K R PRADEEP vs. THE INCOME TAX DEPARTMENT

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CRL.P/22/2020HC KarnatakaKAHC01045531201925 September 2026Author: H.P.SANDESH7 pages
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What did the High Court hold?

The High Court of Karnataka, while hearing the criminal petitions, noted that the petitioner's claims had been considered by the Commissioner of Wealth Tax as the Appellate Authority. The matter was remitted back to the Assessing Officer with a direction to verify the claims and consider the grounds of appeal. The court observed that the Assessing Officer found the grounds of appeal satisfactory and allowed the appeal, but the respondent had yet to take a final decision. The court held that the petitioner had made out grounds to quash the proceedings initiated against him, subject to the outcome of the decision to be taken by the respondent regarding recovery, if any, of deficient tax in accordance with law. The court granted liberty to the respondent to proceed in accordance with law if any wealth tax was found payable and not paid within time, or if it was belated. The court effectively stayed the criminal proceedings pending the final adjudication of the wealth tax liability.

What were the facts?

The petitioner, K.R. Pradeep, filed three criminal petitions (22/2020, 6180/2019, and 7701/2019) under Section 482 of the Cr.P.C. before the High Court of Karnataka. These petitions challenged proceedings initiated against him for offences under Section 35B of the Wealth Tax Act, 1957, pending before the Special Court for Economic Offences, Bengaluru. The proceedings relate to assessment years 2013-14, 2014-15, and 2015-16. The petitioner argued that an appeal filed before the Commissioner of Wealth Tax concerning these years was remitted back to the Assessing Officer for verification of debt claims and assets, and the respondent (Income Tax Department) had not yet taken a final decision. The respondent contended that the proceedings should continue as the matter was remitted for verification and a decision was pending.

What were the issues?

1. Whether the proceedings initiated under Section 35B of the Wealth Tax Act, 1957, should be quashed in light of the pending adjudication of appeals before the Commissioner of Wealth Tax and subsequent remittance to the Assessing Officer for verification of debt claims and assets. Assessee's Contention: The petitioner argued that since the appeals for the relevant assessment years (2013-14, 2014-15, 2015-16) were remitted back to the Assessing Officer for verification of debt claims and assets, and the respondent had not yet taken a final decision, the continuation of criminal proceedings under Section 35B of the Wealth Tax Act was premature and unjustified. The petitioner relied on the order of the Appellate Authority dated 06.05.2026, which directed the Assessing Officer to verify the claims and consider the grounds of appeal. The petitioner contended that once a decision is taken by the respondent after verification, recovery proceedings, if any, could be initiated in accordance with law. Revenue's Contention: The respondent contended that the matter was remitted back to the concerned authority with a direction to verify the claims and offset them after verification, and since a decision was yet to be taken, the criminal petitions should not be continued. The respondent also noted that a search was conducted in 2017, and the petitioner, found to have wealth exceeding the maximum amount, had not filed Wealth Tax Returns initially, filing them belatedly on 18.01.2021, pursuant to a notice.

Which sections of the Income-tax Act were involved?

Section 35B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF SEPTEMBER, 2026 BEFORE THE HON'BLE MR. JUSTICE H.P.SANDESH CRIMINAL PETITION NO.22 OF 2020 C/W CRIMINAL PETITION NO.6180 OF 2019 CRIMINAL PETITION NO.7701 OF 2019

IN CRL.P.No.22/2020: K.R. PRADEEP, S/O SRI. K.N. RAMANARASIMHA SETTY, KOARAMANGALA, …PETITIONER (BY SRI. B.A. BELLIAPPA, ADVOCATE) THE INCOME TAX DEPARTMENT, BY ITS DEPUTY DIRECTOR OF INCOME TAX (INV) UNIT-3(E), C.R. BUILDING (ANNEXE), QUEENS ROAD, BENGALURU - 560 001. (SRI. PRADEEP S) …RESPONDENT

THIS CRL.P IS FILED UNDER SECTION 482 OF CR.P.C. BY HONOURABLE COURT MAY BE PLEASED TO QUASH THE PROCEEDINGS IN C.C.NO.185/2019 FOR THE OFFENCE P/U/S

Digitally signed by DEVIKA M Location: HIGH COURT OF KARNATAKA

35(B) OF THE WEALTH TAX ACT, PENDING ON THE FILE OF SPECIAL COURT FOR ECONOMIC OFFENCES, BENGALURU AT ANNEXURE-A AND ETC.,

IN CRL.P NO. 6180/2019: SRI. K.R. PRADEEP, S/O RAMANARASHIMA SETTY, KORAMANGALA, ...PETITIONER (BY SRI. B.A.BELLIAPPA., ADVOCATE) THE INCOME TAX DEPARTMENT, BY ITS DEPUTY DIRECTOR OF INCOME TAX (INV), UNIT-3(3), C.R. BUILDING (ANNEXE), QUEENS ROAD, BENGALURU - 560 001. (SRI PRADEEP S)

...RESPONDENT THIS CRL.P IS FILED UNDER SECTION 482 CR.P.C BY HON'BLE COURT MAY BE PLEASED TO SET ASIDE THE ORDER PASSED BY THE COURT OF THE SPECIAL COURT FOR ECONOMIC OFFENCES, BENGALURU DATED 22.02.2019 IN C.C.NO.107/2018, REGISTERED FOR THE OFFENCE P/U/S 35B OF THE WEALTH TAX ACT, BY ALLOWING THE APPLICATION UNDER 245(1)(2) OF THE CODE OF CRIMINAL PROCEDURE AND DISCHARGE THE PETITIONER IN C.C.NO.107/2018 AND SET ASIDE THE ORDER PASSED BY THE COURT OF LXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY CCH.NO.66 IN CRL.RP.NO.263/2019 DATED 14.08.2019 AND ETC.,

IN CRL.P NO.7701/2019: SRI. K.R. PRADEEP, S/O. K.N. RAMANARASIMHA SETTY, KORMANAGALA, ...PETITIONER (BY SRI. B A BELLIAPPA, ADVOCATE) THE INCOME TAX DEPARTMENT BY ITS DEPUTY DIRECTOR OF INCOME TAX (INV) UNIT-3(3), C R BUILDING (ANNEXE), QUEENS ROAD, BENGALURU-560001. (SRI. PRADEEP .S) ...RESPONDENT THIS CRL.P IS FILED UNDER SECTION 482 CR.PC BY HONBLE COURT MAY BE PLEASED TO QUASH THE PROCEEDINGS IN C.C.NO.186/2019 FOR THE OFFENCE P/U/S 35B OF WEALTH TAX ACT PENDING ON THE FILE OF THE SPECIAL COURT FOR ECONOMIC OFFENCE BENGALURU AT ANNEXURE-A AND ETC.,

THESE PETITIONS, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE H.P.SANDESH

ORAL ORDER

Heard the learned counsel appearing for the petitioner.

2.

Learned counsel appearing for the petitioner in Crl.P.Nos.22/2020, 6180/2019, 7701/2019 would submit that in these petitions wherein challenge is made to the order of taking of cognizance against the petitioner for the offence punishable under Section 35B of the Wealth Tax Act, 1957. Learned counsel appearing for the petitioner also relies upon the appeal filed before the Commissioner of Wealth Tax in respect of years 2013-14, 2014-15, 2015-16 and these appeals are pertaining to this petitioner is concerned.

3.

The learned counsel brought to the notice of this Court the order passed by the Authority in 7.4 wherein also when the grounds are taken by this petitioner, the Appellate Authority found in respect of these years of Wealth Tax Returns. The Assessing Officer is directed to verify the claim of the debts of the appellant

and allow/offset of the same after verification of the assets for the relevant years. Accordingly, the grounds of appeal for the said years are satisfactorily allowed and matter is also remitted back to the Assessing Officer to verify and consider the same. The said order was passed on 06.05.2026 and the respondent have not yet taken the decision. Hence, the counsel would contend that in view of remitting the matter back, there cannot be any continuation of proceedings in respect of these years are concerned.

4.

Per contra, the counsel appearing for the respondent would submit that the matter is remitted back to the concerned with a direction to verify the claim of the debts of the appellant and allow/offset the same after verification and yet to take the decision and hence, these petitions have to be continued.

5.

The counsel would submit that after the issuance of notice, the petitioners have voluntarily filed the assessment. The counsel appearing for the respondent

would submit that after conducting the raid in 2017, search was conducted on 13.10.2017. The accused having found the wealth exceeding the maximum amount, he had not filed the Wealth Tax Returns and subsequently, filed the Returns on 18.01.2021.

6.

Learned counsel appearing for the petitioner would submit that the same is also filed in pursuance of the notice issued by the respondent. Anyhow, the dispute between the parties is with regard to the payment of wealth tax is concerned and when the appeal was filed and matter is remitted back to the concerned Assessing Officer directed to verify the claim and the grounds of the appeal also came to be considered and the Assessing Officer comes to the conclusion that grounds of the appeal are satisfactory and allowed the appeal and the respondent is yet to take the decision. If decision is taken with regard to the payment of tax is concerned, then the respondent can recover the same by initiating the proceedings in accordance with law.

7.

When already claim made by the petitioners are considered by the Commissioner of Wealth Tax by the Appellate Authority, the same has to be adjudicated. Hence, the petitioner has made out grounds to quash the proceedings initiated against the petitioners subject to the result of decision taken by the respondent to recover the same, if any, deficient in accordance with law.

8.

If the petitioner is liable to pay any wealth tax, if any and if the Authority comes to the conclusion that the petitioner is liable to pay, the same is not paid within time, the liberty is given to the respondent to proceed in accordance with law if the same is not filed within time and if it is belated.

Sd/- (H.P.SANDESH) JUDGE

DR List No.: 1 Sl No.: 13

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