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2002 DIGILAW 1398 (PAT)

Union Of India v. Sharad Kumar

2002-12-10

M.L.VISA

body2002
Judgment M.L.Visa, J. 1. This application by the Union of India through the Assistant Commissioner of Income-tax, Central Circle 1, Patna, has been filed for cancelling the bail granted to the opposite party by this court on April 30, 2001, in Complaint Case No. 394(c) of 1999. 2. According to the case of the petitioner, the opposite party is one of the partners of Birsa Live Stock Feeds and Additives and a search u/s. 132 of the Income-tax Act, 1961, was conducted in the case of Sanwin Pharmaceu-ticals and during such search some documents pertaining to the assessee were seized and notices were sent to all the partners of the aforesaid firm to produce books of account and to furnish information and explanation on various points but there was no compliance and in view of the failure by the assessee accused to comply with the notice u/s. 158BC read with Section 158BD and u/s. 142(1) of the Income-tax Act, the assessment under Sec. 144 of the Income-tax Act was made and the amount of tax payable by the firm was determined at Rs. 2,42,31,471. The further case of the petitioner is that during the assessment proceedings of the firm for the block period 1987-88 to 1997-98 it came to light that the firm claimed purchase of medicines worth Rs. 60,08,318 from IVA Laboratories, Nasik during the financial year 1992-93 and one of the partners of the firm of opposite party admittedly sworn an affidavit on February 16,1998, and February 20, 1998, that this claim of purchase was bogus and medicines were never purchased. In the assessment order of the firm for the block period 1987-88 to 1997-98 it has been established beyond doubt that supplies of the medicines and cattle feed to the Animal Husbandry Department, Government of Bihar, as claimed by the firm in the returns of income filed earlier were never made and that wrong claim of expenses in the returns was made on the basis of bogus purchases. The firm and the partners thereof were found to have deliberately and wilfully attempted to evade tax. A show cause notice as to why prosecution should not be launched against the partners of the firm under Secs. The firm and the partners thereof were found to have deliberately and wilfully attempted to evade tax. A show cause notice as to why prosecution should not be launched against the partners of the firm under Secs. 276C, 277 and 278 of the Income-tax Act was issued to all partners but no response was received from them, and complaint case was instituted for the offence against the firm and its partners under Sections 276C, 277 and 278 of the Income-tax Act on December 24, 1999 (annexure 1). The prayer of the opposite party for regular bail was rejected by the Second Additional Sessions Judge, Patna, on March 28, 2001 (annexure 2). Thereafter, the opposite party moved this court for bail and he was granted bail on April 30, 2001 (annexure 3). 3. The case of the petitioner is that the opposite party misrepresented the facts that the assessment order in respect of the firm in appeal has been set aside but the fact is that the assessment order of the firm of opposite party for the block period comprising of the assessment years 1987-88 to 1997-98 which formed the basis of the complaint petition is still valid and has not been cancelled or modified by any income-tax authority or by the Income-tax Appellate Tribunal or any court of law (annexure 4). A prayer has been made for cancellation of bail granted to the opposite party by this court on April 30, 2001. 4. The opposite party has appeared and has filed counter affidavit opposing the prayer of the petitioner. According to the opposite party, the appeal against the order for the block assessment periods 1987-88 to 1997-98 in respect of the firm of which the opposite party is one of the partners is still pending adjudication before the Commissioner of Income-tax (Appeals) and a second appeal against the order in appeal passed by the Commissioner of Income-tax (Appeals) is also provided before the Income-tax Tribunal. The further case of the opposite party is that the assessments in the case of the opposite party were made protectively under the provisions of sec. The further case of the opposite party is that the assessments in the case of the opposite party were made protectively under the provisions of sec. 158BC of the Income-tax Act and the same were made substantively in the hands of Dr, Gauri Shankar Prasad and the scheme of protective assessment only authorises the income-tax authority to make a parallel assessment only to safeguard the interest of the Revenue until a final finding of the fact as to the receipt of the income and it is only on this basis it has been held by the various High Courts in the country that while a protective assessment is permissible a protective recovery is not. Reference of the decision in the case of G. L. Didwania V/s. ITO [1997] 224 ITR 687 (SC), has been given where, according to the opposite party, it was held that the presumption as to escaped assessment was dependent on the conclusion reached by the Appellate Tribunal, and hence the prosecution cannot be sustained. 5. From the perusal of the impugned order I find that at the time of hearing the application of the opposite party for bail it was submitted that the assessment order in respect of the opposite party for the year 1996-97 in appeal has been set aside after observing that the Assessing Officer has stated that Shri Gauri Shankar Prasad, the father of the opposite party, is a major accused in cases registered by the Central Bureau of Investigation in connection with misappropriation of funds of the Animal Husbandry Department, Government of Bihar, and the Assessing Officer has also stated that the undisclosed investments have been assessed substantively in the hands of Shri Gauri Shankar Prasad because he is one of the partners of the firm, therefore, the same investments have been assessed in the hands of the opposite party on protective basis. Considering this fact and the fact that the opposite party was said to be in jail custody since November 7, 2000, he was granted bail. By this order I do not find that any plea was taken that the assessment orders of the firm for the block period comprising the assessment years 1987-88 to 1997-98 were set aside in appeal. The petitioner has also admitted that the appeal against the aforesaid assessment orders is pending. By this order I do not find that any plea was taken that the assessment orders of the firm for the block period comprising the assessment years 1987-88 to 1997-98 were set aside in appeal. The petitioner has also admitted that the appeal against the aforesaid assessment orders is pending. The other point raised by the petitioner is that in a similar case another Bench of this court had rejected the prayer of bail (annexure 5). From the perusal of annexure 5 I find that no doubt prayer for bail of an accused in a criminal case was rejected by another Bench of this court but at the same time liberty to the accused was given for renewing his prayer for bail after four months, if so advised. In this respect, the opposite party has filed a copy of an order dated July 16, 2001, of the Supreme Court passed in Criminal Appeal No. 717 of 2001 showing that the accused whose prayer for bail in a similar case was earlier rejected by another Bench of this court has been granted bail. Admittedly, the appeal against the assessment orders of the firm of which opposite party is one of the partners for the block period comprising the assessment years 1987-88 to 1997-98 is pending adjudication. The opposite party was granted bail by order dated April 30, 2001, passed by this court considering the fact the he was in jail custody since November 7, 2000, along with the fact that the assessment order in respect of the opposite party for the year 1997-98 in appeal has been set aside. The petitioner in para. 5(ii) has admitted that the assessment order in respect of the opposite party in his individual capacity for the assessment year 1996-97 has been set aside but according to the petitioner it is independent assessment from the assessment of the firm and therefore cancellation of this assessment order is no way connected with the present complaint petition. 6. Considering the entire materials on record I find no merit in this application which is accordingly dismissed.