Judgment : ( 1 ) THIS revision application has been preferred by the petitioner against the order dated 19th July, 2003 passed by the special Judge (Economic Offence) at jamshedpur in Case No. C/1-441/92, whereby and whereunder, he refused to discharge the accused persons under section 445 of Cr. P. C. for the offences punishable under sections 276c and 277 of the Income tax Act, 1961 (hereinafter referred to as the Act ). ( 2 ) THE petitioner of the present case is m/s. T. R. F. Ltd. , a Company registered under the Indian Companies Act (hereinafter referred to as the Company), having its works at Burmamines, Town Jamshedpur, district - Singhbhum (East ). ( 3 ) THE case of the petitioner is that the company filed its Income Tax Return for the financial year 1982-83 (Assessment Yr. 1983-84) on 23rd September, 1983. In the said return, the Company declared a total loss of Rs. 1,80,85,820/ -. Income was assessed under section 143 (3) of the Act at a total income of Rs. 16,85,510/ -. The company claimed deduction of Rs. 1,77,03,141/ - being the demand on account of Excise duty raised by the Superintendent of Central Excise during the financial year 1982-83. An amount of Rs. 9,23,000/- was also debited in the P/l Account of the Company under the head "provisions for Warranty Expenses". ( 4 ) THE Revenue made assessment under section 143 (3) of the Act on 25th March, 1986 disallowing the expenditure claimed on two accounts i. e. (i) Excise duty amounting to rs. 1,77,03,141/- and (ii) Warranty expenses of Rs. 9,23,000/ -. The Company, thereafter, filed an appeal before the Commissioner of Income Tax (Appeal) (hereinafter referred to as the C. I. T. (A)) on 23rd April, 1986 against the assessment order dated 25th March, 1986, but it was rejected by the CIT (A) on 25th October, 1989 who confirmed the order of the Assessing Officer dated 25th March, 1986. ( 5 ) IN December, 1989, the Company preferred appeal before the Income Tax Appellate Tribunal. During the Pendency of the said appeal, on 10th April, 1990, the Deputy commissioner of Income Tax passed penal order under section 271 (1) (C) of the Act imposing penalty of Rs. 1,00,05,486/ -. ( 5 ) IN December, 1989, the Company preferred appeal before the Income Tax Appellate Tribunal. During the Pendency of the said appeal, on 10th April, 1990, the Deputy commissioner of Income Tax passed penal order under section 271 (1) (C) of the Act imposing penalty of Rs. 1,00,05,486/ -. Against the order of penalty dated 10th April, 1990, a separate appeal was preferred by the Company on 7th May, 1990 before the CIT (A ). The said appeal was dismissed by the CIT (A)on 31st August, 1990, affirming the order of penalty imposed by the Deputy Commissioner, Income Tax. ( 6 ) SO far as order of penalty is concerned, the Company moved against the order of cit (A) and preferred an appeal before the income Tax Appellate Tribunal on 15th November, 1990. When both the appeals, one against the original assessment order and another against the order of penalty, were pending before the Income Tax Appellate tribunal, the Income Tax Department filed a complaint petition on 20th June, 1992 before the Special Court (Economic Offences)at Muzaffarpur against the Company and all the Directors who were on Companys board on 28th September, 1983, now pending in the Special Court (Economic Offences)at Jamshedpur. ( 7 ) IN the complaint petition, registered as Complaint Case No. 441 of 1992, it was alleged that the Company filed return on 28th September, 1983 declaring the total loss of Rs. 1,80,85,820/ -. The income was assessed under Section 143 (3) on total sum of Rs. 16,85,510/ -. The Company had claimed deduction of Rs. 1,77,03,141/- being the demand on account of Excise duty raised by the Central Excise Department, jamshedpur during the financial yr. 1982-83. This demand is in respect of contract executed by the Company relating to earlier years and up to 31st December, 1981. The claim of the accused Company was not allowed and a sum of Rs. 1,77,03,141/- was added to the total income of the Assessee company. It was also alleged that an amount of Rs. 9,23,000/- was debited in the P/l account of the Company under the head "provision for Warranty Expenses". It was disallowed and added to the total income of the assessee Company. For this addition, a penalty proceeding under Section 271 (1) (c)of the Act was initiated during the course of assessment proceeding and a penalty of Rs. 1,00,05,500/- was imposed. 9,23,000/- was debited in the P/l account of the Company under the head "provision for Warranty Expenses". It was disallowed and added to the total income of the assessee Company. For this addition, a penalty proceeding under Section 271 (1) (c)of the Act was initiated during the course of assessment proceeding and a penalty of Rs. 1,00,05,500/- was imposed. It was pleaded that the facts and circumstances established that the accused persons wilfully attempted to evade tax by furnishing incorrect particulars of income. The return was signed and verified by accused Shri H. P. Bodhiwala, director on behalf of the accused. It was also alleged that as the accused persons had made a statement in verification of return under the Act and under rules framed thereunder and the statement made was false which they either know or believe to be false or did not believe to be true and as such the accused persons have committed offence punishable under Section 276c and 277 of the Act. ( 8 ) THE Special Court (Economic Offences), jamshedpur took cognizance on 20th June, 1992 against the accused persons and ordered to issue summons against them. The petitioner-Company, thereafter filed a petition under Section 482 Cr. P. C. at Patna High court for quashing the entire proceeding. The case was registered as Cr. Misc. No. 6252 of 1993. On 11th May, 1993, the Patna high Court after hearing the learned counsel appearing on behalf of the petitioner-Company, including the learned Senior counsel appearing on behalf of the Revenue, allowed the petitioner to withdraw the application with liberty to move the High Court again after disposal of the appeal, as was pending before the appellate authority. The court while permitted to withdraw the application, directed the trial Court not to proceed with the case until and unless the appeal pending before the competent authority is disposed of. ( 9 ) THE Income Tax Appellate Tribunal by its order dated 25th March, 1994 passed in i. T. A. No. 34 (Pat) 1990 (Assessment Yr. 1983-84), allowed the demand of Excise duty as allowable expenditure. The Tribunal held that there is a merit in the case of the assessee and found from the assessment order right from the Assessment Yr. 1981-82 onwards that the Revenue had accepted that the assessee had been maintaining its Books of Accounts on Merchantile System of Accounting. 1983-84), allowed the demand of Excise duty as allowable expenditure. The Tribunal held that there is a merit in the case of the assessee and found from the assessment order right from the Assessment Yr. 1981-82 onwards that the Revenue had accepted that the assessee had been maintaining its Books of Accounts on Merchantile System of Accounting. Though, it was found that in some of the Schedules forming part of the accounts and the notes appended thereto, the assessee-Company mentioned about the mixed system of accounts, but ultimately, it was Merchantile System of Accounting which was accepted by the Revenue. The tribunal held that the assessee-Company is entitled to claim deduction for being accrued as a statutory liability in the Assessment Yr. under consideration. The order passed by the CIT (A) was held to be not justified and it was reversed by the Tribunal. Regarding warranty expenses of Rs. 9,23,000/-, the Tribunal held that the matter, in issue, is controversial, on which the cit (A) had not given any finding on merit. So the Tribunal while set aside the order passed by the CIT (A), restored back the appeal to its file to examine the claim relating to warranty expenses afresh and pass fresh order in accordance with law. ( 10 ) ON 7th July, 1994, the Deputy Commissioner of income Tax passed consequential order under Section 250 of the Act complying with the order and decision of the income Tax Appellate Tribunal and relief was allowed to the assessee-Company, deducting an amount of Rs. 1,77,03,141/ -. ( 11 ) THE Revenue i. e. Income Tax Department, thereafter filed a Misc. Case, registered as M. A. No. 26 (Pat) 1994 for rectification of the order dated 25th March, 1994 on the ground that certain facts, judicial pronouncement, evidence etc. were not taken into consideration by the Bench while accepting the claim of the assessee. The said m. A. No. 26 (Pat)/94 was disposed of on 19th october, 1995. A Bench of the Tribunal directed for re-adjudication of the claim of the assessee. The assessee-Company, thereafter, prayed to the Vice President of the Tribunal that the issue be re-adjudicated altogether by a different Bench since it apprehended that a definite view was formed by the Bench which passed order on Misc. Petition filed by the Department. Accordingly, another Bench was constituted to re-adjudicate the claim. The assessee-Company, thereafter, prayed to the Vice President of the Tribunal that the issue be re-adjudicated altogether by a different Bench since it apprehended that a definite view was formed by the Bench which passed order on Misc. Petition filed by the Department. Accordingly, another Bench was constituted to re-adjudicate the claim. The appeal I. T. A. No. 34 (Pat) of 1990 (Assessment Yr. 1983-84) was heard afresh, whereinafter, the Tribunal by its order dated 5th November, 1996, held as follows :"in our opinion, it is admitted position that the impugned liability arose for the first time on the basis of demand notice issued by the Excise Department on 29th september 82 in respect of certain transactions or work carried on by theassessee which was never brought to tax by the Excise department in earlier years and the assessee was also of the definite view that the work was not oxigible to the excise duty and this view was upheld by the Apex Court. Therefore, the assessee was entitled to appropriate deduction on the basis of notice of demand received for the first time in respect of altogether new liability rocked up during the previous year. . . . . . . . . . . . . . Besides the statement in the accounts is for the purpose of information to the shareholders. Again, when a company states in published accounts the accounting system being mixed system of accounting, a further question arises as to what transactions are recorded on merchantile basis and what transactions are recorded on receipt basis. Normally in the company accounts, certain receipts, say for example, cash compensatory and draw back receipts are shown on the basis of actual receipts and not on the basis of accrual following prudential norms and in that event also, the system of accounting would be classified as mixed one. Keeping this aspect in mind as also the evidence considered by the tribunal while passing the original order, such aspect averment and the findings recorded therein etc. , we are of the opinion that this factual contention has to be rejected. " ( 12 ) COUNSEL for the petitioner while referred the aforesaid facts submitted that there was no concealment on the part of the petitioner or its Directors. All figures, particulars, etc. , we are of the opinion that this factual contention has to be rejected. " ( 12 ) COUNSEL for the petitioner while referred the aforesaid facts submitted that there was no concealment on the part of the petitioner or its Directors. All figures, particulars, etc. were disclosed and thereby, it cannot be stated to be a case of non-disclosure to bring it within the purview of section 276c for the purpose of penalty. The order of assessment having varied, the basis of penalty having changed, penalty order cannot survive nor the petitioner or its directors can be prosecuted under Section 276c. In absence of any evasion of tax, the criminal proceeding is uncalled for. It was further submitted that the foundation of the complaint having been demolished, the continuance of the prosecution is illegal and unjustified. ( 13 ) MR. K. K. Jhunjhunwala, learned counsel for the revenue submitted that the matter relating to warranty expenses of Rs. 9,23,000/- was not pressed by the petitioner, at the time of hearing, before the cit (A ). In spite of the same, the Tribunal remanded the issue for determination by the cit (A ). He relied on a decision of Supreme court in the case of P. Jayapan v. S. K. Perumal, reported in 149 ITR 696 : ( AIR 1984 sc 1693 ) wherein the Supreme Court observed that the result of a proceeding under the other Act may not be binding on the criminal Court. The Criminal Court has to judge the case independently on the evidence placed before it. ( 14 ) COUNSEL for the State referred to Section 279 (1) A of the Act to suggest that the company is not entitled to claim protection under the said provision, which reads, as follows :"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 u/s. 273a. " ( 15 ) FURTHER case of the Revenue is that the accused persons on behalf of assessee having wilfully made wrong statement of verification which he knew to be false or which he believed to be false within the meaning of Section 277 of the Act, they committed offence on two counts, i. e. under section 276c as well as Section 277 of the act, both of which are punishable with rigorous imprisonment extending to three years and with fine being the maximum sentence. It was informed that the Special Court (Economic Offences), Muzaffarpur by its order dated 20th June, 1992 had already taken cognizance of the offences under Sections 276c and 277 of the Act. ( 16 ) IT appears that on the second appeal preferred by assessee (petitioner) before the income Tax Appellate Tribunal, Patna Bench (Camp at Jamshedpur) vide its order dated 25th March, 1994 passed in I. T. A. No. 34 (Pat) of 1990 observed that the matter, in issue, is a controversial point on which cit (A) has not given any finding on merit. In that view of the matter, the Income Tax appellate Tribunal set aside the order of cit (A) and restored back the same to its original file to examine and decide the matter afresh and to pass a fresh order. ( 17 ) IT is informed by the counsel for the revenue that the Income Tax Department has moved before this Court and filed a case for reference being Tax Case No. 21 of 1998 (R), wherein they have raised the question of admissibility of excise duty. ( 18 ) IN the present case, the question arises as to whether in view of judgment rendered by the Income Tax Appellate Tribunal in favour of the Company, the criminal proceeding for alleged offence under sections 276c and 277 of the Income Tax act is called for or not. The word "concealment" as mentioned in section 271 of the Act and the provision of section 276c of the said Act, both fell for consideration before the Supreme Court in the case of K. C. Builders v. the Assistant commissioner of Income Tax, reported in j. T. 2004 (2) SC 100. In the said case, the supreme Court held, as follows :"the word "concealment" inherently carried with it the element of mens rea. In the said case, the supreme Court held, as follows :"the word "concealment" inherently carried with it the element of mens rea. Therefore, the mere fact that some figure or some particulars have been disclosed by itself, even if takes out the case from the purview of nondisclosure, it cannot by itself take out the case from the purview of furnishing inaccurate particulars. Mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention of desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In order that a penalty under section 271 (1) (iii) may be imposed, it has to be proved that the assessee has consciously made the concealment or furnished inaccurate particulars of his income. "while interpreting the provision of Section 276c of the Act, which deals with wilful attempt to evade tax etc. and the provision of Section 277, which deals with false statement in verification, etc. and Section 278b, which deals with the offences by a company, the following observation was made by the Supreme Court in the aforesaid case :"in the instant case, the penalties levied under Section 271 (1) (c) were cancelled by the respondent by giving effect to the order of the Income Tax Appellate Tribunal in i. T. A. Nos. 3129-3132. It is settled law that levy of penalties and prosecution under section 276c are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276c is automatic. In our opinion, the appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive finding of the income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supersedes the order of the Assessing Officer under Section 143 (3) more so when the Assessing Officer cancelled the penalty levied. In our view, once the finding of concealment and subsequent levy of penalties under Section 271 (1) (c) of the Act has been struck down by the Tribunal, the Assessing officer has no other alternative except to correct his order under Section 154 of the act as per the directions of the Tribunal. As already noticed, the subject matter of the complaint before this Court is concealment of income arrived at on the basis of the finding of the Assessing Officer. If theorder of concealment and penalties, there is no concealment in the eyes of law and, therefore, the prosecution cannot be proceeded with by the complainant and further proceedings will be illegal and without jurisdiction. The assistant Commissioner of Income Tax cannot proceed with the prosecution even after the order of concealment has been set aside by the Tribunal. When the Tribunal has set aside the levy of penalty, the criminal proceedings against the appellants cannot survive for further consideration. In our view, the High Court has taken the view that the charges have been framed and the matter is in the stage of further cross-examination and, therefore, the prosecution may proceed with the trial. In our opinion, the view taken by the learned magistrate and the High court is fallacious. In our view, if the trial is allowed to proceed further after the order of the Tribunal and the consequent cancellation of penalty, it will be an idle and empty formality to require the appellants to have the order of Tribunal exhibited as a defence document inasmuch as the passing of the order as aforementioned is unsustainable and unquestionable. " ( 19 ) IN the present case, the part of the assessment as was originally made against the assessee Company for the Financial Yr. in question, was set aside by Sales Tax Appellate Tribunal and certain reliefs were granted. So far as amount of Rs. 9,23,000/- towards warranty expenses is concerned, the tribunal remanded the matter before the c. I. T. (Appeal) for a fresh decision and the matter is pending. ( 20 ) THE original order of assessment having been modified and the assessment of the financial year in question, thereafter, having not reached its finality, the question whether the assessee Company evaded tax or not, cannot be determined at this stage. ( 20 ) THE original order of assessment having been modified and the assessment of the financial year in question, thereafter, having not reached its finality, the question whether the assessee Company evaded tax or not, cannot be determined at this stage. Counsel for the Revenue could not lay hand on any order or record to suggest that after remand, a fresh order of assessment has been passed by the assessing authority. No order imposing penalty can be passed till a fresh assessment order is issued. ( 21 ) IN the case of K. C. Builders (supra), the Supreme Court has observed that where addition or alteration is made in the assessment order, on the basis of which penalty for concealment was levied, there remains no basis at all for levying penalty for concealment and, therefore, in such a case, no such penalty can survive and the same is liable to be cancelled. The Supreme Court further observed :"ordinarily penalty cannot stand if the assessment itself is set aside. Where an order of assessment or re-assessment on the basis of which penalty has been levied on the assessee has itself been finally set aside or cancelled by the Tribunal or otherwise. the penalty cannot stand by itself and the same is liable to be cancelled as, in the instant case ordered by the Tribunal and later cancellation of penalty by the authorities. " ( 22 ) IN the said case, the Supreme Court further held :"it is well-established principle that the matter which has been adjudicated and settled by the Tribunal need not be dragged into the criminal Courts unless and until the act of the appellants could have been described as culpable. " ( 23 ) FOR the discussions as made and reasons as shown above, i hold that the criminal proceeding, in question, being Case No. C/1-441/92, pending in the Court of Special Judge (Economic Offence) at jamshedpur, is uncalled for. Pendency of such case will not serve the interest of any of the party, the original order of assessment having been modified. In the circumstances, the proceeding aforesaid i. e. Case no. C/1-441/92, pending before the Court of Special Judge (Economic Offence) at jamshedpur is quashed. This application is allowed. Application allowed. --- *** --- .