The court established that there was no power vested with the Income Tax Department to launch a prosecution for undisclosed income for the block assessment period between 1.7.1995 to 1.1.1997, as per the law laid down by a learned Coordinate Bench.

JUDGMENT :

1. Heard learned Advocate Mr.Manish J. Shah appearing with learned Advocate Mr.Premal Joshi for the applicants, learned Advocate Mr.Nikunt Raval appearing with learned Advocate Mrs.Kalpana Raval for respondent Department and learned APP Ms.M.D. Mehta for the respondent State in all the four applications.

2. Since facts and law involved in the all the four applications are common and similar in nature, they are disposed of by this common judgement. For the sake of convenience, Criminal Misc. Application No.3438 of 2004 is taken as the lead matter for deciding the issues involved.

3. Facts :-

3.1. The premises of the applicant No.1 – a Public Limited Company and its Directors (other applicants) were raided on 1.12.1995 and search was carried out by the respondent Income Tax Department under Section 132 of the Income Tax Act and the search was concluded on 5.1.1996. It appears that pursuant to a Notice under Section 158BC of the Income Tax Act, the applicant had filed return for the Block Period 1.4.1985 to 5.1.1996, declaring undisclosed income of Rs.20,31,055/- on 26.2.1996. The Assessing Officer vide an order dated 31.1.1997, determined the undisclosed income at Rs.62,61,623/-. The applicants herein filed an Appeal before the Income Tax Appellate Tribunal (‘ITAT’ for short) and vide order dated 18.5.1998, the Tribunal had granted certain reliefs and whereas few additions have been set aside for re-adjudication. It appears that pursuant to the re-adjudication, the undisclosed income was computed as Rs.23,36,144/-.

3.2. The applicants thereafter received a show-cause notice from the Department, asking it to show cause as to why the applicants should not be prosecuted for not showing the amount of Rs.20,31,055/- in the returns under Section 139 of the Act for the respective years. The applicants submitted their reply dated 7.1.1999 to the show cause notice inter alia contending that Block Assessment Period is a single unit of Assessment comprising a period of 10 years and hence, income taxed in a Block Assessment could not be stated to be related to any particular year, that there was no finding of any concealment in the regular assessment orders and, therefore, there could not be any prosecution in respect of the regular assessment, more particularly on account of Section 158BF of the Act, no interest or penalty could be levied for the block returns filed, hence, as a necessary corollary the prosecution could not have been launched. The respondent No.2 had sanctioned the prosecution by order dated 8.6.2000 under Section 279(1), stating that all the applicants had knowledge about the concealment and thereby committed offence under Section 276C(1), Section 277 read with Section 278B of the Act, and Criminal Case No.2707 of 2000 has been launched in the Court of learned Chief Judicial Magistrate, Surat, which is sought to be quashed by the present applicants in the present Application.

4. Learned Advocate Mr.Shah, at the outset, would submit that the issue raised in the present group of applications stand covered by decision of a learned Coordinate Bench (Coram: Mr. Justice Anant S. Dave) in Criminal Misc. Application No.3437 of 2004 dated 26.10.2018. Learned Advocate would submit that the said application was part of the present group and whereas issues decided by the learned Coordinate Bench are the very selfsame issues raised in the present applications. Learned Advocate would, therefore, submit that based upon the law laid down by the learned Coordinate Bench, the present applications may be allowed.

4.1. Learned Advocate Mr.Shah for the applicants would submit, on merits, that the complaint is in respect of the returns under Section 139 and assessments under Section 143 of the Act and the Assessing Officer, who had passed the orders under the said Section, had neither given any finding with regard to concealment of income/furnishing inaccurate particulars, nor were there any proceedings under Section 271(1)(c) with regard