Facts of the Case

The petitioners, M/s Infonox Software Private Limited & Others, filed multiple criminal miscellaneous petitions before the Delhi High Court challenging proceedings initiated by the Income Tax Department.

During the hearing, after some arguments, the counsel for the petitioners sought permission to withdraw the petitions, while reserving specific rights:

  • To raise contentions as defenses before the concerned Criminal Court
  • Particularly concerning petitioners Shivani Mittal and Venkatramaraju Nadempali
  • To revisit the issue of whether non-compliance with Section 139(1) was wilful or not, after final adjudication of the pending appellate proceedings before the Commissioner of Income Tax (Appeals)

Issues Involved

  1. Whether the alleged default in compliance with Section 139(1) of the Income Tax Act, 1961 was wilful in nature.
  2. Whether the petitioners should be allowed to withdraw petitions with liberty to raise defenses before the Trial Court.
  3. Whether future recourse to the High Court should be permitted after the appellate authority’s decision attains finality.

Petitioner’s Arguments

  • The petitioners sought withdrawal of petitions after partial arguments.
  • They requested:
    • Liberty to raise all defenses before the Criminal Court
    • Preservation of rights regarding the issue of wilfulness of default under Section 139(1)
    • Permission to approach the High Court again after finality of appellate proceedings

Respondent’s Arguments

  • The respondent (Deputy Commissioner of Income Tax) was represented and opposed the petitions in general course.
  • However, no detailed counter-argument is recorded in the order as the matter concluded on withdrawal by the petitioners.

Court’s Findings / Order

The Delhi High Court held:

  • The petitions are dismissed as withdrawn.
  • The defenses of petitioners Shivani Mittal and Venkatramaraju Nadempali are preserved.
  • These defenses may be adjudicated before the concerned Criminal Court.
  • The Court granted liberty to the petitioners to:
    • Re-approach the High Court
    • On the issue of wilfulness of default under Section 139(1)
    • After the appellate order attains finality

Important Clarification

  • Withdrawal of a petition does not extinguish substantive legal rights, especially when liberty is expressly granted.
  • The Court emphasized that:
    • The question of “wilful default” under Section 139(1) remains open
    • Such determination may depend on the outcome of appellate proceedings
  • This case highlights the procedural importance of:
    • Strategic withdrawal
    • Preservation of defenses
    • Parallel adjudication between criminal proceedings and tax appellate forums

Sections Involved

  • Section 139(1), Income Tax Act, 1961 – Filing of return of income
  • (Contextual Criminal Proceedings relating to alleged default)

Link to download the order -

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

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