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Issues involved: Assessment under I.T. Act, 1961; Legality of penalty imposed by IAC; Sanction for prosecution under s. 277 of I.T. Act; Abuse of process of court; Expectancy of favorable finding in penalty proceedings.
Assessment under I.T. Act, 1961: The petitioner, a registered firm, filed its income for the assessment year 1973-74, which was later adjusted by the ITO and further reduced by the AAC. Subsequently, the Income-tax Appellate Tribunal made additional adjustments, finalizing the quantum proceedings. Legality of penalty imposed by IAC: The IAC levied a penalty against the petitioner-firm, leading to an appeal to the Income-tax Appellate Tribunal which was dismissed. The petitioner then sought a reference to the High Court to determine the legality of the penalty imposed by the IAC. Sanction for prosecution under s. 277 of I.T. Act: The Department obtained sanction from the Commissioner to prosecute the petitioner under s. 277 of the I.T. Act. The petitioner challenged the sanction, alleging it was unmindful, and sought to quash the criminal complaint under s. 482 of the Cr. PC, claiming abuse of the court's process. Abuse of process of court: The petitioner contended that the criminal complaint should be quashed as an abuse of the court's process, arguing that the penalty proceedings were still open to correction through Income-tax Reference No. 11 of 1981, citing relevant case law to support the contention. Expectancy of favorable finding in penalty proceedings: The petitioner anticipated a favorable finding in the pending Income-tax Reference, suggesting that such a finding might impact the penalty proceedings. However, the court held that the ongoing criminal proceedings should not be stayed based on mere expectancies, emphasizing the need to proceed in the interest of justice and prevent stagnation in the legal process. In conclusion, the court dismissed the petition, ruling that the criminal proceedings against the petitioner should continue, rejecting the arguments related to the legality of the penalty imposed and the expectation of a favorable outcome in the pending reference case.
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