Police in dilemma

Sir, I am a police inspector, a month back my subinspector detained a person namely Ashok Pradhan (44years)for possession and selling 12 bottles of country spirit in huge discounted price. When intercepted he confessed that those are stolen articles which he got from an unknown youth and he is disposing it illegally. He was arrested by my officer under 411/414 IPC and forwarded to the court with seizure list. The Ld court on production granted him bail. During investigation officer served message to all police stations to find out if any theft of similar item took place in any of their Police Stn area but despite all efforts no confirmation came. When he fell short of collecting evidence of theft he decided to submit report before the Ld court u/s 2(d) crpc to praying for prosecuting the accused person under 54A Calcutta Police Act (Bengal Act II of 1966) for possession of property suspected to be stolen. At this the Magistrate took serious exception and denied to take cognizance stating that Police has violated the statutory provisions of law by investigating in a Non cog offence under 54A Calcutta Police Act without obtaining prior permission from the Ld court. The magistrate also pointed out the mistake of initiation of a FIR case under 411/414 IPC instead of initiating 41 crpc prosecution to read with section 379 IPC which is a non FIR prosecution. He has kept his judicial order pending and sought explanation from higher-ups of police to assign reason as to why disciplinary action would not be taken against the I. O and SHO for investigating a noncog matter under 155 (2) crpc and also wanted to know the fate of the 411/414 IPC case, as according to him Police has submitted challan or report under 54 A CPAct without closing the original case of 411/414 IPC . Now my question is whether police has done any wrong in suomottu initiating FIR under section 411/414 IPC for possession of Country spirit without valid papers which are believed to be stolen? Can proceeding under 211 IPC be initiated against the I. O and or the SHO at this stage? What is the mistake of Police? Is the mistake repairable? Is the magistrate right in his point of law? Police says that they have only investigated a cog case under section 411/414 IPC and when fell short of collecting evidence submitted report under 54A Calcutta Police Act without investigation and thus not violating any dictum of law as envisaged in section 155(2) crpc.please please help.