The results of penalty and reassessment proceedings do not bar criminal prosecution for specified offences under the Income-tax Act.

RADHAKRISHNA RAO, J.

( 1 ) THE 1st petitioner is a registered firm carrying on manufacture on manufacture of biscuits in the name and style of "m/s. Ashok Biscuit Works". Petitioners Nos. 2 to 4 are partners. The petitioner firm filed returns for the years 1976-77, 1977-78 and 1978-79. On 20/01/1979, the Income-tax officer issued a letter to the 1st petitioner-firm pointing out that the sales aggregating to Rs. 2,29,249 properly accountable as sales for the previous year ending 31/03/1976, have not been accounted for under "sales". The 1st petitioner-firm was requested to offer its objections, if any, for treating the sum of Rs. 2,29,249 as its concealed income for the assessment year 1976-77. The 1st petitioner-firm was requested to file its reply by 27/01/1979. On 7/02/1979, the 1st petitioner-firm filed a revised return of income disclosing a total income ofrs. 2,88,434. 62 along with a letter stating that the reasons for filing the revised return and the reply to the letter dated 20/01/1979, would be filed on 9/02/1979. On Feb 15/02/1979, the 1st petitioner-firm a reply. Two sworn statements were recorded from accused. No. 3, one on 24/09/1983, and the other on 2/11/1983. The assessment was completed on 30/03/1979, determining the income at Rs. 3,40,347 by taking into considerations the revised return filed on 7/03/1979. The income-tax officer, by his order dated 17/12/1983 levied penalty for the three assessment years under section 271 (1) (c) of the Income-tax Act for concealment of the income. The assessed succeed in the penalty proceedings finally before the Income-tax Appellate Tribunal and a revised reference was also asked for and the same was rejected.

( 2 ) BEFORE the datermination by the Income-tax Appellate Tribunal, complaints have been filed in C. C. Nos. 126, 127 and 128 of 1986 for the concealment of income of Rs. 1,13,365, Rs. 2,85,921 and Rs. 4,70,849 for the assessment years 1976-77, 1977-78 and 1978-79, respectively, against the petitioner-firm under section 276c (1) of the Income-tax Act for evasion of tax, under section 277 for making false statement in verification and under sections 193 and 196 of the Indian Penal Code for giving false evidence. As the petitioner-firm succeeded in the penalty proceedings before the Income-tax Appellate Tribunal, three applications were filed before the Special Judge for Economic Offences under sections 482 and 245, Cr. P. C. , to quash the proceedings. The Special Judge dismissed the three petitions by a common order dated 22/08/1986, with an observation that the finding of the Income-tax Appellate Tribunal that there is no case for imposing penalty cannot be a ground for quashing the proceedings, keeping in mind the view of the Allahabad High Court in Dr. D. N. Munshi v. Singh (N. B.) [1978] 112 ITR 173 and that of the Supreme Court in P. Jayappan v. S. K. Perumal, First ITO [1984] 149 ITR 696. Against those orders, the present petitions have been filed under section 482, Cr. P. C. , to quash the proceedings in C. C. Nos. 126, 127 and 128 of 1986 pending on the file of the Special Judge for Economic Offences, Hyderabad.

( 3 ) SHRI Malla Reddy, learned counsel for the petitioner-firm, contended that though the Department has got a right to initiate criminal proceedings at the inception, they cannot be pursued further in view of the finding of the Tribunal that there are bona fides in not disclosing the same at the earliest point of time. Its is also contended that when the statute has given a right to submit revised returns and when such returns have been filed in time and when they were accepted and the same was confirmed by the Tribunal and as the Tribunal also has upheld the plea of the petitioner that no penalties have to be levied, the proceedings before the Special Judge for Economic Offences should not be allowed to go on.

( 4 ) THE point that arises for consideration is whether prosecution for offence under sections 276c and 277 of the Income-tax Act and sect

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