2002 (10) TMI 60 - HC - Income Tax

Offence under sections 276C and 277 read with section 278B - held that if the penalty proceedings have been set aside in the departmental proceedings then the very basis of launching of the prosecution against the assessee stands knocked down. In such facts, the Supreme Court had quashed the proceedings initiated under the Income-tax Act against the assessee. In view of the said judgment, I find that the prosecution against the petitioner is an abuse of the process of law. The very basis of penalty has been struck down by the authorities under the Act. - Consequently, I allow the present petition, set aside the order of the sessions judge and quash the complaint filed by the Department.

Summary

The High Court of Punjab and Haryana, in a judgment by Judge Hemant Gupta, quashed a complaint filed by the Income-tax Department against petitioners for wrong claim of depreciation under sections 276C and 277 of the Income-tax Act. The court found the prosecution an abuse of process of law as penalty proceedings had been dropped, following Supreme Court precedents. The order of discharge passed by the Chief Judicial Magistrate was upheld, setting aside the Sessions Judge's order.