* IN HIGH COURT OF DELHI AT NEW DELHI % Judgment pronounced on: 6th April, 2015 + Crl. M.C. No.1100/2015 & Crl. M.A. No.4098/2015 SHRAVAN GUPTA ..... Petitioner Through Mr.Sandeep Sethi, Sr.Adv. & Mr.Chetan Sharma, Sr.Adv. with Mr.Akhil Sachar, Mr.Gurmehar Singh Sistani, Mr.Yudhister Singh & Mr.Amit Gupta, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX (ACIT) ..... Respondent Through Mr.Sanjay Kumar, Adv. with Mr.Kamal Sawhney, Adv. CORAM: HON'BLE MR.JUSTICE MANMOHAN SINGH MANMOHAN SINGH, J. 1. present petition has been filed by petitioner under Section 482 Cr.P.C. seeking quashing of sanction/authorization dated 10th February, 2015 granted by Commissioner of Income Tax (Central-I), complaint No.CC/91/14 dated 12th February, 2015 preferred by respondent through Dr.Surjeet Singh, ACIT, Central Circle 02 before Court of Additional Chief Metropolitan Magistrate and order dated 27th February, 2015 passed by Additional Chief Metropolitan Magistrate. Crl. M.C. No.1100/2015 Page 1 of 13 2. following prayer is made: A. Call for records of Criminal Complaint No. 100/4/15 dated 12.02.2015 titled ITO Versus Shravan Gupta instituted by Respondent herein and pending before Court of Sh. D.K. Sharma, Ld. ACMM (Spl. Acts), Tis Hazari Courts, New Delhi and after examining same, quash said Complaint and proceedings pending before Ld. ACMM; and B. Quash/set aside Order dated 27.02.2015 passed in abovementioned Criminal Complaint No. 100/4/15 dated 12.02.2015 titled ITO Versus Shravan Gupta instituted by Respondent herein and pending before Court of Sh. D.K. Sharma, Ld. ACMM (Spl. Acts), Tis Hazari Courts, New Delhi, whereby petitioner has been summoned by Trial Court; and C. Quash/set aside Sanction/Authorization dated 10.02.2015 granted by Commissioner of Income Tax (Central-I) for commencement of prosecution against petitioner. 3. When petition was listed on 20th March, 2015 learned counsel for respondent was present and he made his submissions for some time. He was asked to file reply. However, he submitted that he would make his submissions on next date. When matter was taken up on 23rd March, 2015, both parties made their submissions and order was reserved. As matter was coming up before trial court on 24th March, 2015, personal appearance of petitioner was exempted till order is pronounced by this Court. Crl. M.C. No.1100/2015 Page 2 of 13 4. brief facts as per petition are that petitioner by letter dated 17th November, 2011 had disclosed foreign bank account which existed with HSBC Private Bank, Geneva, Switzerland to Director of Income Tax (Investigation-II). peak amount lying in said account during year ending 31st March, 2007 was around US$ 1.3 million. account was closed in year 2007. 5. petitioner s statement was recorded on 24th November, 2011 and 9th December, 2011 under Section 131 of Income Tax Act. 1961 (hereinafter referred to as Act ). Deputy Commissioner of Income Tax, Central Circle-7 issued notice dated 9th July, 2012 to petitioner under Section 148 of Act. petitioner filed return of income on 14th August, 2012 declaring peak balance of said foreign bank account amounting to Rs. 6,48,76,162/-for assessment year 2006-07 and Rs. 27,94,163/- for assessment year 2007-08. 6. respondent issued notices under Section 142(1) of Act dated 2nd May, 2013, 12th June, 2013, 11th July, 2013, 20th August, 2014 and 15th December, 2014 calling upon petitioner to furnish details of foreign bank account i.e. bank statement/transaction details. petitioner responded to same by replies dated 22nd July, 2013, 5th August, 2013, 24th October, 2013, 19th December, 2013, 20th February, 2014 and 27th October, 2014. 7. statement of petitioner was recorded on oath on 5th January, 2015 by complainant Dr.Surjeet Singh ACIT, it was accepted by petitioner that he had voluntarily disclosed his foreign Crl. M.C. No.1100/2015 Page 3 of 13 bank account with HSBC Private Bank, Geneva, Switzerland by letter dated 17th November, 2011. respondent issued Show Cause Notice dated 7th January, 2015 under Section 279 (1) read with 276D of Act informing petitioner to launch prosecution for alleged wilful failure to produce accounts and documents in terms of notices under Section 142 (1) of Act. petitioner was directed to file reply to Show Cause Notice dated 7th January, 2015 on or before 19th January, 2015. petitioner in response to Show Cause Notice dated 7th January, 2015 furnished reply dated 19th January, 2015. 8. petitioner in compliance to notices issued under Section 142(1) of Act and in furtherance to reply dated 19th January, 2015 sent another reply dated 9th February, 2015 whereby it was stated that petitioner with great difficulty had been able to obtain copy of bank statement of Account Number 12119836 at HSBC, Private Bank, Geneva, Switzerland for entire period of operation of said Account. This position was again reiterated by reply dated 11th February, 2015 which was received by respondent on same date. Accordingly, petitioner in response to notices issued under Section 142(1) of Act had allegedly furnished Statement of Account for entire period of operation of account at HSBC, Private Bank, Geneva, Switzerland. 9. Commissioner of Income Tax (Central-I), New Delhi on 10th February, 2015 authorized Dr. Surjeet Singh, ACIT, Central Circle 02, Crl. M.C. No.1100/2015 Page 4 of 13 Income Tax Department, New Delhi to institute Criminal Complaint under Section 276-D of Act for assessment year 2006-07. respondent through Dr. Surjeet Singh, ACIT, Central Circle 02, Income Tax Department, New Delhi filed Criminal Complaint dated 12th February, 2015 under Section 276-D of Act. 10. It is necessary to reproduce sanction/authorization dated 10th February, 2015 under Section 279(1) of Act for initiating action against petitioner. extract of same reads as under: OFFICE OF PRINCIPAL COMMISSIONER OF INCOME (CENTRAL-1) NEW DELHI SANCTION/AUTHORIZATION UNDER SECTION 279(1), OF INCOME TAX ACT FOR A.Y. 2006-07 1. WHEREAS Sh. Shravan Gupta is being assessed to tax by Assessing Officer of Income Tax, Central Cir, 02, New Delhi by virtue of order u/s 127 of I.T. Act. 2. AND WHEREAS Shravan Gupta filed letter dated 17.11.2011 duly signed by him surrendering peak of his account with HSBC, Geneva/Zurich, Switzerland around US$1.3 million, which was not disclosed by him in his original return of income. 3. AND WHEREAS statement u/s 131 of I.T. Act was recorded wherein, he has stated that bank account was opened on reference by Royal Family of Sultan of Oman and initially US$1.1 million were deposited and last balance was US$1.2 million or US$1.3 million at close of said bank account in 2007. 4. AND WHEREAS case was re-opened and assessee has filed his return in response to notice u/s 148 Crl. M.C. No.1100/2015 Page 5 of 13 of I.T. Act declaring peak balance of his said foreign bank account amounting to Rs.64876162/-. 5. AND WHEREAS several notices u/s 142(1) of I.T. Act were issued and served asking details of his said foreign bank account, assessee has filed several replies but has not furnished required details. search was also conducted on 19.06.2014. 6. AND WHEREAS show cause notice for launching of prosecution u/s 276-D of I.T. Act, u/s 279 (1) of I.T. Act was issued by me, giving opportunity of being heard, but assessee has filed reply dated 19.01.2015, which was duly considered by me and I found same unsatisfactory. assessee has referred to circular dated 24.04.2008 stating that appeal against order u/s 271(1)(b) of I.T. Act is pending before CIT (A). said circular only provided that cases where penalty has been confirmed upto I.T. A.T. must be proceeded for prosecution, it does not in any way imply that those cases where above condition have not been satisfied cannot be proceeded. No penalty u/s (1)(b) of I.T. Act was levied for non-compliance of notice u/s 142(1) of I.T. Act dated 15.12.2014. Non- initiation of penalty proceedings does not lead to presumption that default was for sufficient reason. Non-initiation of penalty proceedings in case cannot be equated with case where penalty proceedings were initiated. assessee has surrendered peak credit in foreign bank account, it clearly shows that he is in possession of complete details of his said account including bank statements etc. which he has wilfully not furnished. 7. AND WHEREAS from perusal of records placed before me, I am satisfied and am of opinion that assessee has wilfully not furnished required details as Crl. M.C. No.1100/2015 Page 6 of 13 per Notice U/s 142 (1) of IT Act and has thus committed offence punishable u/s 276-D of I.T. Act 1961. 8. AND THEREFORE I, Meeta Nambiar, Principal Commissioner of Income Tax, (Central-1), New Delhi in exercise of power vested in me u/s 279(1) of I.T. Act 1961 do hereby accord Sanction and Authorize Dr.Surjeet Singh, ACIT, Central Cir.2, New Delhi to initiate prosecution proceedings u/s 276-D of Income Tax Act 1961 for A.Y. 2006-07 against Sh.Shravan Gupta, 44A, Amrita Shergil Marg, New Delhi-110003 at my instance in Court of Competent Jurisdiction. 11. Additional Chief Metropolitan Magistrate has passed following order on 27th February, 2015 which reads as under: Complainant examined himself in pre-summoning evidence as CW-1 and pre-summoning is closed by him vide separated statement. Heard on point of summoning. Perused record. present complaint has been filed U/s 276D with allegation that proposed accused vide his letter dated 17.11.2011 dully signed by him disclosed having Bank Account in Switzerland and also surrendered peak of his account with HSBC, Jeneva, which income was not disclosed in his original return. Upon his disclosure, his statement was recorded on 24.11.2011 wherein he admitted having bank account in said bank and having transactions in year 2006-2007. Accordingly, case was reopened U/s 147 of IT Act and notice U/s 158 of IT Act was issued dated 09.07.2012. In response to said notice, accused filed his return of income declaring peak balance in said foreign bank account. However despite various notices U/s 142 (1) of IT Act dated 02.05.2013, 12.06.2013, 11.07.2013,20.08.2014 &15.12.2014 calling details of said foreign bank account including statement since Crl. M.C. No.1100/2015 Page 7 of 13 beginning till date and account opening form etc. for purposes of completion of assessment, though replies were sent by him but no details was furnished of said foreign bank account. show cause notice dated 07.01.2015 was sent but reply was not found satisfactory. Hence, present complaint. complaint alongwith documents and from testimony of CW-1, there is sufficient material on record disclosing commission of offence u/s 276D, r/w Section 278E of Income Tax Act as details of account opening and transaction therein foreign bank account will be specifically in knowledge of accused who being account holder will be having relevant information but he failed to provide details willfully. Complainant has moved application seeking exemption from his personal appearance and submitted that he is public servant and remain busy in discharging his official duties. In these circumstances complainant is exempted through his counsel Sh. Brijesh Garg who has been appearing in court and looking after case filed by complainant till further orders. Accused be summoned on filing of PF and RC/speed post/courier as well as through office of complainant. 12. It appears that petitioner in compliance with notices issued under Section 142(1) of Act and in furtherance to reply dated 19th January, 2015 sent another reply dated 9th February, 2015 whereby it was stated that with great difficulty petitioner had been able to obtain copy of bank statement of Account Number 12119836 at HSBC, Private Bank, Geneva, Switzerland for entire period of operation of said account and again letter dated 11th February, 2015 was sent in which reference of letter dated 9th Crl. M.C. No.1100/2015 Page 8 of 13 February, 2015 was mentioned. said letters and bank statement furnished by petitioner have not been discussed in sanction even no reference is given. 13. Learned counsel appearing on behalf of respondent has not denied fact that said letter dated 11th February, 2015 was received by department. However, he was not sure whether reply dated 9th February, 2015 was received although copy of reply was shown by Mr.Sethi Senior counsel which contained office stamp of respondent on office copy of said letter. 14. argument of Mr.Sandeep Sethi, learned Senior counsel of petitioner, is that CIT (Central-I) infact has without considering reply dated 9th February, 2015, along with which copy of bank statement was enclosed, and suppressing same, filed criminal complaint under Section 276-D of Act for assessment year 2006-07 and on 10th February, 2015 authorization was granted under Section 279(1) of Act. 15. Mr.Sethi also submits that at time of sanction/authorization to file criminal complaint against petitioner, department was fully aware that all details of account have been sent/disclosed. His simple argument is that petitioner wants to pay entire tax of disclosed amount at HSBC, Private Bank, Geneva, Switzerland, without any condition as petitioner just wants to get rid of any notice of prosecution of respondent. It is also stated by Mr.Sethi that department has now all information of account. It may assess tax thereon. same Crl. M.C. No.1100/2015 Page 9 of 13 would be deposited by petitioner without any further delay. He submits that since details were available with department, question of filing criminal complaint against petitioner does not arise. 16. Learned counsel appearing on behalf of respondent, submits that there is total non-compliance/non-cooperation on behalf of petitioner when notices under Section 142(1) of Act were issued on 2nd May, 2013, 12th June, 2013, 11th July, 2013, 20th August, 2014 and 15th December, 2014. 17. His submission is that department did not have knowledge about reply dated 9th February, 2015 at time of filing complaint otherwise in sanction letter factum of reply ought to have been considered. He suggested that letter dated 11th February, 2015 might have come to appropriate desk after one or two days at that time as criminal complaint was already filed on 10th February, 2015. 18. There is no dispute that if action as per law is required to be taken against petitioner under said provision for non- compliance, said is always available with respondent who also be entitled to receive all taxes and penalties from petitioner as per law. 19. I am also agreeable with learned counsel for respondent that in case there is non-compliance of said notices under Section 142(1) of Act, requisite action in accordance with law had to Crl. M.C. No.1100/2015 Page 10 of 13 be taken against petitioner who would be entitled to contest same in accordance with law. However, it is also matter of fact that criminal proceedings have been initiated by respondent against petitioner on basis of sanction issued by department on 10th February, 2015 and in case grounds of sanction are read, it is evident that reply sent by petitioner contains copy of bank statement filed for period has not been mentioned/ discussed in same. 20. Even otherwise assuming for sake of argument that reply dated 9th February, 2015 was not put up before appropriate officer, when sanction was issued, it is admitted position that said complaint was filed on 12th February, 2015 when letter dated 11th February, 2015 was admittedly received by department. factum of receipt of said letter is not mentioned in complaint. Assuming for sake of argument that even said letter was not placed at appropriate desk till 12th February, 2015 as counsel for respondent mentioned to court that usually any letter filed at counter is received by appropriate desk within two days, but in present case, pre- summoning evidence in above said matter was recorded on 27th February, 2015. At least on that date, department had full knowledge of contents of two letters dated 9th February, 2015 and 11th February, 2015. statement of Dr.Surjeet Singh does not contain details of receipt of said replies/letters. It was also not disclosed in statement that petitioner has already sent Crl. M.C. No.1100/2015 Page 11 of 13 bank statement for entire period as alleged by petitioner. It is not denied by respondent s counsel that letter dated 11 th February, 2015 contains reference and details of letter dated 9th February, 2015, where statement of bank account was enclosed. It is also not denied by respondent that when pre-summoning evidence was recorded, said documents were not in possession of respondent. Learned counsel for respondent has confirmed to Court that statements of bank accounts have already been received for purpose of assessing tax, which were not furnished by petitioner. Thus, it is apparent that while recording statement of complainant and passing summoning order dated 27th February, 2015, all facts were not available with trial Court otherwise Court might have asked respondent to produce same and to consider replies dated 9th February, 2015 and 11th February, 2015 before passing summoning order or respondent ought to have sought prayer for amendment in sanctioning letter. same has not happened in present case. 21. Under these circumstances, order dated 27th February, 2015 passed in Criminal Complaint No.100/4/15 dated 12th February, 2015 titled ITO Versus Shravan Gupta whereby summoning order has been passed, is liable to be quashed on technical reason. 22. respondent is at liberty to issue fresh sanction against petitioner after considering replies filed by petitioner on 9th February, 2015 and 11th February, 2015 and would be entitled to Crl. M.C. No.1100/2015 Page 12 of 13 initiate proceedings if so desires on failure of compliance of various letters issued under Section 142(1) of Act. petitioner at same time would be entitled to contest said proceedings in accordance with law. 23. present petition is accordingly disposed of. (MANMOHAN SINGH) JUDGE APRIL 06, 2015 Crl. M.C. No.1100/2015 Page 13 of 13 Shravan Gupta v. Assistant Commissioner of Income-tax (ACIT)