Court discharges travel firm, directors in IT case

A Delhi court has discharged a tour and travel agency and its three directors in an income tax case, saying the evidence produced by the IT Department does not make out any case against them.
The court said it was clear that none of the accused have made any false statement as alleged by the IT Department during the assessment proceedings of Delhi-based firm, M/S Creative Travel Pvt Ltd for Assessment Year 1999-2000.
"I am of the considered view that no prima facie case for contravention of Section 277 (false statement in verification) read with Section 278B (offences by companies) of the Income Tax Act, was made out against the accused....

"Thus, after considering all the evidence produced/ recorded by the prosecution, I am of the considered view that no case is made out against the accused. Accordingly, accused are discharged for the offence under the IT Act," Additional Chief Metropolitan Magistrate Pritam Singh said.
Apart from the company, the court also discharged its directors Deepak Kohli, Rajeev Kohli and Rohit Kohli.
The department alleged in the court that the firm had in November 1999, filed the IT return, verified by one of its directors, declaring the taxable income of over Rs 41 lakh.

It was served with two notices and assessment was made in March 2002 at a taxable income of Rs 96.9 lakh, it said.

The firm then filed an appeal before income tax appellate tribunal (ITAT) against the department's assessment order and took an additional ground that no notice was served upon the company within the period stipulated by law and thus, the assessment order deserved to be quashed.
ITAT had not admitted the additional ground and imposed a cost of Rs 50,000 on the firm after which the IT department filed a complaint against the company and its officials in the court contending that they knew this fact was false and wilfully contravened the provisions of the IT Act.
The court, however, said it was a defence of the accused which they are entitled to take in any proceedings or appeal.

"Such a defence even if false, does not contravene the provisions of Section 277 of the IT Act. I am afraid that the defence of a person or assessee in an appeal before the ITAT can be considered the statement under this Act or under any rule made thereunder. It is also important to mention here that ITAT found the defence of the accused company false and rejected it and imposed the cost of Rs 50,000 upon them...
"I am of the considered view that prosecution of all the accused under Section 277 of the IT Act would amount to double jeopardy particularly when they were already punished by the ITAT by imposing the cost of Rs 50,000 which was already paid by them," the judge said.