A Single Bench of Justice Sanjay Kumar Dwivedi at Jharkhand High Court has recently set aside the entire criminal proceedings against Karta of a Hindu Undivided Family (HUF).
It had been alleged that during course of search and seizure operation, it was found that the petitioner had claimed huge Bogus Long Term Capital Gain during the Financial Year 2013-14 relevant to Assessment Year 2014- 15 and during the course of Post Search Investigation, the petitioner was even examined on oath under section 131(1A) of the Income Tax Act, 1961 but he denied that his claim for Long Term Capital Gain is bogus.
In the complaint petition, it was further alleged that the Enquiry/Investigation Report reveals that the petitioner has transacted certain scripts of shares whose value has been appreciated 50 times in one year.
On the basis of the aforesaid allegations, it had been alleged against the petitioner that the petitioner has committed offences under section 276 C (1), 277 and 278 of the Income Tax Act.
Sumeet Gadodia, appearing for the assessee submitted that the allegation that the petitioners have obtained Long Term Capital Gain has been found to be incorrect.
He further submitted that so far as the petitioner is concerned, a penalty has not been imposed upon the petitioner. He elaborates his arguments by way of submitting that once the penalty imposed upon the petitioner is set aside there is no question of continuity of criminal proceedings.
He placed reliance on various judgements of the Apex Court including Suresh Kumar Agarwal v. Union of India & Others (2016). On these grounds he submitted that the criminal proceedings in both the cases are bad in law and to continue the proceedings against the petitioners is abuse of the process of law.
The assessee was allegedly denying his allegedly bogus claim of long term capital gains on appreciation of value of shares to the extent of fifty times. Several related parties to a company owned by the assessee including the allegedly appointed dummy director was also questioned. The alleged original director as per the dummy director, Deepak Patwari had been examined on oath and he had admitted that he was engaged in the business of providing bogus accommodation entries to various beneficiaries.
However, the Court observed that, āit has been clearly held that once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under section 276C is automaticā and set aside the prosecution proceedings against the petitioners – Satendra Kumar Jalan and Murari Lal Jalan.
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