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CASE NO.: Special Leave Petition (crl.) 2430  of  2000 Special Leave Petition (crl.)   2995     of  2000 Special Leave Petition (crl.)   3141     of  2000

PETITIONER: COMMISSIONER OF INCOME TAX, MUMBAI

       Vs.

RESPONDENT: BHUPEN CHAMPAK LAL DALAL & ANR.

DATE OF JUDGMENT:       27/02/2001

BENCH: S.R.Babu, S.N.Phukan

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J

     RAJENDRA BABU, J.  :

     Twelve cases were lodged against the respondents under the  Income  Tax Act, 1961 [hereinafter referred to as  the Act]  before  the  Metropolitan   Magistrate  for  offences punishable  under  the Act.  In relation to the  assessments arising  under  the Act, appeals had been  preferred  either before  the  Commissioner  of Income Tax  [Appeals]  or  the Income  Tax  Appellate Tribunal [hereinafter referred to  as the Tribunal].  On the basis that the appeals were pending the   respondents  filed  applications   for  stay  of   the proceedings  arising  before  the criminal  court.   Several decisions  were  cited  before  the  court  to  support  the contention that the decision of the appellate authorities in the income tax proceedings would be relevant to the criminal prosecution instituted against the respondents.  The learned Magistrate,  after  examining  the  position in  law  as  to whether  the  findings  of  the  appellate  authorities  are relevant  for the purpose of the criminal proceedings and to avoid  conflicting  decisions of the criminal court and  the appellate  authorities, felt that it would be appropriate to grant an interim order of the following nature:  ORDER

     The   work  of  recording   evidence  shall   proceed. However, passing of order about framing of charge, discharge of  the accused or acquittal of the accused shall be  stayed during  pendency  of the appeals by the accused  before  the Income  Tax  Appellate  Authorities.  These orders  will  be passed  after  the appeals filed by the accused  before  the Income Tax Authorities are finally decided.

     Against  that  order,  revision petitions  were  filed before  the  Sessions  Court.  The Sessions  Court  did  not interfere  with the order made by the learned Magistrate and dismissed  the  same.   Thereupon, the  matter  was  carried further  to  the  High  Court  and  the  High  Court,  while entertaining  a writ petition noticing several decisions  of

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that High Court and of this Court, issued rule in the matter and  granted an interim order staying the proceedings in the criminal  cases filed before the learned Magistrate.  It  is against  this order that these special leave petitions  have been filed.

     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.

     This  Court  in G.L.Didwania & Anr.  vs.   Income  Tax Officer  &  Anr.,  1995  Supp.(2) SCC 724,  dealt  with  the similar situation where there is a prosecution under the Act for  making  a  false  statement   that  the  assessee   had intentionally   concealed  his  income   and  the   Tribunal ultimately set aside the assessment holding that there is no material to hold that such income belong to the assessee and the  petition  was filed before the Magistrate to  drop  the criminal proceedings and thereafter an application was filed before  the  High Court under Section 482 Cr.P.C.  to  quash those  criminal proceedings.  This Court held that the whole question  is  whether the appellant made a  false  statement regarding  the  income  which  according  to  the  assessing authority   has  escaped  assessment   and  this  issue  was dependent  on  the  conclusion   reached  by  the  appellate Tribunal  and hence the prosecution could not be  sustained. In  Uttam  Chand  & Ors.  vs.  Income Tax  Officer,  Central Circle,  Amritsar, 1982 (2) SCC 543, this Court held that in view of the finding recorded by the Tribunal on appraisal of the  entire  material  on  the record that the  firm  was  a genuine  firm  and the assessee could not be prosecuted  for filing   false   returns  and,    therefore,   quashed   the prosecution.    In   P.Jayappan   vs.   S.K.Perumal,   First Income-Tax  Officer,  Tuticorin, 1984 Supp.  SCC  437,  this Court  observed  that  the   pendency  of  the  reassessment proceedings  under  the  Act  cannot act as  a  bar  to  the institution  of the criminal proceedings and postponement or adjournment  of a proceedings for unduly long period on  the ground  that  another  proceedings having a bearing  on  the decision was not proper.

     In  the present case, there is no claim of quashing of the  proceedings.  When ultimately the result to come out of the  proceedings  before  the appellate authorities  have  a definite   bearing   on  the   cases  alleged  against   the respondents,  we  find that the High Court is  justified  in granting  the interim order it did and we do not think  that such  an interim order calls for interference at our  hands. The  learned  counsel  on  either  side  relied  on  several decisions,  but in the view we have taken it is  unnecessary to refer to those decisions.

     The petitions are, therefore, dismissed.  No costs.