Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
NEENA BANSAL KRISHNA, J.
Raj Kumar Kedia, S/o Late Shri S.N. Kedia - Appellant
Versus
Income Tax Office - Respondent
Crl.M.C. 222 of 2018, Crl. M.C. 219 of 2018
Decided on : 23-07-2025
| Table of Content |
|---|
| 1. petitions for quashing criminal complaints under income tax act. (Para 1 , 2) |
| 2. definition and implications of accommodation entries. (Para 3 , 4 , 5 , 6) |
| 3. undisclosed income and tax evasion. (Para 7 , 8 , 9) |
| 4. legal implications of retracting statements. (Para 10 , 11 , 12) |
| 5. challenge to the jurisdiction of sanctioning authority for prosecution. (Para 18 , 19 , 20) |
| 6. nature of jurisdictional errors in sanctions. (Para 23 , 24 , 25) |
| 7. arguments on the timing of the criminal complaint. (Para 26 , 27 , 28 , 29) |
| 8. necessity for due process before prosecution. (Para 33 , 35) |
| 9. interpretation of legal terms in income tax act. (Para 38 , 40 , 41 , 42) |
| 10. discussion of jurisdiction in filing criminal complaints. (Para 46 , 47 , 48) |
| 11. final ruling dismissing the petitions. (Para 55 , 56) |
JUDGMENT :
NEENA BANSAL KRISHNA, J.
1. The above two Petitions under Section 482 Cr.P.C. read with Article 227 of the Constitution of India have been filed for quashing of Criminal Complaint No.516654/2016 and Complaint No. 516655/2016 under Section 276-C(1) and 277-A Income Tax Act, 1961 for the Assessment Year 2015- 16 and Order dated 14.09.2017 passed in Criminal Revision Petition No.407/2017 of learned ASJ upholding the Order of framing of Charge dated 28.06.2017 passed by learned ACMM.
2. Briefly stated, a search and seizure action under Section 132 Income Tax Act, 1961, on the basis of Warrants of Authorization issued by Director of Income Tax (INV)-1, Delhi, was conducted on 13.06.2014 at the premises of Petitioner/Raj Kumar Kedia at P-12, Hauz Khas Enclave, Second Floor, New Delhi and some incriminating documents were seized. The search action commenced on 13.06.2014 and concluded on 17.06.2014. Panchnama was prepared on the spot in respect of search and seizure action carried out in the aforesaid premises.
3. The statement of the Petitioner was recorded on Oath under Section 132(4) of the I.T. Act on 13.06.2014 and 17.06.2014. The Petitioner in his statement, admitted that in addition to his regular business activity of Share Broking, he was involved in the activity of providing accommodation entries to various beneficiaries and also explained in detail the modus operandi followed by him in providing such entries.
4. As per the Petitioner, Accommodation Entry is a financial transaction between two parties, whereby one party enters the transaction in his books for accommodating the other party in lieu of cash of equal amount and commission charged over and above at a certain fixed percentage of giving such Accommodation Entry, which may be a long term or a short term Accommodation entry.
5. The beneficiary, on the instructions of entry Operator, buys the share of a listed paper Company at a very low price and then the price of the shares is jacked up to a desired level through dummy persons. Then the beneficiary is asked to provide cash which can be routed through these shares in the hands of dummy paper entities. The beneficiary then is asked to sell the shares at a specific price and a specific time. It can be an OT entry, i.e. one time entry in the form of share capital, share premium and selling of Private and Listed Companies.
6. The subsequent search action under Section 132 and Survey under Section 133-A IT Act was carried out in the case of ten other beneficiaries. During Search Survey, those beneficiaries admitted that they had taken Accommodation Entries of various amounts mentioned in their respective Accounts in different names, from the Petitioner.
7. It was claimed in the Complaint that the accused had generated huge unaccounted income by way of commission in unaccounted cash from various beneficiaries for providing accommodation entries to them. It has transpired that he had dealt with cash of over Rs.700 crores, over Rs.104 crores during Financial Year 2014-15 relevant to Assessment Year 2015-16 and arranged Accommodation entries of bogus long term capital gain thereon.
8. As per the statement of the Accused, the co
AI
The court upheld the validity of the prosecution's sanction and found the complaints valid, confirming that pending assessments do not impede criminal complaints under tax evasion laws.
Prosecution under S.276CC requires jurisdictional Assessing Officer, regular assessment, and penalty initiation; absent these, quashed as abuse of process.
An annulled penalty under the Income Tax Act negates the foundation for criminal prosecution for concealment unless reversed, thus quashing ongoing prosecution.
(1) Wilful tax evasion – Mens rea of assessee is required to be proved – In absence, lodging such prosecution would result into futility.(2) Wilful tax evasion – Circulars issued by Revenue are bindi....
Criminal prosecution requires credible evidence; unauthenticated foreign documents are insufficient to establish a prima facie case of tax evasion under the Income Tax Act.
The main legal point established in the judgment is that the Settlement Commission had exclusive jurisdiction from the date of the petitioner's application, and the penalty imposed was without jurisd....
The main legal point established is that the failure to remit tax, without evidence of a wilful attempt to evade tax, does not constitute an offence under Section 276 C (2) of the Income Tax Act.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
