High Court Allows Prosecution to Proceed in Income‑Tax Concealment Cases; Criminal Petitions Dismissed

A single‑judge bench of Justice G. Girish of the Kerala High Court heard a batch of criminal miscellaneous petitions under Section 482 Cr.P.C. filed by Dr. Shammem Majeed, who challenged complaints filed by the Assistant Commissioner of Income Tax alleging offences under Sections 276C(1) and 277 of the Income‑tax Act, 1961 arising out of search and seizure operations. The petitions concerned separate complaints corresponding to assessment years 2008‑09 to 2013‑14 and were taken up together for admission and disposal.

The court dismissed the petitions and held that there was no scope for interference with the trial court proceedings. The High Court found that the complaints specifically alleged "wilful, deliberate and conscious evasion of tax" and that the prosecution followed a search under Section 132 and subsequent assessments and penalty orders which, the court said, disclosed concealment and false statements even in revised returns filed under Section 153A. The court observed that the amendments brought in by the Finance Act, 2016 (w.e.f. 01.04.2017) dealing with mis‑reporting and under‑reporting did not negate the allegations of tax evasion in the facts of these cases. The Court, in its reasoning, observed: "It is apparent from the above data that the petitioner had made false statements even in the revised returns filed under Section 153A of the I.T Act, for the assessment years 2008-2009 to 2013-2014, and made concealment of her actual income for the respective assessment years, and thus evaded tax." The court therefore refused to quash the complaints under Section 482 Cr.P.C.

Background: The petitioner, a practising paediatrician who ran medical stores as a proprietary concern (M/s. Pallimukku Sevana Medicines), faced complaints alleging substantial concealment of income and false statements in original returns for assessment years 2008‑09 to 2013‑14. The offences were alleged to have come to light after search and seizure operations under Section 132 of the Income‑tax Act on 18.12.2013 at the petitioner’s business and residential premises. Notices under Sections 142(1) and 153A issued thereafter led to revised returns filed under Section 153A which showed higher income than the original returns. After assessments and an order under Section 271(1)(c) (penalty), and on obtaining sanction under Section 276C(1), the Assistant Commissioner filed complaints before the Additional Chief Judicial Magistrate (Economic Offences), Ernakulam and summons issued to the petitioner.

The petitioner argued that the alleged misconduct could not amount to wilful evasion because the statutory scheme recognising mis‑reporting and under‑reporting as separate violations was introduced with effect from 01.04.2017 and that a revised return under Section 153A must be treated as a return under Section 139, thereby negating any charge of concealment. The High Court rejected these contentions as irrelevant to the specific allegations and the material on record. The court relied on the assessment and penalty orders (annexures) which, after reworking income, showed significant discrepancies between income disclosed in revised returns and income reworked by the Income‑tax authorities. Noting that the complaints averred deliberate evasion and that the documents produced disclosed concealment, the court held that the petitions did not merit interference. The petitions were dismissed and the trial proceedings were permitted to continue; no interim stay or other relief was granted.

Case Details: Case No.: Crl.MC No. 8014 of 2019 (and connected Crl.MC Nos. 8019/2019, 8023/2019, 8024/2019, 8036/2019, 8023/2019, 8036/2019, 294/2020, 298/2020, 304/2020, 306/2020, 309/2020, 310/2020) Case Title: Shammem Majeed v. State of Kerala & Anr. Appearances: For the Petitioner(s): Shri Anil D. Nair (Sr.), Smt. Telma Raju, Sri Aaditya Nair For the Respondent(s): Public Prosecutor, High Court of Kerala, Ernakulam; Sri Navaneeth N. Nath, Senior Counsel, Income‑tax Department