SUDHAKAR MALLAPA SHETTY vs. DEPUTY COMMISSIONER OF INCOME TAX AND ANR

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WP/1175/2022HC BombayHCBM01015835202218 July 2025Author: HON'BLE SHRI JUSTICE JITENDRA SHANTILAL JAIN4 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the process order in the present case was identical in nature to the process order considered in the case of M/s. Zico Environmental Solutions (supra). In that prior case, the Court had found that the learned Magistrate had not assigned any reasons for passing the order, deeming it cryptic and unreasoned, and not an appropriate exercise of judicial discretion. Consequently, the High Court quashed and set aside the impugned process order dated August 28, 2017. It directed the learned Metropolitan Magistrate to pass a speaking order afresh, providing a brief outline of the facts and explaining how the provisions of Section 276CC of the Income Tax Act, 1961, are attracted, including specifying which clause of the said section is applicable. The petitions were allowed with this direction.

What were the facts?

The Petitioner, Sudhakar Mallapa Shetty, challenged the process order dated August 28, 2017, issued by the learned Metropolitan Magistrate for an alleged offence punishable under Section 276CC of the Income Tax Act, 1961. The Petitioner argued that the process order was non-speaking, issued without due application of mind, and failed to consider the nuances of Section 276CC, specifically regarding the amount of tax evaded and its impact on the trial procedure (warrant vs. summons trial). The Revenue contended that the Magistrate had perused the complaint and documents and formed a prima facie view, which was sufficient at the stage of issuing process.

What were the issues?

1. Whether the process order issued by the learned Metropolitan Magistrate for an offence under Section 276CC of the Income Tax Act, 1961, is a speaking order and demonstrates due application of mind? (Question of law) Assessee's Contentions: The process order is non-speaking and lacks due application of mind. It failed to consider the specific provisions of Section 276CC, which depend on the amount of tax evaded, thereby affecting whether the trial should be a warrant trial or a summons trial. Relied on M/s. Zico Environmental Solutions vs. State of Maharashtra & Anr. Revenue's Contentions: The Magistrate perused the complaint and documents and formed a prima facie view that an offence under Section 276CC was made out. This is sufficient at the stage of issuing process, and there is no infirmity in the order.

Which sections of the Income-tax Act were involved?

Section 276CC

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
Sayyed 10-WP.3187.2022.docx IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.3187 OF 2022 CRIMINAL WRIT PETITION NO.3187 OF 2022 WITH WITH CRIMINAL WRIT PETITION NO.1301 OF 2022 CRIMINAL WRIT PETITION NO.1301 OF 2022 WITH WITH CRIMINAL WRIT PETITION NO.1299 OF 2022 CRIMINAL WRIT PETITION NO.1299 OF 2022 WITH WITH CRIMINAL WRIT PETITION NO.1844 OF 2022 CRIMINAL WRIT PETITION NO.1844 OF 2022 WITH WITH CRIMINAL WRIT PETITION NO.1175 OF 2022 CRIMINAL WRIT PETITION NO.1175 OF 2022 Sudhakar Mallapa Shetty Sudhakar Mallapa Shetty ... ...Petitioner Petitioner Versus Versus Deputy Commissioner of Income Tax, Deputy Commissioner of Income Tax, Income Tax Department, Mumbai & Anr. Income Tax Department, Mumbai & Anr. ... ...Respondents Respondents _____________________________________________________ Mr. Siddhesh Bhole a/w Mr. Ruturaj Gurjar, Mr. Yakshay Chheda & Mr. Siddhesh Bhole a/w Mr. Ruturaj Gurjar, Mr. Yakshay Chheda & Mr. Apoorva Kulkarni i/by SSB Legal and Advisory for the Petitioner in Mr. Apoorva Kulkarni i/by SSB Legal and Advisory for the Petitioner in all petitions. all petitions. Mr. Suresh Kumar for Respondent No.1. Mr. Suresh Kumar for Respondent No.1. Mr. S. A. Karmakar, APP for Respondent No.2-State. Mr. S. A. Karmakar, APP for Respondent No.2-State. _____________________________________________________ CORAM : Jitendra Jain, J. DATED : 18 July 2025 PC.:- 1. By consent of the learned counsel for the parties, lead petition By consent of the learned counsel for the parties, lead petition is taken as Criminal Writ Petition No.3187 of 2022. is taken as Criminal Writ Petition No.3187 of 2022. 2. These Petitions challenges issue of process by the learned These Petitions challenges issue of process by the learned Metropolitan Magistrate for an offence punishable under Section 276CC Metropolitan Magistrate for an offence punishable under Section 276CC of the Income Tax Act, 1961 (I.T. Act). The process order dated 28 of the Income Tax Act, 1961 (I.T. Act). The process order dated 28 August 2017 challenged reads as under :- August 2017 challenged reads as under :- “ORDER BELOW EXHIBIT-1 ORDER BELOW EXHIBIT-1 Perused the complaint and documents. Heard the learned Advocate Perused the complaint and documents. Heard the learned Advocate for the complainant. The complainant has made out his prima facie for the complainant. The complainant has made out his prima facie Page 1 of 4 2025:BHC-AS:29848 Sayyed 10-WP.3187.2022.docx case to issue process, hence process be issued against the accused case to issue process, hence process be issued against the accused for an offence punishable U/s. 276CC of Income Tax Act, 1961.” for an offence punishable U/s. 276CC of Income Tax Act, 1961.” 3. Mr. Mr. Bhole, learned counsel for the Petitioner submits that the Bhole, learned counsel for the Petitioner submits that the process order is a non-speaking order and without due application of process order is a non-speaking order and without due application of mind and, therefore, requires to be set aside and remanded back for mind and, therefore, requires to be set aside and remanded back for passing speaking order. He submits that under Section 276CC of the I.T. passing speaking order. He submits that under Section 276CC of the I.T. Act, the punishment is based on the amount of tax sought to be evaded Act, the punishment is based on the amount of tax sought to be evaded and based on such figure of evasion of tax, whether warrant trial or and based on such figure of evasion of tax, whether warrant trial or summons trial should be proceeded with is to be decided. He submits summons trial should be proceeded with is to be decided. He submits that therefore it was incumbent upon the learned Magistrate to have that therefore it was incumbent upon the learned Magistrate to have examined the provisions of Section 276CC in its entirety because the examined the provisions of Section 276CC in its entirety because the nature of proceedings would differ in warrant triable case and summons nature of proceedings would differ in warrant triable case and summons triable case. He, therefore, submitted that in the absence of such an triable case. He, therefore, submitted that in the absence of such an exercise, the impugned process order is required to be set aside and exercise, the impugned process order is required to be set aside and remanded for passing speaking order. He relied upon the decision of remanded for passing speaking order. He relied upon the decision of this Court in the case of this Court in the case of M/s. Zico Environmental Solutions vs. State of M/s. Zico Environmental Solutions vs. State of Maharashtra & Anr. Maharashtra & Anr.1 in support of his submission. in support of his submission. 4. Mr. Kumar, learned counsel for Respondent No.1 defended the Mr. Kumar, learned counsel for Respondent No.1 defended the order issuing the process. He submitted that the learned Magistrate in order issuing the process. He submitted that the learned Magistrate in the order has stated that he has perused the complaint and documents the order has stated that he has perused the complaint and documents and is of a and is of a prima facie prima facie view that an offence punishable under Section view that an offence punishable under Section 276CC of the I.T. Act is made out. He submitted that at this stage only a 276CC of the I.T. Act is made out. He submitted that at this stage only a prima facie prima facie view has to be expressed and, therefore, there is no view has to be expressed and, therefore, there is no infirmity in the process order issued by the learned Metropolitan infirmity in the process order issued by the learned Metropolitan Magistrate. Magistrate. 5. I have heard learned counsel for the Petitioner and the I have heard learned counsel for the Petitioner and the Respondents. Respondents. 1 WP(St) No.1758 of 2025 dtd. 29 February 2024 Page 2 of 4 Sayyed 10-WP.3187.2022.docx 6. This Court in This Court in M/s. Zico Environmental Solutions (supra) M/s. Zico Environmental Solutions (supra) had had an occasion to consider a very similarly worded process order. Learned an occasion to consider a very similarly worded process order. Learned counsel for the Petitioner has filed a copy of the process order which counsel for the Petitioner has filed a copy of the process order which was the subject matter of Writ Petition (Stamp) No.1758 of 2024 and was the subject matter of Writ Petition (Stamp) No.1758 of 2024 and others and the same is reproduced hereinunder:- others and the same is reproduced hereinunder:- “ORDER BELOW EXH.1 ORDER BELOW EXH.1 “Read complaint, verification. Heard Ld. Counsel for the “Read complaint, verification. Heard Ld. Counsel for the complainant. Perused documents filed on record. The complainant complainant. Perused documents filed on record. The complainant has made allegations against accused from which prima-facie is has made allegations against accused from which prima-facie is made out against all accused. To support the oral contention made out against all accused. To support the oral contention complainant has furnished documents. Hence there are substantial complainant has furnished documents. Hence there are substantial material to proceed against accused as prayed. Hence, the order: material to proceed against accused as prayed. Hence, the order:

ORDER ORDER 1) Issue Process against all accused under Section 500 read with 34 1) Issue Process against all accused under Section 500 read with 34 of IPC. of IPC. 2) 2) Issue summons against accused returnable on 22/02/2024.” Issue summons against accused returnable on 22/02/2024.”

7.

This Court after perusing the process order in the case of This Court after perusing the process order in the case of M/s. M/s. Zico Environmental Solutions (supra) Zico Environmental Solutions (supra) came to the conclusion that the came to the conclusion that the learned Magistrate has not assigned any reasons for passing the order. learned Magistrate has not assigned any reasons for passing the order. Paragraph 2 and 3 of the said order reads as under:- Paragraph 2 and 3 of the said order reads as under:- "

2.

Mr. Yakshay Chheda, learned Counsel for the petitioners, "

2.

Mr. Yakshay Chheda, learned Counsel for the petitioners, brought to my attention the orders of issuance of process in these brought to my attention the orders of issuance of process in these petitions and submitted that the orders are cryptic and unreasoned. petitions and submitted that the orders are cryptic and unreasoned. Upon perusal of the orders, it is evident that the learned Magistrate Upon perusal of the orders, it is evident that the learned Magistrate has not assigned any reason for passing the orders. This is not the has not assigned any reason for passing the orders. This is not the appropriate manner in which the judicial discretion should be appropriate manner in which the judicial discretion should be exercised. The learned Magistrate needs to demonstrate such exercised. The learned Magistrate needs to demonstrate such application of mind by giving reasons as to why the process is application of mind by giving reasons as to why the process is issued against the accused. issued against the accused.

3.

Therefore, the orders for issuing process in these petitions are 3. Therefore, the orders for issuing process in these petitions are liable to be quashed and set aside. However, at the same time, it liable to be quashed and set aside. However, at the same time, it must be considered that if the Magistrate did not fulfill his duty, the must be considered that if the Magistrate did not fulfill his duty, the complainant should not be held responsible and should not have to complainant should not be held responsible and should not have to endure any consequences due to Magistrate's lapse. As a result, the endure any consequences due to Magistrate's lapse. As a result, the impugned orders for issuing process are quashed and set aside, and impugned orders for issuing process are quashed and set aside, and the learned Magistrate is directed to pass the reasoned order afresh the learned Magistrate is directed to pass the reasoned order afresh in the respective cases, pending before it." in the respective cases, pending before it." Sayyed 10-WP.3187.2022.docx

8.

In my view, there is no difference between the process order In my view, there is no difference between the process order which is the subject matter of the present petition and the process order which is the subject matter of the present petition and the process order which was the subject matter before this Court in the case of which was the subject matter before this Court in the case of M/s. Zico M/s. Zico Environmental Solutions (supra) Environmental Solutions (supra).

9.

Therefore, following the above decision, the impugned Therefore, following the above decision, the impugned process order dated 28 August 2017 challenged in the present petition process order dated 28 August 2017 challenged in the present petition is quashed and set aside with a direction to the learned Metropolitan is quashed and set aside with a direction to the learned Metropolitan Magistrate to pass a speaking order after giving the facts in brief and Magistrate to pass a speaking order after giving the facts in brief and how the provisions of Section 276CC of the I.T. Act are attracted and how the provisions of Section 276CC of the I.T. Act are attracted and which clause of the said section is attracted. In view of above, Petitions which clause of the said section is attracted. In view of above, Petitions are allowed with a direction to the learned Metropolitan Magistrate to are allowed with a direction to the learned Metropolitan Magistrate to pass a speaking order. pass a speaking order.

10.

Since both the learned counsel for the Petitioner and Since both the learned counsel for the Petitioner and Respondents agree that the facts are identical in the case of other four Respondents agree that the facts are identical in the case of other four petitions, the process order issued in those petitions are also quashed petitions, the process order issued in those petitions are also quashed

for the reasons stated above with a direction to pass a speaking order.

for the reasons stated above with a direction to pass a speaking order.

11.

Petitions are disposed of in the above terms. No costs. Petitions are disposed of in the above terms. No costs.

(Jitendra Jain, J.) Signed by: Sayyed Saeed Ali Designation: PA To Honourable Judge Date: 18/07/2025 18:34:47

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