ORDER
1. By way of filing the instant petition, a prayer has been made to quash the proceeding of Criminal Case No.293/2017, pending before the Court of Chief Metropolitan Magistrate (Economic Offences) Jaipur Metropolitan for the offence punishable under Sections 276C(1)(i) of the Income Tax Act, 1961 (for short, ‘IT Act’).
2. Learned counsel for the petitioner submits that a search under Section 132 of the IT Act, was carried out in the premises of the petitioner, wherein certain documents were seized and thereafter, two separate of proceedings were initiated against the petitioner. One for imposing penalty for the undisclosed income and other by way of filing a complaint against the petitioner before the Court below.
3. Counsel submits that the order of penalty imposed by the Income Tax Department was assailed by the petitioner by way filing an appeal before the Income Tax Appellate Tribunal (for short, ‘ITAT’). The ITAT, vide its order dated 23.09.2019 quashed the order imposing penalty under Section 271AAB of the IT Act, against the petitioner. Counsel submits that under these circumstances, two separate proceedings arising out of the same cause cannot be allowed to continue before the Court below. He further submits that in identical matters, the Co-ordinate Benches of this Court in the case of Nagendra Choudhary v. UOI 2025 SCC OnLine Raj. 6063 and Ritesh Agarwal v. UOI [S.B. Criminal Misc. Petition No. 2139 of 2019, dated 27.11.2025], have put the controversy to an end. It was held in para 33 to 36 of the judgment passed in the case of Nagendra Choudhary (supra), as under:
“33. So far as the present case is concerned, on the basis of foregoing discussion, this court finds that the challenge made by the petitioner qualifies all the tests laid down by the Hon’ble Supreme court in the case of Pradeep Kumar Kesarwani (supra).
34. Hence, on the above issues, this Court is inclined to hold that quashing of penalty under Section 271AAB of the Act of1961 by the ITAT, without an adverse finding of willfulness, stands against sustaining prosecution of the petitioner under Section276C(1) of the Act of 1961. The inherent jurisdiction under Section 482 Cr.P.C. is exercisable notwithstanding pendency of Department’s appeal or taking cognizance by trial court, where continuation would be unjust or contrary to statutory scheme. To allow continued prosecution in such circumstances would sanction an unjust, oppressive and abusive process, contrary to the constitutional guarantee of fairness and the very purpose of inherent jurisdiction under Section 482 Cr.P.C. The only logical conclusion is to quash the prosecution, while preserving the Department’s liberty to seek revival, if the Tribunal’s exoneration is reversed in the pending appeal.
35. In view of the above findings, this Court holds that the continuation of criminal proceedings under Section 276(C)(1) of the Income Tax Act, 1961 against the petitioner would amount to an abuse of the process of law. The prosecution is untenable in the absence of the foundational finding of concealment, which stands judicially negated and not yet reversed/ stayed in appeal.
36. In the light of above, this criminal misc. petition is, accordingly, allowed. The criminal proceedings in Criminal Case No. 140/2017 pending before the Court of Chief Metropolitan Magistrate (Economic Offences), Jaipur City, are hereby quashed and set aside.”
4. Counsel submits that the judgment passed by the Co-ordinate Bench in the case of Nagendra Choudhary (supra) was followed subsequently in the case of Ritesh Agarwal (supra) and the proceedings pending against the aforesaid persons before the Court of Chief Metropolitan Magistrate (Economic Offences), Jaipur City were quashed and set-aside. Hence, the petitioner is entitled to get the same relief, which was granted to the aforesaid persons.
5. Per contra, learned counsel appearing on behalf of the respondent-Department opposes the arguments raised by counsel for the petitioner and submits that against the order dated 23.09.2019, an appeal has been preferred by the Department before the Division Bench bearing D.B. Income Tax Appeal No.25/2020 and the same has been admitted on 29.06.2020 by formulating certain substantial questions of law. The aforesaid appeal is still lying pending for its adjudication before the Division Bench, so unless and until the same is decided by the Division Bench of this Court, the arguments raised by counsel for the petitioner are not tenable and the instant petition filed by the petitioner is liable to be rejected.
6. In rebuttal, learned counsel for the petitioner submits that the Division Bench of this Court has not passed any interim order staying the operation of the order dated 23.09.2019, passed by the ITAT. Hence, under these circumstances, the petitioner is entitled to get the relief as sought in the instant petition.
7. Heard and considered the submissions made at the Bar and perused the material available on the record.
8. Considering the arguments put forward by learned counsel for the parties and looking to the fact that the controversy involved in the instant petition has already been set at rest by the Co-ordinate Bench of this Court in the case of Nagendra Choudhary (supra), wherein the issue was identical and similar, under these circumstances, this Court finds no valid reason to take a different view.
9. Accordingly, the instant criminal misc. petition stands allowed. The proceedings arising out of the Criminal Case No.293/2017, pending against the petitioner before the Court of Chief Metropolitan Magistrate (Economic Offences), Jaipur Metropolitan stand quashed and set-aside.
10. However, the respondent-Department would be at liberty to seek revival of the instant petition and recall of this order in case, the order passed by the ITAT is reversed in the aforesaid appeal submitted by the respondent-Department against the petitioner.
11. The stay application and all pending applications, if any, stand disposed of.
