1990 (10) TMI 11 - HC - Income Tax

Summary

Issues:
1. Quashing of prosecution under sections 276C(1) and 277 of the Income-tax Act, 1961.
2. Allegations of false return of income and evasion of tax.
3. Application of section 279(1A) in the case.
4. Exercise of inherent powers under section 482, Criminal Procedure Code.

Analysis:
The petitioner sought to quash the pending prosecution under sections 276C(1) and 277 of the Income-tax Act, contending that the complaint lacked essential allegations regarding wilful evasion of tax. The respondent, Sixth Income-tax Officer, argued that the complaint detailed facts sufficient to establish the offences. The complaint revealed that the petitioner failed to disclose capital gains from a property sale, leading to charges of furnishing a false return of income with intent to evade tax. The court found the complaint contained necessary particulars to proceed with the trial, emphasizing the importance of mens rea in the offence under section 277.

Regarding the application of section 279(1A), the petitioner claimed that the provision should prevent prosecution due to the penalty set aside in appeal. However, the court disagreed, stating that the provision's applicability could be raised and proven during the trial, and the absence of an order under section 273A did not bar the prosecution. The court also rejected the argument that the complaint lacked a negative averment regarding non-prosecution under section 279(1A).

In considering the exercise of inherent powers under section 482, the court emphasized that the unchallenged facts in the complaint indicated the commission of alleged offences, warranting a trial. The court declined to quash the prosecution, noting that the appellate order postdated the complaint, and the outcome of the trial should determine the case's merits. The court referenced legal precedents to support its decision, highlighting the need for uncontroverted allegations to prima facie establish the offence and the court's role in ensuring justice.

The judgment also addressed the interpretation of section 279(1A) based on a previous case, emphasizing that the provision's applicability depends on specific criteria being met. Ultimately, the court dismissed the petition, finding no merit in the petitioner's arguments and affirming the continuation of the prosecution.