sheet has concealed particulars of its actual income and also made a fake verification/declaration, in my opinion, no case is made out for quashing the impugned complaint. On the contrary, in view of the pleas taken by the respondent in the written statement, it is the petitioner who has been delaying the matter in one way or the other. The complaint which is pending since 1983 has not progressed at all and for that the petitioner is equally to be blamed for causing delay.

In the result, this petition is dismissed. The trial Court is directed to decide the complaint at the earliest as it has already grown pretty old. The petitioner is also directed to co-operate with the Court and assist it in the disposal of the case.

[Citation : 247 ITR 654]

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