The court ruled that criminal prosecutions under the Income Tax Act must be stayed pending the outcome of related assessment appeals, emphasizing the interrelation between criminal and tax proceedings.

O R D E R

The criminal prosecutions launched against the petitioners under Section 279 (1) of the Income Tax Act , 1961 (hereafter referred to as ‘the I.T Act’ ) before the Additional Chief Judicial Magistrate Court (Economic Offences) by the Deputy Commissioner and Assistant Commissioner of Income Tax, Kochi, are under challenge in these petitions filed under Section 482 Cr.P.C by the accused in those cases.

2. Crl.M.C Nos.5407/2014, 5485/2014, 559/2021, 560/2021 and 561/2021 relate to the cases numbered as C.C No.889/2014, C.C No.947/2014, C.C No.995/2014, C.C No.996/2014 and C.C No.915/2014 respectively. The offences alleged in the aforesaid cases are under Section 276CC of the Income Tax Act .

3. Crl.M.C Nos.576/2021, 585/2021, 587/2021 and 591/2021 relate to the cases numbered as C.C No.68/2015, C.C No.67/2015, C.C No.66/2015 and C.C No.65/2015 respectively. The offences alleged in the aforesaid cases are under Section 276 (C)(1) of the Income Tax Act .

4. When the matter was taken up for consideration today, it has been submitted by the learned counsel representing the petitioners and the learned Standing Counsel for the Income Tax Department that the assessments related to all these cases are now pending consideration of either the Commissioner of Income Tax (Appeals) or the Income Tax Appellate Tribunal. Accordingly, it is argued by the learned counsel for the petitioners that the Trial court is not expected to proceed with the prosecutions pending the decision of the aforesaid authorities on the challenge against the respective assessments made by the Income Tax Department.

5. The learned counsel for the petitioners brought to my notice the dictum laid down by the Hon’ble Supreme Court in C.I.T, Mumbai v. Bhupen Champak Lal Dalal and Another [(2001) 3 SCC 459]  wherein it has been held as follows:

“The prosecution in criminal law and proceedings arising under the Act are undoubtedly independent proceedings and, therefore, there is no impediment in law for the criminal proceedings to proceed even during the pendency of the proceedings under the Act. However, a wholesome rule will have to be adopted in matters of this nature where courts have taken the view that when the conclusions arrived at by the appellate authorities have a relevance and bearing upon the conclusions to be reached in the case necessarily one authority will have to await the outcome of the other authority.”

6. The learned Standing Counsel for the Income Tax Department also submitted that in many cases, the decisions rendered by the appellate authorities of the Income Tax Department on the matters challenging the assessment, would have a direct bearing in the criminal prosecutions launched against the assessees, and hence the department has no serious objection in keeping the criminal prosecutions in abeyance pending the decisions of the Appellate Authorities on the proceedings challenging the assessments.

7. Having regard to the aforesaid submissions of the learned counsel for the petitioners, and the learned Standing Counsel for the Income Tax Department, I am of the view that the learned Magistrate has to await the decisions of the Appellate Authorities of Income Tax on the matter of the assessments challenged in the respective proceedings, before proceeding with the individual complaints alleging the offences under Section 276CC and 276(C)(1) of the Income Tax Act .

Accordingly, these petitions are disposed of as follows:

(i) The Additional Chief Judicial Magistrate (Economic Offences), Ernakulam shall keep in abeyance the trial in the cases mentioned in this order, pending the decisions of the Income Tax Appellate Authorities on the proceedings challenging the assessments made in the respective cases.

(ii) As soon as the matter