A two-judge bench of the Bombay High Court recently held that if a stay application is filed before the CIT(A) to seek a stay of the assessment order, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not be proceeded.
The petitioner filed his income tax return for the relevant year. However, the Assessing officer rejected the same and completed assessment by making an addition. An appeal was filed against the first appellate authority. Simultaneously, criminal prosecution was launched against the petitioner under Section 276(C)(1) of the Income Tax Act 1961 for bogus purchase on the ground that the assessee did not disclose his true and correct income while filing his return.
Justice B.P Colabawalla and Justice S.C Dharmadhikari inquired to the petitioner’s advocate as to whether the petitioner sought any interim relief/stay during the pendency of the Appeal and he says that, that was not sought in the hope and anticipation that the Appeal itself would be disposed of.
While concluding, the bench observed that “We find that interest of justice would be served if we dispose of this writ petition by keeping larger and wider question open. In the event, the petitioner seeks a stay of the order passed by the Assessment Officer by making a stay application, then, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceed. Thus, the ad interim stay granted by this Court would continue till the disposal of the application for stay by the First Appellate Authority.”
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