Delhi District Court
Chintels India Ltd. And Ors vs Ito (Manoj Kumar) on 11 August, 2025
IN THE COURT OF SH. ABHISHEK GOYAL, ADDITIONAL
SESSIONS JUDGE-03, CENTRAL DISTRICT, TIS HAZARI
COURTS, DELHI
CNR No.: DLCT01-008701-2019
CRIMINAL REVISION No.: 401/2019
1. CHINTELS INDIA LTD.,
Chintels House,
A-11, Kailash Colony,
New Delhi-110048.
2. SHRI. ASHOK SOLOMON,
R/o. 44, Golf Links,
New Delhi-110003.
3. SHRI. PRASHANT SOLOMON,
R/o. 44, Golf Links,
New Delhi-110003. ... REVISIONISTS/
PETITIONERS
VERSUS
INCOME TAX OFFICE,
Shri. Manoj Kumar,
ACIT, Central, Cir-17,
ARA Centre, 3rd Floor,
Jhandewalan Extension,
New Delhi-110055. ... RESPONDENT
Date of filing : 04.07.2019
Date of institution : 05.07.2019
Date when judgment was reserved : 02.07.2025
Date when judgment is pronounced : 11.08.2025
JUDGMENT
1. The present revision petition has been filed under
Sections 397 of the Code of Criminal Procedure, 1973
(hereinafter, referred to as ‘Cr.P.C./Code’) seeking setting aside
of the order dated 18.04.2019 (hereinafter referred to as the
‘impugned order’), passed by the learned Additional Chief
Metropolitan Magistrate (Special Acts)/Ld. ACMM (Special
Acts), Central, Tis Hazari Courts, Delhi (hereinafter referred to
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 1 of 31
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
15:07:10
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as the ‘Ld. ACMM/Ld. Trial Court’), in case bearing; ‘Income
Tax Office v. Chintels India Ltd. & Ors., CC No. 3775/2017’,
emanating in a complaint proceedings, initiated in terms of the
provisions under Sections 276C(1)/277 read with Section 278B
of the Income Tax Act, 1961 (hereinafter referred to as ‘IT Act‘)
by the Income Tax Office (hereinafter referred to as the
‘complainant/respondent’). Pertinently, by virtue of the
impugned order the Ld. Trial Court, dismissed the application
moved on behalf of the revisionists under Section 245 Cr.P.C.,
seeking dropping of proceedings in the present case.
2. Succinctly, the genesis of the proceedings against
the revisionist was the aforenoted complaint, initiated on behalf
of the respondent by its Assistant Commissioner of Income Tax,
Central Cir.-17, New Delhi, asserted to be duly authorized by the
respondent to initiated prosecution against M/s Chintels India
Ltd., Chintels House, A-11, Kailash Colony, New
Delhi-110048/revisionist no. 1 (hereinafter referred to as the
‘company/revisionist no. 1’) and its directors/revisionist nos. 2
and 3, by virtue of sanction dated 23.02.2017, issued under
Section 279(1) of the IT Act. Notably, the said complaint averred
the commission of offences under Sections 276C(1)/277 read
with Section 278B of the IT Act by the company and the
revisionist for the Assessment Year/AY 2009-10. Notably, under
the complaint it has been inter alia averred that search and
seizure proceedings/operations were conducted by/on behalf of
the respondent, in terms of the provisions under Section 132 of
IT Act, at the business premise of revisionist no. 1 on 26.03.2010
vide authorization dated 25.03.2010. Consequently, notice under
Section 153-A of the IT Act, dated 10.03.2011, was issued to
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 2 of 31
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signed by
ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.08.11
15:07:14
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revisionist no. 1, seeking return of income for the AY 2009-10.
Thereupon, in response to the said notice on 28.04.2011, the
revisionists declared the income for the said period as Rs.
4,45,32,988/- (Rupees Four Crores Forty Five Thirty Two
Thousand Nine Hundred and Eighty Eight only), which was
signed by revisionist no. 3. Pertinently, the complaint further
chronicles that earlier, the return of income for AY 2009-10 was
filed on 30.09.2009, under Section 139(1) IT Act, duly signed
and verified by revisionist no. 3. Thereupon, notice under Section
143(2) IT Act, dated 21.07.2011 was issued and served upon the
revisionists, besides, notice under Section 142(1) of IT Act dated
19.08.2011, was issued on the revisionists, calling details for the
purpose of completion of assessment. Markedly, the complaint
further chronicles that revisionist no. 1, acting through revisionist
nos. 2 and 3, claimed/asserted a software purchase to a tune of
Rs. 4,24,24,550/- (Rupees Four Crores Twenty Four Lakhs
Twenty Four Thousand Five Hundred and Fifty only) during AY
2008-09 from M/s. Macro Infotech Ltd. (hereinafter referred to
as ‘Macro/MIL’) and claimed depreciation on it, which was
found to be bogus claim. Correspondingly, as per the respondent,
the depreciation on the said purchase was claimed as ‘written
down value’ in the return of income filed for AY 2009-10,
whereupon the instant complaint along with separate complaint
for the AY 2008-09 was filed by/on behalf of the respondent.
2.1. As per the respondent, during the course of
assessment proceedings for AY 2008-09, it was revealed that the
revisionists claimed depreciation on the purchase of software of
Rs. 4,24,24,550/- (Rupees Four Crores Twenty Four Lakhs
Twenty Four Thousand Five Hundred and Fifty only) fromCR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 3 of 31
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by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
15:07:18
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MIL/Macro, despite the fact that revisionists did not purchase
any software from MIL, controlled by one, Tarun Goyal, rather,
had only obtained bogus bill in respect of the said alleged
purchase. Markedly, as per the respondent, search proceedings
had been earlier conducted, wherein Sh. Tarun Goyal, admitted
in his statement recorded on oath under Section 132(4) IT Act
that he was providing accommodation entry and bogus bills to a
number of persons/entities. Correspondingly, further enquiries
are avowed to have revealed that MIL had no expertise in
software business, besides the said entity was not even found in
existence at the address, furnished. Concomitantly, revisionist no.
1 is proclaimed to have been unable to produce any evidence
regarding the use of software, allegedly obtained from MIL. It is
further narrated under the complaint that the revisionists were
issued questionnaire along with notice under Section 142(1) IT
Act, dated 19.08.2011 regarding MIL and its transactions with
the revisionists for the relevant assessment year and also to prove
the genuineness of the transaction made. However, it is the
respondent’s case that the revisionists failed to provide any
satisfactory answer/failed to establish the requisite information.
As per the respondent, the revisionists claimed expenditure of Rs.
4,24,24,550/- (Rupees Four Crores Twenty Four Lakhs Twenty
Four Thousand Five Hundred and Fifty only) as capital
expenditure during AY 2008-09 and claimed depreciation on the
opening written down value of the bogus software in AY 2009-
10, to a tune of Rs. 3,39,39,640/- (Rupees Three Crores Thirty
Nine Lakhs Thirty Nine Thousand Six Hundred and Forty only),
on which, depreciation of Rs. 1,35,75,856/- (Rupees One Crore
Thirty Five Lakhs Seventy Five Thousand Eight Hundred and
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 4 of 31
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signed by
ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.08.11
15:07:23
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Fifty Six only) was claimed at the rate of 40% (Forty percent) on
the opening written down value. Ergo, it is the case of the
respondent that by claiming false depreciation, the revisionists,
reduced their true income to tax and willfully attempted to evade
tax on the said amount. Consequently, the assessment was
framed under Section 153-A read with Section 143(3) IT Act
vide order dated 30.12.2011 at a total taxable income of Rs.
5,81,08,845/- (Rupees Five Crores Eighty one Lakhs Eight
Thousand Eight Hundred and Forty Five only), by adding the
false bogus depreciation claimed Rs. 1,35,75,856/- (Rupees One
Crore Thirty Five Lakhs Seventy Five Thousand Eight Hundred
and Fifty Six only). Concomitantly, it is avowed under the
complaint that by virtue of the said assessment, a tax demand
payable against the revisionists came to Rs. 53,75,814/- (Rupees
Fifty Three Lakhs Seventy Five Thousand Eight Hundred and
Fourteen only), as per the Demand Notice under Section 156 IT
Act.
2.2. Further, as per the respondent, it was subsequently
determined that the disallowance of depreciation to a tune of Rs.
1,35,75,856/- (Rupees One Crore Thirty Five Lakhs Seventy Five
Thousand Eight Hundred and Fifty Six only) was erroneously
computed, wrongly considering the rate of 40% (forty percent),
instead of 60% (sixty percent) rate. Ergo, vide order dated
11.05.2016, issued under Section 154 IT Act, the disallowance
on account of depreciation on software was re-worked at Rs.
1,78,18,311/- (Rupees One Crore Seventy Eight Lakhs Eighteen
Thousand Three Hundred and Eleven only). Relevantly, the
addition(s)/assessment order for AYs 2008-09, 2009-10, 2010-11
were challenged by the revisionists before the Commissioner of
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 5 of 31
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
15:07:27
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Income-Tax (Appeals) (hereinafter referred to as ‘CIT(A)’).
However, CIT (A) vide its order dated 18.07.2012, upheld the
disallowance of the depreciation claimed on the software,
allegedly purchased from MIL. Undeterred, the revisionists filed
a further appeal before the Income Tax Appellate Tribunal
(hereinafter referred to as ‘ITAT’), whereupon ITAT vide its
common order dated 10.03.2016 for AYs 2008-09, 2009-10 and
2010-11, also upheld the disallowance of depreciation on
software purchased by the revisionists. However, upon a further
challenge before the Hon’ble High Court of Delhi, the Hon’ble
High Court vide its order dated 19.07.2017, whilst, upholding the
assessment order for AYs 2009-10 and 2010-11, quashed the
order of ITAT for AY 2008-09. Notably, in the meanwhile,
penalty u/s 271(1)(c) IT Act was levied on the revisionists
pursuant to order dated 20.03.2014, for the revisionists’ willfully
concealing the particulars of their true income and furnishing
inaccurate particulars. Subsequently, show cause notices dated
08.08.2016 were issued by/on behalf of the respondent to the
revisionists, individually, which was responded by the
revisionists on 23.08.2016. Markedly, under their reply(ies) the
revisionists asserted that revisionist no. 1 had made genuine
purchase of software and that the ledger extracts in respect of
software purchase, copy of invoice, details of payment made to
the suppliers of software, etc., were duly filed in the course of
assessment and the disallowance of depreciation made was
illegal. Successively, upon the grant of sanction under Section
279(1) IT Act on 20.09.2016, the instant proceedings came to be
initiated before the Ld. Trial Court.
2.3. Markedly, upon such complaint being filed by the
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 6 of 31
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signed by
ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.08.11
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respondent before the Ld. Trial Court, vide order dated
11.04.2017, Ld. Trial Court took cognizance of the offences,
specified under the complaint and issued summons against the
accused, i.e., the revisionists herein. Subsequently, an application
came to be filed before the Ld. Trial Court by/on behalf of the
revisionists on 16.05.2017, seeking dropping of proceedings,
which was disposed of by the Ld. Trial Court vide order dated
18.04.2019/impugned order, inter alia under the following
observations;
“…1. Vide this order, I shall dispose of an
application filed on behalf of accused for dropping of
the proceedings in the present case.
2. It is stated that the Income Tax Appellate
Tribunal vide order dt. 31.03.17 was pleased to direct
deletion of penalties levied. Hence, no offence
survives under the Income Tax Act. Ld. Counsel for
accused argued that levy of penalties and prosecution
U/s 276 C are simultaneous and once the penalties
are cancelled on the ground that there is no
concealment, the quashing of prosecution U/s 276 C
is automatic. He further argued that after filing of the
application U/s 245(2) Cr.P.C., the CBDT vide its
circular No. 3/2018 dt. 11.07.18 revised its monetary
limits for filing of appeals by the department before
ITAT, Hon’ble High Courts and SLP before the
Hon’ble Supreme Court of India and as per the said
circular the monetary limits also applies
retrospectively to all the pending appeals. He further
argued that the complainant had filed an appeal
before the Hon’ble High Court of Delhi against the
order passed by Hon’ble ITAT whereby it was
pleased to quash the penalty imposed by CIT vide
order dt. 10.08.18 in terms of the CBDT
circular/notification no. 3/2018 and as per the said
notification/circular, no further appeals are
permissible or maintainable as per law, and hence the
order passed by Hon’ble ITAT has attained finality
and as such the present proceedings against the
applicants are liable to be dropped.
*** *** ***
9. Heard. Perused. In order dt. 19.07.17 of
Hon’ble High Court, the question involved was
“whether in the facts and circumstances of the case
the ITAT was correct in law in confirming the
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 7 of 31
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signed by
ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.08.11
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addition on account of the claim of depreciation on
software.” This question was framed in view of the
appeal filed by the accused no. 1 challenging the
order dt. 10.03.16 of ITAT for the Assessment year
2009-10 & 2010-11. In the order dt. 10.03.16 ITAT
had noted that there was no purchase of any
hardware corresponding to the extent of purchase of
the software and how the software was involved and
used was not demonstrated by the accused. It further
noted that some irregularities with respect to use of
the software and waiver of compensation for
destruction of software. ITAT for AY 2009-10 &
2010-11 confirmed the disallowance of depreciation
on software.
10. Hon’ble High Court after considering the
submissions of both the parties had held that as far as
assessment of year 2008-09 is concerned since there
was not notice to the accused U/s 143(3) of the Act
before 30.09.09 and in view of CBTD circular No.
549 dt. 31.10.89, the ITAT was in error in holding
that the assessment for AY 2008-09 should be treated
as pending and it should have been treated as final in
respect of which no scrutiny is to be started and
decided the appeal with respect to AY 2008-09 in
favour of the accused herein.
11. However, with respect to AY 2009-10 &
2010-11 Hon’ble High Court has held that ITAT has
reexamined every shred of evidence to come to a
clear conclusion that the assessee was not able to
demonstrate the genuineness of the purchase of the
software. It further noted the story of accused that
software has been handed over to Sobha was also not
substantiated by any documentary evidence or even
otherwise. It finally held that the concurrent opinion
of AO, CIT(A) and ITAT to the effect that purchase
of software was infact a bogus transaction and
accordingly not entitled to depreciation.
12. The argument of Ld. Counsel that in view of
the judgment of K.C. Builders the present
prosecution cannot continue is humbly rejected as in
the order dt. 19.07.17 of Hon’ble High Court has
categorically held that the concurrent opinion of AO,
CIT(A) and ITAT to the effect that purchase of
software was infact a bogus transaction and
accordingly not entitled to depreciation. No such fact
has been adjudicated in the judgment of K.C.
Builders (supra). Moreover, in K.C. Builders it was
specifically mentioned that if the acts of evasion of
tax could be described as culpable then the
prosecution to continue. In the present case there are
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 8 of 31
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signed by
ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.08.11
15:07:39
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clear averments supported with documentary
evidence of a willful attempt to evade tax and
making of false statement by the accused persons and
therefore, judgment of K.C. Builders is not
applicable. Similarly, the judgment of I.T.O. Vs.
Rajan & Co. is also not applicable.
13. In view of the above discussion, I am satisfied
that the present application is misconceived as it is
moved on wrong assumptions and is therefore not
maintainable. Same stands dismissed …”
(Emphasis supplied)
3. Ld. Counsel for the revisionists submitted that the
impugned order was passed by the Ld. Trial Court on mere
conjunctures, surmises and in contravention of the settled
cannons of law, deserving to be set aside at the outset, as
suffering with gross illegality. In this regard, Ld. Counsel further
submitted that the impugned order was passed by the Ld. Trial
Court on mere assumptions and no sound and/or cogent reasons
have been delineated under the said order. As per the Ld.
Counsel, the impugned order, demonstrates complete non-
application of mind by the Ld. Trial Court as there is no whisper
under the impugned order, qua the findings given by ITAT under
its detailed order dated 31.03.2017, dismissing the penalty
proceedings qua the revisionists and on the basis of which, the
application for dropping of prosecution was moved by/on behalf
of the revisionists before the Ld. Trial Court. Ld. Counsel further
submitted that the Ld. Trial Court, ought not have dismissed the
revisionists’ said application for the reason that vide its own
order dated 02.06.2017, Ld. Trial Court directed the respondent’s
counsel to clarify the finality, if any, attained by the order dated
31.03.2017 of ITAT, quashing penalty, admittedly passed before
the order of cognizance in respect of the complaints filed before
the Ld. Trial Court. Correspondingly, as per the Ld. Counsel for
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 9 of 31
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by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
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the revisionist, the respondent filed a copy of order dated
19.07.2017 in respect of the appeal filed by revisionist no. 1
before the Hon’ble High Court of Delhi and which was allowed
for AY 2008-09, however, upholding the assessment for AYs
2009-10 and 2010-11, and which errenously formed the basis of
dismissal of the revisionists’ application. Ld. Counsel for the
revisionist further asserted that the Ld. Trial Court erred in
distinguishing the decision of the Hon’ble Apex Court in K.C.
Builders & Anr. v. The Assistant Commissioner of Income Tax,
Crl. Appeal Nos. 212-213/1998, dated 28.01.2004: AIR Online
2004 SC 638, as not applicable to the facts of the present case. In
this regard, it was further submitted that the manner in which the
said dictate was interpreted by the Ld. Trial Court defeats the
purpose of the said dictate, besides acts as grossly prejudicial to
the interest of the revisionist. Correspondingly, it was submitted
by the Ld. Counsel that the Ld. Trial Court even failed to give
reason for not accepting the decision of the Hon’ble High Court
of Delhi in the case of ITO v. Rajan & Co., (2007) 291 ITR 345
(Del.), which clearly held that once the penalty for concealment
has been quashed, no prosecution lies. In this regard, Ld. Counsel
strenuously asserted that it is an admitted fact that penalty
proceedings, initiated against the revisionist in the instant case,
were taken up under the provision of IT Act and once the same
were finally dropped, the prosecution of the revisionist on the
same issue cannot be permitted, which fact has not been
considered by the Ld. Trial Court, while passing the impugned
order.
3.1. Ld. Counsel for the revisionists further submitted
that the Ld. Trial Court failed to appreciate the difference
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 10 of 31
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by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
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between the points of addition which was disallowed on the
assessment side in the case of the revisionists for the relevant
year and imposition of penalty. Correspondingly, as per the Ld.
Counsel, while passing the impugned order, not only were the
relevant orders of ITAT and the Hon’ble High Court of Delhi,
deliberately avoided, rather, as per the Ld. Counsel, the Ld. Trial
Court even failed to appreciate that no useful purpose would be
served by continuing revisionists’ prosecution, after quashing of
the penalty by the final fact-finding authority under the IT Act
and more particularly, after the withdrawal of the appeal by the
respondent from the Hon’ble High Court. In this regard, Ld.
Counsel vehemently asserted that under the instant fact and
circumstances the respondent would neither be able to examine
the penalty officer who imposed the penalty for alleged
concealment of income against revisionist no. 1 for the relevant
year nor the penalty order passed by him be exhibited as
evidence against the revisionists, making the entire prosecution
infructuous. Even otherwise, as per the Ld. Counsel, the order of
ITAT, dismissing/setting aside/dropping the penalty proceedings
against the revisionists was passed not on mere technicalities, as
otherwise contended by the Ld. Counsel for the respondent. On
the contrary, Ld. Counsel for the revisionists vehemently argued
that the said order was passed, after duly considering the merits
of the case and the material brought forth on record. Further, as
per the Ld. Counsel for the revisionists, there is a failure on the
part of the respondent to withdraw prosecution launched against
the petitioner after ITAT quashed the penalty imposed for alleged
concealment for all the relevant years and withdrawal of the
appeal filed against them before the High Court. As per the Ld.
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 11 of 31
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by ABHISHEK
GOYAL
ABHISHEK
Date:
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Counsel, not only have the said facts been not considered by the
Ld. Trial Court under the impugned order, though, specifically
brought by way of additional points, besides, the respondent
acted in utter violation of the instructions No. 5256 dated
25.10.1995 issued by the Central board of direct taxes, inter alia
directing the competent authorities/officers of the respondent to
bring the relevant facts and change of circumstances to the notice
of the departmental prosecution counsel, who, in turn, is
obligated to inform the same to the trial court of the changed
circumstances. Ergo, in light of the foregoing facts and
circumstances and submissions made, Ld. Counsel for the
revisionists entreated that the present petition/proceedings be
allowed and while setting aside the impugned order, the
prosecution/proceedings against the revisionists before the Ld.
Trial Court be directed to be dropped. In support of the said
contentions, reliance was placed upon the decision(s) in; Uttam
Chand v. ITO (1982) 133 ITR 909 (SC).
4. Per contra, Ld. SPP for the respondent submitted
that the impugned order was passed by the Ld. Trial Court after
due appreciation of the facts and circumstances of the present
case and judicial precedents, deserving no interference by this
Court. It was further submitted that all the relevant facts and
circumstances were duly considered by the Ld. Trial Court,
besides the impugned order was passed by the Ld. Trial Court,
wary of the settled judicial precedents and the material brought
forth. Ld. SPP for the respondent further submitted that no
illegality/infirmity can be attributed to the impugned order, so as
to subject the same to any interference by this Court under this
Court’s exercise of its revisional jurisdiction. In particular, Ld.
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by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
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SPP for respondent noted that the penalty proceedings were
dropped by ITAT vide its order dated 31.03.2017, merely on
technical grounds and not on merits. Ergo, as per Ld. SPP,
dropping of proceedings on the said ground does not arise.
Correspondingly, Ld. SPP for the respondent submitted that the
said order dated 31.03.2017 of ITAT could not be
contested/taken to its logical conclusion by further challenge
before the Hon’ble High Court of Delhi, owing to circular issued
by CBDT bearing no. 3/2018 dated 11.07.2018, which was given
retrospective effect. As per Ld. SPP, the said circular provides
for monetary limits for filing of appeal by the
respondent/department before ITAT, Hon’ble High Court and the
Hon’ble Supreme Court vis-à-vis tax effect involved in such
matters. Therefore, it was submitted that, though, the order of
ITAT was challenged before the Hon’ble High Court, however,
the same was withdrawn by virtue of the limitation imposed
under the said circular. Accordingly, Ld. SPP for the respondent
prayed that the instant petition deserved to be dismissed as
grossly malicious and amounting to abuse of process of law. In
support of the said contentions, reliance was placed upon the
decision(s) in; Radheyshyam Kejriwal v. State of West Bengal &
Anr., Crl. Appeal No. 1097/2003, dated 18.02.2011 (SC).
5. The arguments of Ld. Counsel for the revisionists
and that of Ld. SPP for the respondent have been heard as well as
the records, including the Ld. Trial Court records and the written
submissions filed as well as the case laws relied upon by the
parties, thoroughly perused.
6. Significantly, in order to appreciate the scope and
purview of analysis of the revisionists’ entreaty in the present
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ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
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petition, it would be apposite to outrightly make a reference to
the relevant provisions under law, in particular that under Section
397 Cr.P.C.1, as under;
“397. Calling for records to exercise of powers of
revision – (1) The High Court or any Sessions Judge
may call for and examine the record of any
proceeding before any inferior Criminal Court situate
within its or his local jurisdiction for the purpose of
satisfying itself or himself as to the correctness,
legality or propriety of any finding, sentence or
order, recorded or passed, and as to the regularity of
any proceedings of such inferior Court, and may,
when calling for such record, direct that the
execution of any sentence or order be suspended, and
if the accused is in confinement, that he be released
on bail or on his own bond pending the examination
of the record.
Explanation – All Magistrates, whether Executive
or Judicial, and whether exercising original or
appellate jurisdiction, shall be deemed to be inferior
to the Sessions Judge for the purposes of this sub-
section and of Section 398.
(2) The powers of revision conferred by sub-
section (1) shall not be exercised in relation to any
interlocutory order passed in any appeal, inquiry,
trial or other proceeding…”
(Emphasis supplied)
7. Pertinently, from a perusal of the aforesaid, it is
quite evident that the revisional jurisdiction of this Court can be
agitated either suo motu or an application of parties, solely in the
cases where there is a palpable error, non-compliance of the
provision of law, decision of Trial Court being completely
erroneous or where the judicial decision is exercised arbitrarily.
In this regard, reliance is placed upon the decision of the Hon’ble
1
Pari materia to Section 438 of Bharatiya Nagarik Suraksha Sanhita, 2023/BNSS, which provides; “438. Calling
for records to exercise powers of revision-(1) The High Court or any Sessions Judge may call for and examine the
record of any proceeding before any inferior Criminal Court situate within its or his local jurisdiction for the
purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order,
recorded or passed, and as to the regularity of any proceedings of such inferior Court, and may, when calling, for
such record, direct that the execution of any sentence or order be suspended, and if the accused is in confinement
that he be released on his own bond or bail bond pending the examination of the record.***Explanation–All
Magistrates, whether Executive or Judicial, and whether exercising original or appellate jurisdiction, shall be
deemed to be inferior to the Sessions Judge for the purposes of this sub-section and of Section 439.***(2) The
powers of revision conferred by sub-section (1) shall not be exercised in relation to any interlocutory order passed
in any appeal, inquiry, trial or other proceeding….” (Emphasis supplied).
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Supreme Court in Amit Kumar v. Ramesh Chander, (2012) 9
SCC 460, wherein the Hon’ble Court while explicating the
various contours of the provision under Section 397 Cr.P.C.
observed as under:
“12. Section 397 of the Code vests the court with
the power to call for and examine the records of an
inferior court for the purposes of satisfying itself as
to the legality and regularity of any proceedings or
order made in a case. The object of this provision is
to set right a patent defect or an error of jurisdiction
or law. There has to be a well-founded error and it
may not be appropriate for the court to scrutinise the
orders, which upon the face of it bears a token of
careful consideration and appear to be in accordance
with law. If one looks into the various judgments of
this Court, it emerges that the revisional jurisdiction
can be invoked where the decisions under challenge
are grossly erroneous, there is no compliance with
the provisions of law, the finding recorded is based
on no evidence, material evidence is ignored or
judicial discretion is exercised arbitrarily or
perversely. These are not exhaustive classes, but are
merely indicative. Each case would have to be
determined on its own merits.
13. Another well-accepted norm is that the
revisional jurisdiction of the higher court is a very
limited one and cannot be exercised in a routine
manner. One of the inbuilt restrictions is that it
should not be against an interim or interlocutory
order. The Court has to keep in mind that the
exercise of revisional jurisdiction itself should not
lead to injustice ex facie. Where the Court is dealing
with the question as to whether the charge has been
framed properly and in accordance with law in a
given case, it may be reluctant to interfere in exercise
of its revisional jurisdiction unless the case
substantially falls within the categories aforestated.
Even framing of charge is a much advanced stage in
the proceedings under the CrPC.”
(Emphasis supplied)
8. Similarly, the Hon’ble High Court of Delhi in V.K.
Verma v. CBI, 2022 SCC OnLine Del 1192 , in an akin context
noted as under;
“67. The revisional jurisdiction is not meant to
test the waters of what might happen in the trial. The
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Revisional Court has to consider the correctness,
legality or propriety of any finding inter se an order
and as to the regularity of the proceedings of the
court below. While doing so, the Revisional Court
does not dwell at length upon the facts and evidence
of the case, rather it considers the material only to
satisfy itself about the legality and propriety of the
findings, sentence and order and refrains from
substituting its own conclusion on an elaborate
consideration of evidence. In the instant case, the
Petitioner has failed to make out a case for exercise
of the revisional jurisdiction since there is no patent
error in the impugned order on the face of record.”
(Emphasis supplied)
9. Quite evidently, it may be noted from above that the
revisional jurisdiction of the higher court is quite limited and
cannot be exercised in a routine manner. In fact, as aforenoted,
the revisional Court can interfere only in the instances where an
order of trial court was passed, unjustly and unfairly. Further, it
is a settled law2 that trite law that in a case where the order of
subordinate Court does not suffer from any illegality , “merely
because of equitable considerations, the revisional Court has no
jurisdiction to re-consider the matter and pass a different order in
a routine manner.” Reference in this regard is made to the
decision in Taron Mohan v. State, 2021 SCC OnLine Del 312,
wherein the Hon’ble High Court of Delhi expounded as under;
“9. The scope of interference in a revision
petition is extremely narrow. It is well settled that
Section 397 CrPC gives the High Courts or the
Sessions Courts jurisdiction to consider the
correctness, legality or propriety of any finding inter
se an order and as to the regularity of the proceedings
of any inferior court. It is also well settled that while
considering the legality, propriety or correctness of a
finding or a conclusion, normally the revising court
does not dwell at length upon the facts and evidence
of the case. A court in revision considers the material
only to satisfy itself about the legality and propriety
of the findings, sentence and order and refrains from
2
Juned v. State of M.P., 2023 SCC OnLine MP 4458; and Dilip Damor v. State of M.P., 2024 SCC OnLine MP
958.
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substituting its own conclusion on an elaborate
consideration of evidence.”
(Emphasis supplied)
10. Ergo, in the background of the foregoing, however,
before proceeding further with the evaluation of the rival
contentions of the parties, this Court deems it pertinent here to
reproduce the relevant provisions under law/IT Act, germane for
the present discourse, as under;
“271. Failure to furnish returns, comply with
notices, concealment of income, etc.-(1) If the
Assessing Officer or the Commissioner (Appeals) or
the Principal Commissioner or Commissioner in the
course of any proceedings under this Act, is satisfied
that any person-***
*** *** ***
(c) has concealed the particulars of his income or
furnished inaccurate particulars of such income, or
(d) has concealed the particulars of the fringe
benefits or furnished inaccurate particulars of such
fringe benefits,
he may direct that such person shall pay by way
of penalty,-***
*** *** ***
(iii) in the cases referred to in clause (c) or clause
(d), in addition to tax, if any, payable by him, a sum
which shall not be less than, but which shall not
exceed three times, the amount of tax sought to be
evaded by reason of the concealment of particulars of
his income or fringe benefits or the furnishing of
inaccurate particulars of such income or fringe
benefits***
*** *** ***
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
imposable, or under reports his income, 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,-
(i) in a case where the amount sought to be
evaded or tax on under-reported income exceeds
twenty-five 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;
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(ii) in any other case, with rigorous imprisonment
for a term which shall not be less than three months
but which may extend to two years and with fine…
*** *** ***
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 twenty-five
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 two years and with fine.
*** *** ***
278B. Offences by companies-(1) Where an
offence under this Act has been committed by a
company, every person who, at the time the offence
was committed, was in charge of, and was
responsible to, the company for the conduct of the
business of the company as well as the company
shall be deemed to be guilty of the offence and shall
be liable to be proceeded against and punished
accordingly:
Provided that nothing contained in this sub-
section shall render any such person liable to any
punishment if he proves that the offence was
committed without his knowledge or that he had
exercised all due diligence to prevent the commission
of such offence.
(2) Notwithstanding anything contained in sub-
section (1), where an offence under this Act has been
committed by a company and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to any neglect on the
part of, any director, manager, secretary or other
officer of the company, such director, manager,
secretary or other officer shall also be deemed to be
guilty of that offence and shall be liable to be
proceeded against and punished accordingly.
(3) Where an offence under this Act has been
committed by a person, being a company, and the
punishment for such offence is imprisonment and
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ABHISHEK GOYAL
Date:
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fine, then, without prejudice to the provisions
contained in sub-section (1) or sub-section (2), such
company shall be punished with fine and every
person, referred to in sub-section (1), or the director,
manager, secretary or other officer of the company
referred to in sub-section (2), shall be liable to be
proceeded against and punished in accordance with
the provisions of this Act.
Explanation-For the purposes of this section,-
(a) “company” means a body corporate, and
includes-
(i) a firm; and
(ii) an association of persons or a body of
individuals whether incorporated or not; and
(b) “director”, in relation to-
(i) a firm, means a partner in the firm;
(ii) any association of persons or a body of
individuals, means any member controlling the
affairs thereof…”
(Emphasis supplied)
11. Pertinently, it is seen from a conjoint reading of the
aforesaid provisions that Section 276C of IT Act envisages a
prosecution in the instances where an assessee willfully attempts
to evade the chargeability or imposition of tax, penalty or interest
or willfully attempts to evade the payment of tax, penalty or
interest, as per mandated under law. In particular, the provisions
under Section 276C IT Act are meant to act as deterrent for
taxpayers from engaging in any fraudulent activities, directed
towards avoidance of tax paying liability. Correspondingly, it is
seen from the foregoing that Section 277 IT Act provides for
culpability of an individual/person, who, “…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…”. Reference
in this regard is made to the decision of the Hon’ble Punjab &
Haryana High Court in Sh. R.K. Jain (Raj Kumar Jain HUF) &
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ABHISHEK GOYAL
GOYAL Date:
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Ors. v. Commissioner of Income-Tax & Ors., Criminal
Miscellaneous No. 16294-M of 1995, dated 15.03.1996: (1996)
221 ITR 136 (P&H), wherein the Hon’ble Court, while
enunciating the scope of the said provisions, noted, as under;
“…The provisions of Section 276C of the Act
cover a wider field. Under Sub-section (1) of the said
section any person who willfully makes any attempt
in any manner whatsoever to evade any tax, penalty
or interest chargeable or imposable under the Act is
liable to be proceeded against. While the provisions
of Section 277 of the Act render the person liable for
prosecution under the 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…”
(Emphasis supplied)
12. Here, it is further pertinent to make a reference to
the provisions under Section 271(1)(c) of IT Act, germane for the
present discourse, which provides for liability in the form of
penalty against any person, who has concealed the particulars of
his income or furnished inaccurate particulars of such income. In
this regard, this Court deems it pertinent to make a reference to
the decision of the Hon’ble Bombay High Court in Ventura
Textiles Ltd. v. Commissioner of Income Tax, Mumbai, Income
Tax Appeal No. 958/2017, dated 12.06.2020: AIR Online 2020
Bom. 853, wherein the Hon’ble Court, while cogitating on the
various facets of the said provisions, remarked, as under;
“16. Since imposition of penalty is under Section
271(1)(c) of the Act, the same may be adverted to at
the outset. As per this provision, if the Assessing
Officer or the Commissioner (Appeals) or the
Principal Commissioner or Commissioner in the
course of any proceedings under the Act is satisfied
that any person had concealed the particulars of his
income or furnished inaccurate particulars of such
income, he may direct that such person shall pay by
way of penalty, in addition to the tax payable by him,
a sum which shall not be less than but which shall
not exceed three times the amount of tax sought to be
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ABHISHEK GOYAL
Date:
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evaded by reason of concealment of particulars of his
income or furnishing of inaccurate particulars of such
income.
17. The two key expressions in Section 271(1)(c)
of the Act are “concealment of particulars of his
income” and “furnishing inaccurate particulars of
such income”. These two expressions comprise of the
two limbs for imposition of penalty under Section
271(1)(c) of the Act. Gujarat High Court in the case
of Manu Engineering Vs. CIT, 122 ITR 306 and
Delhi High Court in Virgo Marketing P. Ltd. Vs.
CIT, 171 Taxmann 156 held that levy of penalty has
to be clear as to the limb for which penalty is levied.
If the Assessing Officer proposes to invoke the first
limb, then the notice has to be appropriately marked.
Similarly, if the Assessing Officer wants to invoke
the second limb then the notice has also to be
appropriately marked. If there is no striking off of the
inapplicable portion in the notice which is in printed
format, it would lead to an inference as to non-
application of mind. In such a case, penalty would
not be sustainable.
18. Supreme Court in Ashok Pai Vs. CIT, 292
ITR 11 observed that concealment of income and
furnishing of inaccurate particulars of income in
Section 271(1)(c) of the Act carry different
connotations.”
(Emphasis supplied)
13. Quite evidently, in the aforenoted dictate, the
Hon’ble Court accentuated the importance of issuing a proper
notice, by the concerned authority, articulating the ground for
levy of proposed penalty, i.e., whether on the count of
‘concealment of particulars of his income’ or on the ground of
‘furnishing inaccurate particulars of such income’, failing which,
it has been held that such proceedings must fail.
14. Consequently, with the foregoing understanding, this
Court would now proceed with the evaluation of the merits of the
present case as well as the rival contentions of the revisionists
and the respondent. At the outset, this Court deems it pertinent to
reiterate that Ld. Counsel for the revisionists has fervently argued
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 21 of 31
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that once ITAT set aside the order of penalty under Section
271(1)(c) of IT Act vide order dated 31.03.2017, the prosecution
of the revisionists in the instant case for the offence under
Section 276C/277 IT Act, must necessarily fail. In this regard, as
aforenoted, Ld. Counsel placed reliance on the decision of the
Hon’ble Apex Court in K.C. Builders & Anr. v. The Assistant
Commissioner of Income Tax, (Supra.), wherein the Hon’ble
Court inter alia, observed as under;
“…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 supercedes 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 the Tribunal has set aside the
order 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 toCR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 22 of 31
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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…”
(Emphasis supplied)
15. However, in order to properly appreciate the
aforenoted contention of Ld. Counsel for the revisionists, this
Court deems it pertinent to reproduce the relevant extracts from
order dated 31.03.2017 of ITAT in Chintels India Ltd. v. ACIT;
ITAT No. 3791/Del/2016 (AY 2008-09), ITAT No.
3792/Del/2016 (AY 2009-10) & ITAT No. 3793/Del/2016 (AY
2010-11), wherein, ITAT, while setting aside the order of penalty
against the revisionists inter alia remarked as under;
“…5.2 Reverting to the facts of the present case,
the AO, in the assessment orders, in the notices
issued u/s 274 and in the penalty orders, has not
stated the exact limb (concealment of particulars of
income or furnishing of inaccurate particulars of
income) under which the penalty is initiated and
levied. We have very carefully considered this
aspect. We have no hesitation in accepting assessee’s
contention that nowhere has the exact limb of penalty
been specified. The Hon’ble Karnataka High Court in
case of CIT vs. Manjunatha Cotton and Ginning
Factory & Ors. (Supra) dealt with the identical issue
threadbare and came to the following conclusion-***
*** *** ***
5.3. Respectfully following the law laid down by
Hon’ble High Court, we are of the considered view
that when the assessee has not been specifically made
aware of the charges leveled against him as to
whether there is a concealment of income or
furnishing of inaccurate particulars of income on his
part, the penalty u/s. 271(1)(c) of the Act is not
sustainable. We are also supported in our conclusion
by the Hon’ble Karnataka High Court’s decision in
the case of SSA Emerald Meadows (supra) against
which the Department’s SLP was dismissed by the
Hon’ble Apex Court. In reaching this conclusion we
also find support from the decision of the Hon’ble
Apex Court in the case of Ashok Pai reported in 292CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 23 of 31
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GOYAL Date:
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ITR 11 (relied upon in Manjunath Cotton Ginning
Factory (Supra) wherein it has been observed that
concealment of income and furnishing of inaccurate
particulars of income carry different
meanings/connotations.
5.4 We would also like to underline the settled
position of law that penalty proceedings are
independent of assessment proceedings and that a
mere confirmation of addition cannot be the sole
ground to levy penalty. In the penalty orders, the AO
has himself observed that the entire proceedings of
assessments were based on a) post search enquiries
b) statement of Shri Tarun Goyal, which have been
the key factors to impose the penalty u/s 271(1)(c). In
the present appeals, it is undisputed that no
incriminating material was unearthed during
assesssee’s search u/s 132 of the Act, that no
independent enquiry and examination took place
during assessment proceedings qua Shri Tarun Goyal
and Micro Infotech Ltd, that only post search
enquiries were made the basis of the entire
assessment and penalty proceedings/orders, that no
cross examination of Shri Tarun Goyal took place,
that no effort was made to find out the status of the
supplier independently, that the assessee’s contention
that software purchase was genuine was discounted
on the basis of preponderance of probabilities and
inferences, that no material was brought on record to
establish that cash found its way back to the coffers
of the assessee. It is apparent that no independent
inquiry was made from the concerned party by
issuing notices u/s 133(6)/131 and the entire
foundation is laid on post search enquiries, search
and seizure operation of Shri Tarun Goyal and
statement of Shri Tarun Goyal. On an overall
consideration of all these facts, we are inclined to
agree with the Ld. AR’s argument that the present
case may lie in the realm of “facts not proved” but
cannot fall in the realm of “facts disproved”. We
have gone through the orders of the co-ordinate
Bench of the ITAT in the quantum proceedings
confirming the additions. However, since the scales
are different in penalty and quantum proceedings and
penalty cannot be automatic to the confirmation of
addition in the quantum proceedings, we are
disinclined to agree with the contention of the
department that the confirmation of the quantum by
the ITAT would automatically result in confirmation
of the penalty. We are of the considered opinion that
mere probability can, at most, be the basis of addition
but same cannot be good enough in penalty
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proceedings. Further, the findings in the quantum
order of the ITAT on merits do not reflect any
incriminating material unearthed from the search of
the assessee. This fact assumes significance because
assessments were framed u/s 153A r/w S. 143(3) of
the Act. Therefore, we accept the arguments of the
Ld. AR and direct the AO to delete the penalties in
all the three years…”
(Emphasis supplied)
16. Germane for the purposes of present discourse to
refer the relevant extracts from the decision of the Hon’ble
Supreme Court in Radheyshyam Kejriwal v. State of West
Bengal & Anr., (Supra.), wherein the Hon’ble Court, while
dealing with the dichotomy of two sets of dictates governing
concurrent adjudication and criminal proceedings, explicated the
law, in the following terms;
“…19. We find substance in the submission of
Mr. Sharan. There may appear to be some conflict
between the views in the case of Standard Charted
Bank (supra) and L.R. Melwani (supra) holding that
adjudication proceeding and criminal proceeding are
two independent proceedings and both can go on
simultaneously and finding in the adjudication
proceeding is not binding on the criminal proceeding
and the judgments of this Court in the case of Uttam
Chand (supra), G.L. Didwania (supra) and K.C.
Builders (supra) wherein this Court had taken a view
that when there is categorical finding in the
adjudication proceeding exonerating the person
which is binding and conclusive, the prosecution
cannot be allowed to stand. Judgments of this Court
are not to be read as statute and when viewed from
that angle there does not seem any conflict between
the two sets of decisions. It will not make any
difference on principle that latter judgments pertain
to cases under the Income Tax Act. The ratio which
can be culled out from these decisions can broadly be
stated as follows:-
(i) Adjudication proceeding and criminal
prosecution can be launched simultaneously;
(ii) Decision in adjudication proceeding is not
necessary before initiating criminal prosecution;
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(iii) Adjudication proceeding and criminal
proceeding are independent in nature to each
other;
(iv) The finding against the person facing
prosecution in the adjudication proceeding is not
binding on the proceeding for criminal
prosecution;
(v) Adjudication proceeding by the
Enforcement Directorate is not prosecution by a
competent court of law to attract the provisions of
Article 20 (2) of the Constitution or Section 300
of the Code of Criminal Procedure;
(vi) The finding in the adjudication
proceeding in favour of the person facing trial for
identical violation will depend upon the nature of
finding. If the exoneration in adjudication
proceeding is on technical ground and not on
merit, prosecution may continue; and
(vii) In case of exoneration, however, on
merits where allegation is found to be not
sustainable at all and person held innocent,
criminal prosecution on the same set of facts and
circumstances cannot be allowed to continue
underlying principle being the higher standard of
proof in criminal cases.
In our opinion, therefore, the yardstick would be
to judge as to whether allegation in the adjudication
proceeding as well as proceeding for prosecution is
identical and the exoneration of the person concerned
in the adjudication proceeding is on merits. In case it
is found on merit that there is no contravention of the
provisions of the Act in the adjudication proceeding,
the trial of the person concerned shall be in abuse of
the process of the court…”
(Emphasis supplied)
17. Understandably, it is seen from above that the law is
now settled that there is no bar to the simultaneous initiation of
the criminal prosecution and adjudication proceedings. However,
the Hon’ble Apex Court unambiguously noted that where the
party facing such concomitant proceedings is exonerated in
adjudication proceeding on mere technical grounds/consideration
and not on merits, criminal prosecution may continue. However,
where such exoneration is premised/based on the merits, i.e.,
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where the allegation is found to be not sustainable at all and
person held innocent, criminal prosecution on the same set of
facts and circumstances cannot be allowed to continue. Ergo, in
light of the foregoing, when the observation of ITAT under order
dated 31.03.2017 are conscientious analyzed, this Court is of the
considered opinion that the penalty proceedings against the
revisionists were abated/dropped on the ITAT’s observation
regarding non-compliance of the mandate in law. In particular, as
aforenoted, ITAT, under the said order explicitly remarked that
the notice issued under Section 274 IT Act, did not delineate the
exact limb, i.e., ‘whether concealment of particulars of income or
furnishing of inaccurate particulars of income by the revisionist’ ,
under which circumstances, the penalty was initiated and levied.
In fact, ITAT, specifically remarked under the said order, “…the
assessee has not been specifically made aware of the charges
leveled against him as to whether there is a concealment of
income or furnishing of inaccurate particulars of income on his
part, the penalty u/s. 271(1)(c) of the Act is not sustainable…”
Clearly, this Court reiterates that the finding of ITAT, setting
aside the order of penalty were premised on an observation that
the assessee/revisionists were not made aware of the charges
levelled against them under Section 271(1)(c) of IT Act under the
notice, belying the entire proceedings.
18. Indisputably, in the concluding remarks of the said
order, ITAT made reference to lack of independent enquiry and
examination proceedings during assessment, however, even then
the conclusion of ITAT accentuated that even under such
circumstances, the instant case fell in the realms of “facts not
proved”, in variance to “facts disproved”. Ergo, under such
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 27 of 31
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.08.11
15:08:59 +0530
circumstances, such finding of ITAT, in the considered opinion
of this Court, cannot be deemed to be determination and/or
exoneration of the revisionists on the merits of the case, where
the allegations were held to be not sustainable at all and the
revisionists were held to be innocent by ITAT so as to abate
criminal prosecution. On the other hand, this Court is in
consonance with the finding of the Ld. Trial Court under the
impugned order that in the order dated 19.07.2017 of the Hon’ble
High Court in case bearing; Chintels India Ltd. v. Deputy
Commissioner of Income Tax-Circle8; ITA 581/2016, ITA
707/2016 & ITA 731/2016, being appeals against order dated
10.03.2016 passed by ITAT for AYs 2008-09, 2009-10 and
2010-11, specifically observed and held that in so far as AYs
2009-10 and 2010-11 are concerned, concurrent opinions of AO,
CIT(A) and ITAT to the effect that purchase of software was in
fact a bogus transaction and accordingly not entitled to
depreciation, would continue to determine the instant
proceedings. Apposite at this stage to reproduce the relevant
extracts from the said order of the Hon’ble High Court of Delhi
as under;
“…AY 2008-09
19. The above submissions have been considered.
As far as AY 2008-09 is concerned, the fact that
there was no notice sent to the Assessee under
Section 143(3) of the Act before the deadline, i.e.,
30th September, 2009, is not in dispute. The CBDT
Circular No. 549 dated 31st October, 1989 deals with
such a situation. Para 5.13 thereof reads as under:
*** *** ***
22. The inevitable conclusion, therefore, in the
present case, is that the ITAT was in error in holding
that the assessment for AY 2008-09 should be treated
as ‘pending’ whereas in terms of the above CBDT
circular it should be treated as final in respect of
which no scrutiny are to be started.
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 28 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:09:02 +0530
23. Consequently as far as ITA No. 581/2016 is
concerned the question framed by this Court on 27th
January, 2017 is answered in the affirmative, i.e., in
favour of the Assessee and against the Revenue. The
impugned order of the ITAT to the extent it negatives
the plea of the Assessee is hereby set aside and the
appeal is allowed.
AYs 2009-10 and 2010-11
24. Turning to the appeals for AYs 2009-2010
and 2010-11 the short question involved is whether
the Assessee was able to demonstrate that it was the
Assessee which, in fact, purchased the software for a
value of over Rs. 4.24 crore from MIL whose address
has not been able to be verified by the AO.
25. The Court finds that the ITAT has re-
examined every shred of evidence to come to clear
conclusion that the Assessee was not able to
demonstrate the genuineness of the purchase
software. Further the story put forth by the Assessee
that the software having been handed over to Sobha
was also not substantiated by any documentary
evidence or even otherwise. On facts, therefore, the
concurrent opinions of the AO, CIT(A) and the ITAT
to the effect that the purchase of the software was, in
fact, a bogus transaction not entitled to depreciation
cannot be said to suffer from any legal infirmity
warranting interference.
26. In ITA Nos. 707/2016 & 731/2016, the
question framed is answered in the negative, i.e., in
favour of the Revenue and against the Assessee.
These two appeals of the Assessee are accordingly
dismissed…”
(Emphasis supplied)
19. Consequently, in light of the foregoing, when the
facts of the present case are scrupulously analyzed in light of the
aforesaid observations of the Hon’ble High Court in its order
dated 19.07.2017 vis-à-vis finding of ITAT under its order dated
31.03.2017, in the considered opinion of this Court, Ld. Trial
Court did not commit any illegality and/or impropriety under the
impugned order, while dismissing the revisionists’ application
seeking dropping of proceedings/criminal prosecution under
Sections 276C(1)/277 read with Section 278B of IT Act.
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 29 of 31 Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.08.11 15:09:06 +0530
Needless to reiterate that the finding of ITAT under order dated
31.03.2017 setting aside the order of penalty qua the revisionists
is not premised on the merits of the case. On the contrary, vide
order dated 19.07.2017 the Hon’ble High Court decidedly
remarked that in respect of AYs 2009-10 and 2010-11, ITAT re-
examined every shred of evidence to come to a clear conclusion
that the assessee/revisionist was not able to demonstrate the
genuineness of the purchase of the software. Correspondingly, in
the said order, the Hon’ble High Court concurred that the
revisionists version that the software had been handed over to
Sobha was also not substantiated by any documentary evidence
or even otherwise and that the concurrent opinions of AO,
CIT(A) and ITAT to the effect that purchase of software was in
fact a bogus transaction and accordingly not entitled to
depreciation. Ergo, under such circumstances, Ld. Trial Court, in
the considered opinion of this Court, did not commit any
irregularity/illegality in dismissing the revisionists’ application
under Section 245 Cr.P.C., seeking dropping of proceedings
before the Ld. Trial Court.
20. Conclusively, in light of the aforesaid discussion,
this Court unswervingly reiterates that the Ld. Trial Court did not
commit any illegality and/or impropriety under the impugned
order, while dismissing the revisionists’ application/entreaty for
dropping proceedings against them for the aforenoted offence, in
light of the facts and circumstances, arguments addressed,
documents and the material placed on record, as well as judicial
dictates. Accordingly, in the considered opinion of this Court, the
present revision petition deserves to be dismissed as devoid of
merits and is hereby dismissed. Correspondingly, the order
CR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 30 of 31
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.08.11
15:09:10
+0530
18.04.2019, passed by Ld. ACMM (Special Acts), Central, Tis
Hazari Courts, Delhi in case bearing; ‘ Income Tax Office v.
Chintels India Ltd. & Ors., CC No. 3775/2017’, emanating in a
complaint proceedings, initiated in terms of the provisions under
Sections 276C(1)/277 read with Section 278B of IT Act,
dismissed the application moved on behalf of the revisionists,
seeking dropping of proceedings in the present case, is hereby
upheld/affirmed. Apposite at this stage to further note that,
though, this Court holds highest regard for the decisions relied
upon by Ld. Counsel for the revisionists, however, the same
would not, in the considered opinion of this Court come to the
aid/rescue of the case put forth by the revisionists in the manner
as prayed, as the facts and circumstances of the present case are
clearly, distinguishable.
21. Trial Court Record along with a copy of this
order/judgment be sent to the Ld. Trial Court concerned with
directions to proceed as per law.
22. Revision file be consigned to record room after due
compliance. Digitally
signed by
ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.08.11
15:09:17
+0530Announced in the open Court (Abhishek Goyal)
on 11.08.2025. ASJ-03, Central District,
Tis Hazari Courts, DelhiCR No. 401/2019 Chintels India Ltd. & Ors. v. Income Tax Office. Page 31 of 31