JUDGMENT Mrs. [ENTITY], J.
1. All these writ petitions are for a writ of certiorari against the respondents for quashing or setting aside criminal complaints which have been filed against the petitioners in each of the writ petitions and in the alternative for a writ of mandamus directing the respondents to withdraw and/or forbear from taking any steps in pursuance of criminal complaints which have been filed against the petitioners.
2. The facts are common to all these petitions. The petitioners in each of these petitions were originally the tenants of various premises in a building known as Shikhar Kunj situated at 29A Carmichael Road, Bombay-400 026, which was owned by one Sahu Brothers (Saurashtra) Pvt. Ltd. The share capital in this company was held by some of the tenants. Each of the petitioners was paying a monthly rent to the said company. The premises were covered by the [ACT]. The said company entered into an agreement dated March 10, 1966, with another company known as Carmichael Properties Pvt. Ltd. for the sale of its entire property with a view that the building may be demolished and a new multi-storeyed building may be constructed by Carmichael Properties Pvt. Ltd. the latter being a wholly owned subsidiary of Sahu Brothers Pvt. Ltd. Prior to this agreement, the landlord, namely, Sahu Brothers Pvt. Ltd., entered into an agreement with the tenants which agreement is dated January 7, 1966. Under this agreement, the tenants agreed to vacate the premises occupied by them in Shikhar Kunj on condition that after the sale of the said property was completed and a new building was constructed, each of them would be put in possession of a flat in the new building on condition that they would pay the permissible standard rent in respect of the new flat as per the provisions of law. If, at any time after the amount of standard rent so payable was ascertained, the tenants desired to purchase the flats allotted to them in the new building on ownership basis, the new company would sell the flat to the old tenants at the capitalised value of the said standard rent, the value to be calculated at the rate of 7 1/2 per cent. yield per annum or at the cost price of the carpet area of the new flat, whichever was less. Until they were put in possession of the new flat, the old tenants were to pay Re. 1 per month as nominal rent while the building was being demolished and the new building was being constructed.
3. Accordingly, the tenants vacated Shikhar Kunj in January, 1966. The new building was completed some time in the year 1971 and the tenants purchases the flats so allotted to them on payment of the agreed price as per the agreement of January 7, 1966.
4. Each of the tenants who are the petitioners before us in these petitioners had filed their wealth-tax returns for the assessment years 1966-67 to 1971-72. In the original wealth-tax returns filed by the petitioners they had not disclosed their tenancy rights in the said building as an asset liable to wealth-tax. Between March 27, 1975 and February 16, 1978, notices were issued to them under [SECTION] of the [ACT] for reopening wealth-tax assessment of the petitioners for the assessment years 1966-67 to 1971-72. Between October 27, 1976, and June 16, 1978, the petitioners filed fresh wealth-tax returns for the above periods. By his order dated March 31, 1978, the Wealth-tax Officer held that the difference between the price at which the new flats had been sold to the petitioners and the price at which such flats in another wing of the said building had been sold to outsiders, should be considered as the value of the tenancy rights and this should be added to the wealth-tax returns of each of the petitioners for the said assessment years. The petitioners filed appeals from this order of the Wealth-tax Officer. In the meanwhile, gift-tax proceedings were also started against Carmichael properties Pvt. Ltd. Ultimately, as a result of a meeting held between the Commissioner of Income-tax and the petitioner's chartered accountant, it was decided that if the petitioners withdrew the appeals, the gift-tax proceedings would be dropped. The petitioners, accordingly, did not proceed with their appeals and the same were withdrawn. The gift-tax proceedings were also withdrawn. The petitioners contend that, in any event, the quantum of wealth-tax so assessed was small and they did not wish to have a protracted litigation on this issue.
5. The Wealth-tax Officer, noting that the assessees had omitted the said asset from the wealth-tax returns, started penalty proceedings under [SECTION] of the [ACT] for concealing Particulars of the said asset in respect of the assessment years 1966-67 to 1971-72. In June, 1981, orders were passed levying penalty under [SECTION] against the petitions for the assessment years 1966-67 to 1971-72. The petitioners filed appeals before the Commissioner (Appeals). They pointed out that they did not include the value of the said asset in their returns of wealth-tax in the bona fide belief that this did not constitute, in law, an asset for the purposes of wealth-tax. And hence there was no concealment of any asset on their part. The Commissioner (Appeals) accepted the contention and held that the appellants did not conceal their wealth or furnish inaccurate particulars thereof within the meaning of [SECTION] of the [ACT]. He cancelled the penalty levied for all these years.
6. The Department filed appeals before the Income-tax Tribunal. These appeals have been decided by the Tribunal, by its order dated August 12, 1986, which order has been passed during the pendency of the present petitions. The Tribunal, after considering the facts at length, has come to the conclusion that for the assessment purposes, a tenant's right to stay in a property under the protection of the [ACT] is not by itself an asset includible in the net wealth. Even if it is property, it would be purely personal to the tenant and cannot have a market value under [SECTION] of the [ACT]. Having not treated tenancy itself as an asset, to treat it as an asset during the period when it was not there, and was substituted by merely a right under the agreement of January 7, 1966, would be "the limit of absurdity". The Tribunal held that penalty for concealment requires the establishment of contumacious conduct on the part of the assessee. Looking to the facts of the present case, the assessees bona fide believed that this asset was not includible in their net wealth. The Tribunal, therefore, held that penalty under [SECTION] could not be levied in these circumstances. Hence, the Tribunal upheld the order of the Commissioner (Appeals) setting aside the penalties so levied.
7. In the meanwhile, the Commissioner of Wealth-tax also ordered prosecution of the petitioners under [SECTION] and [SECTION] by his order dated November 8, 1983. Pursuant to this, the Wealth-tax Officer has registered complaints against the petitioners in the Court of the Metropolitan Magistrate, Esplanade, Bombay, in respect of the offences alleged to have been committed by the petitioners under [SECTION] and [SECTION] of the [ACT]. [SECTION] states that if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or impossible under this Act, he shall be punishable with imprisonment and fine as set out in that section. [SECTION] provides that if a person makes a statement in any verification under this Act (other than [SECTION]) or under any rule made thereunder, which he either knows or believes to be false, or does not believe to be true, he shall be punishable as provided in that section. Both these sections requires a wilful attempt on the part of the offender to evade tax or to furnish a false statement in verification. In the present case, the Tribunal had clearly come to the conclusion that there was no wilful attempt on the part of any of the petitioners either to furnish false wealth-tax returns or to evade any tax. The Tribunal has held that the alleged asset was not included in the wealth-tax returns for the assessment years in question because the petitioners bona fide believed that the same did not constitute an asset which required disclosure in the wealth-tax return. The Tribunal's findings in this regard and its judgment have become final. The Department had applied for a reference from the above order and judgment but the Tribunal declined to draw up a statement of the case and refer it to the High Court. The Department has also not shown to us any material which would indicate that they have applied to the High Court to have a statement of the case drawn up by the Tribunal or that the High Court has issued any such directions. In these circumstances, it is clear that the provisions of neither [SECTION] are attracted in the present case.
8. Mr. [ENTITY], learned counsel for the Department, has drawn our attention to the observations of the Supreme Court in the Case of [PRECEDENT] to the effect that criminal proceedings are independent proceedings and a mere expectation of success in some proceeding in an appeal or a reference under the [ACT] cannot come in the way of the institution of criminal proceedings under [SECTION] or [SECTION] of the [ACT]. This decision in our view does not help the Department in any manner because in the present case, looking to the circumstances which are before us, not even a prima facie case of any offence having been committed under [SECTION] and [SECTION] is made out; and we do not see why the petitioners should have to suffer the harassment of a criminal prosecution which is ultimately bound to fail.
9. Our attention was also drawn to the observations of the Allahabad High Court in the case of [PRECEDENT]. The Allahabad High Court found that the submission of the petitioners that no offence had been committed by them on the basis of [SECTION] of the [ACT], required investigation of facts which was not warranted in a writ petition. The court observed that the petitioners would have a right to point out to the Magistrate before whom the case was pending that the facts did not establish any offence. The court dismissed the Writ petition for quashing criminal prosecution.
10. In the present case, however, no facts require any further investigation. The Tribunal has already come to the conclusion that there is no wilful evasion of any tax nor is there any deliberate false statement made in the verification clause to the wealth-tax return in question. There is, therefore, no basis for prosecution.
11. In the case of [PRECEDENT], the Supreme Court, on the basis of the findings given by the Tribunal in the appeal, held that the partnership firm was genuine and quashed the criminal prosecution which had been launched against the petitions therein for filing false returns. In the present case also, looking to the findings given by the Tribunal, the criminal prosecutions which have been launched against the petitioners are wholly unsustainable. The prosecutions are, therefore, quashed and the rule is made absolute in terms of prayer (b). The respondents to pay to the petitioners costs of the petitions.