AMIT MANGILAL JAIN vs. STATE OF MAHARASHTRA AND ANR

1 7-WP 4473-22.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.4473 OF 2022 Amit Mangilal Jain … Petitioner V/s. 1. State of Maharashtra 2. Pr. Commissioner of Income Tax-33 3. Asst. Commissioner of Income Tax-33(1)-Mumbai … Respondents ----- Mr. Naresh Jain, Neha Anchlia, Bhavesh Bhatia i/by Neha Anchalia for the Petitioner. Mr. B. V. Holambe Patil, APP for Respondent No.1-State. Ms. Sushma Nagaraj & Ms. A. Das for Respondent Nos.2 and 3. ----- CORAM : N.R. BORKAR, J. DATE : 07TH JANUARY 2026 P.C. : 1. This Writ Petition takes exception to the order dated 03rd August 2018 passed by the Learned Magistrate in C. C. No.338/SW/2018. By the impugned order in a complaint case filed by Respondent No.3 herein (the Assistant Commissioner of Income Tax), the Learned Magistrate has issued the process against the present Petitioner for the offence punishable under Section 276 C (1) of the Income Tax Act, 1961 (for short ‘IT Act’). 2. On 14th October 2010, the Petitioner had e-filed his Return of income tax for the assessment year 2010-2011 declaring his total income as Rs.72,98,210/-. The Return of the Petitioner was selected for scrutiny and on 24th August 2011 notice under Section 143(2) of the IT Act was issued. Subsequently, on 19th March 2013 notice under Section 142(1) of Mugdha 1 of 6

2 7-WP 4473-22.doc the IT Act was issued to the Petitioner and the assessment was completed under Section 143(3) of the IT Act and income of the Petitioner was assessed at Rs.75,50,069/-. 3. On 05th October 2015 a search and seizure action under Section 132 of the IT Act was carried out by the Investigation Wing, Mumbai of the Income Tax Department against M/s. Ekta and Bhoomi Group. During the search and seizure action, the Investigation Wing has seized certain electronic records and data. It is alleged that Mr. Akshay Doshi, Director of Bhoomi Group has admitted in his statement that the said data pertained to cash transactions carried out by his companies and the same was not recorded in books of accounts. The Investigation Wing came across a ledger account in the name of Bridgeland (Humao). In respect of the said ledger account, said Akshay Doshi stated that the entries therein pertained to transactions executed to acquire immovable property in Kandivali for the purpose of TDR generation and the present Petitioner was one of the partners in the said project and made the following capital contribution in cash towards acquisition of the said property: Financial Year 2008-2009 : Rs.6,80,00,000/- Financial Year 2009-2010 : Rs.2,50,00,000/- Financial Year 2010-2011 : Rs. 50,00,000/- 4. It is alleged that a total sum of Rs.9,80,00,000/- was undisclosed income of the Petitioner and the said income was not revealed in the Returns of Income filed by him during the relevant Assessment Years. The case of the Petitioner was thus reopened as per the provisions of Section Mugdha 2 of 6

3 7-WP 4473-22.doc 147 of the IT Act and the notice was issued to the Petitioner. Thereafter on 23rd September 2016, a Survey Action was conducted and the statement of the Petitioner under Section 131 of the IT Act was recorded. It is alleged that in the said statement, the Petitioner has admitted that he was involved in the construction activities as a member of Association of Persons (AOP) of M/s. Arkade Bhoomi Enterprise however, he has denied to have done any cash transactions with Akshay Doshi. As the Petitioner denied having any cash transactions with Akshay Doshi, a summons was issued to him. On 26th October 2016 his statement came to be recorded in the presence of the Petitioner and an opportunity of cross-examination was given to the Petitioner. 5. It is alleged that during reassessment it was found that the Petitioner was in possession of unaccounted cash to the tune of Rs.6,80,00,000/- and Rs.2,50,00,000/-. He neither offered the said amount for tax nor revealed the source of such unaccounted cash. It is alleged that as the Petitioner failed to give any satisfactory explanation about the said amounts, the income of the Petitioner was reassessed at Rs.2,75,50,070/- for the Assessment Year 2010-2011. Accordingly, the assessment order dated 30th December 2016 was passed. In addition to the assessment order, penalty proceedings under Section 271(1)(c) of the IT Act were also commenced against the Petitioner for concealment of income and furnishing inaccurate particulars of income. As such, show cause notice under Section 274 read with Section 271(1)(c) of the IT Act was issued to the Petitioner. It is alleged that from the records available, it is evident that during the Financial Year 2008-2009 and 2009-2010 the Mugdha 3 of 6

4 7-WP 4473-22.doc Petitioner had undisclosed and unaccounted cash from undisclosed sources. It is therefore alleged that the Petitioner had willfully attempted to evade the taxes imposable upon him by not disclosing the amount of Rs.9,80,00,000/- in the Return filed by him and thereby committed an offence under Section 276C(1) of the IT Act. 6. I have heard Learned Counsel for the Petitioner and Learned Counsel for Respondent Nos.2 and 3. 7. Learned Counsel for the Petitioner submits that the Petitioner being aggrieved by the order of assessment dated 30th December 2016 filed an Appeal before the Commissioner of Income Tax, who after considering the submissions and material on record, deleted the additions made by the Assessing Officer for the assessment years in question. It is submitted that this effectively negated the basis on which the prosecution was initiated. It is further submitted that the Department carried the matter further in Appeal before the Income Tax Appellate Tribunal (‘ITAT’) against the order of CIT(A) and simultaneously the Petitioner also preferred an Appeal before the ITAT challenging the very jurisdiction of the Assessing Officer to reopen the assessment proceedings. Learned Counsel for the Petitioner submits that the ITAT quashed the reassessment proceedings on the ground of jurisdiction also. It is submitted that as the ITAT has quashed the reassessment order, the very foundation on which the prosecution was launched stands eliminated. It is submitted that in absence of a valid assessment order confirming the addition of undisclosed income, there can be no criminal liability. Learned Counsel for the Petitioner further submits Mugdha 4 of 6

5 7-WP 4473-22.doc that the prosecution has been initiated in complete contravention of CBDT Circular dated 24th April 2008. It is submitted that the said Circular explicitly stipulates that the prosecution under Section 276C(1) of the IT Act can be filed only after the imposition of a penalty and its confirmation by the ITAT. 8. On the other hand, Learned Counsel for Respondent Nos.2 and 3 submits that the ITAT has quashed the assessment order on technical grounds and thus the prosecution initiated against the Petitioner can continue. As regards the initiation of the prosecution in contravention of the CBDT Circular, the Learned Counsel submits that prior to the imposition of penalty, the prosecution can be initiated where the CIT considers that it is a fit case by keeping in view the nature and magnitude of the offence. 9. The Hon’ble Supreme Court in the case of Radheshyam Kejriwal vs. State of West Bengal1 has held that in case of exoneration, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances can not be allowed to continue underlying principle being the higher standard of proof in criminal cases. 10. In the present matter, the CIT(A) has set aside the order of assessment dated 30th December 2016 and deleted the addition made by the Assessing Officer for the assessment years in question. The order of CIT(A) has attained finality. The criminal prosecution therefore on the 1 2011(2) TMI 154-SC Mugdha 5 of 6

6 7-WP 4473-22.doc same set of facts can not be allowed to continue. Hence, the following order:- ORDER i. The Writ Petition is allowed. ii. The impugned order is set aside. iii. The Complaint Case No.338/SW/2018 pending on the file of Learned Metropolitan Magistrate is hereby dismissed. (N.R. BORKAR, J.) Mugdha 6 of 6