Facts of the Case

The petitioners, M/s Infonox Software Pvt. Ltd. & others, filed multiple petitions before the Delhi High Court challenging criminal proceedings initiated by the Income Tax Department. The matter arose from alleged non-compliance with statutory requirements under Section 139(1) of the Income Tax Act, 1961.

During the course of proceedings, it was indicated that certain appellate proceedings before the Commissioner of Income Tax (Appeals), particularly Appeal No. 550/17-18/CIT(A)-4 dated 18.05.2018, had not yet attained finality. The petitioners sought to preserve their rights depending on the outcome of such appellate proceedings.

Issues Involved

  1. Whether criminal proceedings for non-compliance under Section 139(1) of the Income Tax Act were maintainable at this stage.
  2. Whether the alleged default in compliance was “wilful” in nature.
  3. Whether petitioners should be permitted to withdraw petitions with liberty to raise defences before the trial court and re-approach the High Court later.

Petitioner’s Arguments

  • The petitioners sought permission to withdraw the petitions along with pending applications.
  • They requested liberty to raise all their defences before the concerned Criminal Court.
  • It was argued that the question of “wilful default” under Section 139(1) should be considered only after the appellate proceedings before the Commissioner of Income Tax (Appeals) attain finality.
  • The petitioners also sought liberty to approach the High Court again on the issue after such final adjudication.

Respondent’s Arguments

  • The respondent (Deputy Commissioner of Income Tax) opposed interference at this stage.
  • The respondent maintained that criminal proceedings were validly initiated for statutory non-compliance.
  • It was implied that the petitioners should contest the matter before the appropriate trial forum.

Court’s Findings / Order

  • The Delhi High Court permitted the petitioners to withdraw the petitions.
  • The Court recorded that the petitioners reserve their defences to be raised before the concerned Criminal Court.
  • Liberty was granted to the petitioners to approach the High Court again on the issue of whether the default under Section 139(1) was wilful, after the appellate proceedings attain finality.
  • Accordingly, all petitions were dismissed as withdrawn.

Important Clarification

  • The Court did not adjudicate on the merits of the case.
  • The issue of “wilful default” remains open and is to be determined at the appropriate stage.
  • The rights of specific petitioners, namely Shivani Mittal and Venkatramaraju Nadempali, were expressly preserved for adjudication before the Criminal Court.

Sections Involved

  • Section 139(1), Income Tax Act, 1961
  • Criminal proceedings relating to non-compliance of statutory tax obligations

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:7499/RKG07032019CRLMM37242018_125831.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.