N Petition for Special Leave to Appeal Criminal No 1923 of 1984
From the Judgment and Order dated the 19th June 1984 of the Madras High Court in Crl
Petition No 816483 8168 8166  817083
CS Vaidyanathan for the Petitioner
The Order of the Court was delivered by VENKATARAMIAH J
The petitioner is the proprietor of Ms Ratnam Food Stuff Co Tuticorin
He is an assessee under the Income tax Act 1961 hereinafter called the Act 
For the assessment year 1977 78 he filed his return under the Act on January 20 1978 disclosing an income of Rs 13380 alongwith the profit and loss account trial balance income tax adjustment statement and a copy of the capital account
The return was accepted
On August 20 and 21 1981 a search was conducted at the residence of the petitioner under section 132 of the Act which resulted in the seizure of several documents and account books which revealed the suppression of purchase of chicory seeds the existence of several bank accounts fixed deposits investments in the names of his wife and daughters and several bank accounts not disclose in the statements filed alongwith the return
The trading and profit and loss account for the assessment year 1977 78 filed alongwith the return showed that he had purchased chicory seeds of the value of Rs 65797 as against Rs 215729 as per the seized accounts
There were several other wrong statements in the accounts
On the basis of the allegation that the petitioner had deliberately filed a false return and had kept false accounts with the intention of using them as genuine evidence in the assessment proceedings a complaint was filed against him in the Court of the Additional Chief Judicial Magistrate Economic Offences Madurai for taking action against him for offence punishable under section 276C and section 277 of the Act and under sections 193 and 196 of the Indian Penal Code
Similarly three other complaints were filed against the petitioner for the same offences said to have been committed by him in respect of three succeeding assessment years 1978 79 1979 80 and 539 1980 81 before the same Magistrate
The petitioner thereupon filed four petitions under section 482 of the Code of Criminal Procedure before the High Court of Madras requesting it to quash the said proceedings contending that the launching of the prosecution in each of the four cases was a premature one on the ground that the reassessment proceedings started against him under the Act had not been completed
All the four petitions were dismissed by the High Court by four separate orders dated June 19 1984
The petitioner has filed this petition before this Court under Article 136 of the Constitution for leave to appeal against the above said four orders of the High Court
The only point which arises for consideration in this case is whether prosecutions for offences punishable under section 276C and section 277 of the Act and under section 193 and 196 of the Indian Penal Code instituted by the Department while the reassessment proceedings under the Act are pending are liable to be quashed on the ground that they were not maintainable
The material parts of section 276C and 277 of the Act read as follows 276C Wilful attempt to evade tax etc 1 If a person wilfully attempts in any manner whatsoever to evade any tax penalty or interest chargeable or impossible under this Act he shall without prejudice to any penalty that may be impossible on him under any other provision of this Act be punishable i in a case where the amount sought to be evaded exceeds one hundred thousand rupees with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine ii in any other case with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine
If a person willfully attempts in any manner whatsoever to evade the payment of any tax penalty or interest under this Act he shall without prejudice to any penalty that may be imposable on him under any other provision of this Act be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three 540 years and shall in the discretion of the court also be liable to fine
Explanation        277
False statement in verification etc
If a person makes a statement in any verification under this Act or under any rule made thereunder or delivers an account or statement which is false and which he either knows or believes to be false or does not believe to be true he shall be punishable i in a case where the amount of tax which would have been evaded if the statement or account had been accepted as true exceeds one hundred thousand rupees with rigorous imprisonment for a term which shall not be less then six months but which may extend to seven years and with fine
ii in any other case with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine
 The relevant parts of sections 193 and 196 of the Indian Penal Code read thus 193
Punishment for false evidence
Whoever intentionally gives false evidence in any stage of a judicial proceeding or fabricates false evidence for the purpose of being used in any stage of a judicial proceeding shall be punished with imprisonment of either description for a term which may extend to seven years and shall also be liable to fine and whoever intentionally gives or fabricates false evidence in any other case shall be punished with imprisonment of either description for a term which extend to three years and shall also be liable to fine
Explanation        196
Using evidence known to be false
Whoever corruptly uses or attempts to use as true or genuine evidence any evidence which he knows to be false or fabricated shall be punished in the same manner as if he gave or fabricated false evidence  At the outset it has to be stated that there is no provision in law which provides that a prosecution for the offences in question cannot 541 be launched until reassessment proceedings initiated against the assessee are completed
Section 279 of the Act provides that a person shall not be proceeded against for an offence punishable under section 276C or section 277 of the Act except at the instance of the Commissioner
It further provides that a person shall not be proceeded against for an offence punishable under those provisions in relation to the assessment for an assessment year in respect of which penalty is imposed or imposable on him under clause iii of sub section 1 of section 271 has been reduced or waived by an order under section 273A
The Commissioner has the power either before or after the institution of proceedings to compound any such offence
In this case it is not claimed that the Commissioner has not initiated the proceedings for instituting the complaints
No other legal bar for the institution of the proceedings is urged except stating that in the event of the petitioner being exonerated in the reassessment proceedings the prosecutions may have to be dropped
It is true that as observed by this Court in Uttam Chand  Ors
vs Income tax officer Central Circle Amritsar1 the prosecution once initiated may be quashed in the light of a finding favourable to the assessee recorded by an authority under the Act subsequently in respect of the relevant assessment proceedings but that decision is no authority for the proposition that no proceedings can be initiated at all under section 276C and section 277 as long as some proceeding under the Act in which there is a chance of success of the assessee is pending
A mere expectation of success in some proceeding in appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings under section 276C and section 277 of the Act
In the criminal case all the ingredients of the offence in question have to be established in order to secure the conviction of the accused
The criminal court no doubt has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act
It does not however mean that the result of a proceeding under the Act would be binding on the criminal court
The criminal court has to judge the case independently on the evidence placed before it
Otherwise there is a danger of a contention being advanced that whenever the assessee or any other person liable under the Act has failed to convince the authorities in the proceedings under the Act that he has not deliberately made any false statement or that he has not fabricated any material evidence the conviction of such person should invariably 542 follow in the criminal court
The High Court of Punjab and Haryana has correctly applied the rule regarding the maintainability of prosecution in such circumstances in Ms Telu Ram Raungi Ram  Anr
vs Income tax officer A Ward Hoshiarpur  Anr1
We do not however agree with the view expressed by the High Court of Calcutta in Jyoti Prakash Mitter vs Haramohan Chowdhury2 In that case on a complaint made against the assessee for an offence punishable under section 277 of the Act the Chief Metropolitan Magistrate issued process
Thereupon the assessee questioned the validity of the initiation of the criminal proceedings before the High Court of Calcutta on the ground that until the penalty proceedings initiated in respect of the same period under section 2711c of the Act were finally disposed of no complaint could be filed
The contention of the assessee was that the prosecution was opposed to the principles of natural justice as he would be deprived of the benefit of a finding which was likely to be recorded in his favour in the penalty proceedings
It was urged on behalf of the Department that the penalty proceedings under section 2711c had no direct bearing on the maintainability of a prosecution launched under Chapter XXII of the Act
The High Court took the view which according to us is an erroneous one that the provisions of section 2791A of the Act established the necessity for the completion of the penalty proceedings before the institution of the prosecution and therefore as long as the penalty proceedings were pending the criminal proceedings could not be instituted
Section 2791A of the Act merely states that a person shall not be proceeded against for an offence under section 276C or section 277 in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him under clause iii of sub section 1 of section 271 has been reduced or waived by an order under section 273A Section 273A1ii provides that notwithstanding anything contained in the Act the Commissioner may in his discretion whether on his own motion or otherwise reduce or waive the penalty if the conditions mentioned therein are satisfied
The power conferred on the Commissioner under section 273A is an overriding power which he may exercise at his discretion
It is only where the Commissioner reduces or waives the penalty imposed or imposable under section 2711iii of the Act in exercise of his discretion under section 273A section 2791A comes into operation and acts as a statutory bar for proceeding with the prosecution under section 276C or section 277
It does not however provide that merely because there is a possibility of the Commissioner 543 passing an order under section 273A the prosecution shall not be instituted
The reason given by the High Court of Calcutta therefore does not appeal to us
It may be that in an appropriate case the criminal Court may adjourn or postpone the hearing of a criminal case in exercise of its discretionary power under section 309 of the Code of Criminal Procedure if the disposal of any proceeding under the Act which has a bearing on the proceedings before it is imminent so that it may take also into consideration the order to be passed therein
Even here the discretion should be exercised judicially and in such a way as not to frustrate the object of the criminal proceedings
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
But this however has no relevance to the question of maintainability of the prosecution
The prosecution in those circumstances cannot be quashed on the ground that it is a premature one
On a careful consideration of the relevant provisions of the Act we are of the view that the pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under section 276C or section 277 of the Act
The institution of the criminal proceedings cannot in the circumstances also amount to an abuse of the process of the court
The High Court was therefore right in refusing to quash the prosecution proceedings in the four cases instituted against the petitioner under section 482 of the Code of Criminal Procedure
The Special Leave Petition is therefore dismissed
HSK Petition dismissed


Summary:
The petitioner an assessee under the Income Tax Act 1961 filed income tax returns which were accepted
Later a search of the petitioner s residence revealed that the petitioner had suppressed certain business transactions and had kept false accounts
On the basis of the allegation that the petitioner had deliberately filed false returns and had kept false accounts with the intention of using them as genuine evidence under the assessment proceedings complaints were filed against him in the trial court for taking action against him for offences punishable under sections 276C and 277 of the Income Tax Act and under sections 193 and 196 of the Indian Penal Code
The petitioner moved the High Court under section 482 of the Code of Criminal Procedure for quashing the proceedings contending that the launching of the prosecution was a premature one on the ground that the reassessment proceedings started against him under the Income Tax Act had not been completed
The High Court dismissed the petitions
The petitioner filed this petition for special leave to appeal
The petitioner did not urge any legal bar for the institution of the proceedings except stating that in the event of the petitioner being exonerated in the reassessment proceedings the prosecutions may have to be dropped
Dismissing the petition for special leave 537  HELD The pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under section 276C or section 277 of the Act
The institution of the criminal proceedings cannot in the circumstances also amount to an abuse of the process of the court
543 E There is no provision in law which provides that a prosecution for the offences in question cannot be launched until reassessment proceedings initiated against the assessee are completed
540 H A mere expectation of success in some proceeding in appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings under section 276C and section 277 of the Act
In the criminal case all the ingredients of the offence in question have to be established in order to secure the conviction of the accused
The criminal court no doubt has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act
It does not however mean that the result of a proceeding under the Act would be binding on the criminal court
The criminal court has to judge the case independently on the evidence placed before it
Otherwise there is a danger of a contention being advanced that whenever the assessee or any other person liable under the Act has failed to convince the authorities in the proceedings under the Act that he has not deliberately made any false statement or that he has not fabricated any material evidence the conviction of such person should invariably follow in the criminal court541 E H Uttam Chand  Ors
vs Income tax Officer Central Circle Amritsar 1982133 ITR 909 referred to
Ms Telu Ram Raungi Ram  Anr
vs Income tax Officer A  Ward
Hoshiar Pur  Anr 1984145 ITR 111 upheld
The view of the Calcutta High Court in Jyoti Prakash Mitter vs Haramohan Chowdhury that the provisions of section 2791A of the Income Tax Act established the necessity for the completion of the penalty proceedings before the institution of the prosecution and therefore as long as the penalty proceedings were pending the criminal proceedings could not be instituted was erroneous
Section 2791A does not provide that merely because there is a possibility of the Commissioner passing an order under section 273A the prosecution shall not be instituted
542 D H 543 A Jyoti Prakash Mitter vs Haramohan Chowdhury overruled
It may be that in an appropriate case the criminal Court may adjourn or postpone the hearing of a criminal case in exercise of its discretionary power under section 309 of the Code of Criminal Procedure if the disposal of any proceeding under the Act which has a bearing on the proceedings before it is imminent so that it may take also into consideration the order to be passed therein
Even here the discretion should be exercised judicially and in such a way as not to frustrate the object of the criminal proceedings
There is no rigid rule which makes it necessary for a criminal court to adjourn or postpone the 538 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
But this however has no relevance to the question of maintainability of the prosecution
The prosecution in those circumstances cannot be quashed on the ground that it is a premature one
543 B D