The findings of the Income Tax Appellate Tribunal in penalty proceedings are not binding on the criminal court in determining the guilt of the assessee, and the mere expectancy of a favourable finding in a pending Income Tax Reference does not justify staying criminal proceedings.

Madan Mohan Punchhi, J.

1. The petitioner is a registered firm. It is an assessee under the I.T. Act, 1961. For the assessment year 1973-74, the petitioner-firm returned a certain sum as its income. The ITO, while framing the assessment made considerable additions thereto. On appeal to the AAC, the amount was reduced. On cross-appeals to the Income-tax Appellate Tribunal, certain additions were again made. Thus, in the quantum proceedings, the matter came finally to rest. Simultaneously, the IAC passed an order of penalty against the petitioner-firm. The petitioners appeal to the Income-tax Appellate Tribunal was dismissed. The petitioner thereupon successfully sought a reference to the High Court, bearing I.T. Ref. No. 11 of 1981, which is pending. The question posed therein is to the effect, whether the IAC was legally authorised to levy penalty. The third step which the Department took is to obtain sanction from the Commissioner to prosecute the petitioner before, a criminal court under Section 277 of the I.T. Act. In the said complaint, charge having been framed against the petitioner-firm, it has approached this court to get quashed the same by invoking the inherent jurisdiction of this court under Section 482 of the Cr. PC. It is being bemoaned that the present proceedings are in the nature of an abuse of the process of the court and in the interests of justice these be quashed.

2. Mr. D.N. Awasthy, learned counsel for the petitioner-firm, has, in the first place, contended that the sanction accorded by the Commissioner is an unmindful sanction and as such the criminal complaint cannot proceed. From a bare perusal of the impugned order of the Magistrate, it seems that the question as such was never raised before him. The question of sanction, however, was raised in quite a different context before the learned Magistrate. Since I do not have the advantage of his view on the question as raised, I do not propose to touch the question raised. In the present proceedings I am not even inclined to permit Mr. Awasthy to raise this question in the manner he has attempted to project it. The petitioner may, if so advised, raise it in a proper manner before the court dealing with the matter.

3. The second contention of Mr. Awasthy is that since penalty proceedings are open to correction by decision in Income-tax Reference No. 11 of 1981, the complaint cannot be allowed to proceed. The precise objection is that the Supreme Court in Uttam Chand v. ITO, [1982] 133 ITR 909, and this court in Parkash Chand v. ITO, [1982] 134 ITR 8, have in substance taken the view that in case the finding of the Income-tax Appellate Tribunal in penalty proceedings was that there was no proof of concealment of income or deliberate furnishing of inaccurate particulars, then criminal proceedings cannot continue under Section 277 of the I.T. Act, 1961. It is the admitted position that if under the old Act of 1922, penalty proceedings has been taken against the assessee, then no prosecution could be launched against him. But, under the present Act of 1961, there is no such bar, for penalty proceedings can be launched as also prosecution. It is also a settled principle that whatever adverse has been observed in the orders in assessment or penalty proceedings, that is not binding on the criminal court while determining the guilt of the assessee. But a principle of good sense seems to have been grafted in the aforesaid principle by settling that in case the Tribunal comes to a finding in penalty proceedings (and, if I may say so, in quantum proceedings as well) that the assessee had not furnished inaccurate particulars or had not concealed his income, then that finding has, in a way, been made to influence the mind of the criminal court in requiring it to drop proceedings. It is precisely in these circumstances that in the, afore-referred, two cases, namely, Uttam Chands case [1982] 133 ITR 909 (SC) and Parkash Chands case [1982] 134 ITR 8 (P&H), crimina