Criminal prosecution requires credible evidence; unauthenticated foreign documents are insufficient to establish a prima facie case of tax evasion under the Income Tax Act.

JUDGMENT :

NEENA BANSAL KRISHNA, J.

1. These two petitions have been filed under Section 482 and Section 483 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the "Cr.P.C"), read with Article 227 of the Constitution of India, seeking quashing of the Criminal Complaints No. 536622/2016 (old Complaint Case No. 177/4/16) and Complaint No. 517460/2016 (old Complaint Case No. 179/4/16), initiated against the Petitioner under Sections 276C(1)(i), 276 (D) and 277(1) Income Tax Act, before the Court of the ACMM, Delhi.

2. The main ground for seeking quashing is that the Assessment Order dated 23.03.2015 which was the very foundation of the Criminal Complaints, has been set aside in Appeal by the Income Tax Appellate Tribunal (ITAT) and nothing survives for prosecution of the Complaints.

3. Briefly stated, Petitioner filed his original Income Tax Return for the year 2006-07 and 2007-08, by declaring his total income for the said years. The original Income Tax Return for the year 2006-07 and 2007-08, got finalized and even Refund was given to the Petitioner under Section 143(1) Income Tax Act, 1961 (hereinafter referred to as the IT Act) on 25.05.2007.

4. An information was received from the French Government under the Double Taxation Avoidance Agreement (DTAA) in 2011, indicating that the Petitioner along with certain others, held bank accounts in HSBC Private Bank (Suisse), SA, Switzerland. The profile of the Petitioner was also linked to four other accounts, namely: Portland Holdings Ltd.; Shagun 21 (formerly Shagun, until 25.11.2005); Willaston Investments Ltd., and Chotuman 21 (formerly Chotuman, until 25.11.2005), in which he was shown as the beneficial holder.

5. Further, the account of CHOTUMAN-21 where he is shown as the Account holder, had names of his brother and wife as Attorney and Account Holder 2, respectively. Additionally, in the Account of Shagun 21 in which he has the right to inspection, his friend Vivek Chadha is shown as the Account Holder. These Accounts could not have been opened, without his prior permission. It was contended that no steps have been taken by the Petitioner to verify the statements in the HSBC Accounts.

6. Based on the aforesaid information received under DTAA, a Search under Section 132 IT Act was carried out on the premises of the Petitioner on 20.01.2012 but no incriminating material was found qua him.

7. Certain Independent communication was also sought by the Authorities through FT &TR Division of the Central Board of Direct Taxes. Once that communication was received, the taxability of the income on the basis of subsequent Documents/ communications for the said period also became liable for fresh Assessment.

8. The Petitioner was confronted with the aforesaid documents and his Statements were recorded under Section 132 (4) IT Act, in which he denied having any Account in the HSBC Bank.

9. Notice dated 17.10.2012 under Section 153A IT Act, was sent requiring the Petitioner to file his Return within 15 days from the date of service. The Petitioner in his Reply to the said Notice dated 05.11.2012, declared the same income as was previously disclosed in his earlier Returns.

10. Thereafter, Notice was issued under Section 142 (1) IT Act on 18.07.2013, requiring the Petitioner to file certain information in respect of the HSBC Bank and to sign the Consent-Waiver Form to procure details of his Bank account from the Swiss Bank. It was contended that no prejudice would have been caused to the P