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Issues involved: The judgment involves issues related to premature prosecution under section 277 of the Income-tax Act, 1961, maintainability of proceedings, completion of assessment before initiating penalty or prosecution, and the application of principles of natural justice.
Premature Prosecution under Section 277: The petitioner contended that the complaints filed on January 27, 1975, were premature and contrary to natural justice due to a notice issued earlier for imposing a penalty under section 271(1)(c). The court held that there was a contravention of natural justice principles and the procedure adopted was premature and not in conformance with the law. The court found the proceedings under section 277 to be premature and contrary to natural justice. Completion of Assessment before Penalty or Prosecution: The petitioner argued that assessments for the relevant periods were not completed, making any penalty or prosecution premature. The court agreed that assessments should be completed before initiating penalty or prosecution under Chapter XXI and Chapter XXII of the Income-tax Act, 1961. It was held that completing the assessment is necessary before instituting penalty or prosecution proceedings. Maintainability of Proceedings: The court considered the maintainability of the applications, with reference to the case law stating that criminal proceedings should be tried under the provisions of the code. However, the court also acknowledged the inherent jurisdiction to quash proceedings to prevent abuse of court processes or secure justice. In this case, due to identified defects, the court ruled that the continuation of the proceedings was not maintainable in law and should be quashed to secure the ends of justice. Conclusion: The court quashed the orders passed by the Chief Metropolitan Magistrate under section 277 of the Income-tax Act, 1961, and the proceedings based on them, citing prematurity and contravention of natural justice principles. The judgment did not delve into the merits of the case, leaving them open for consideration at the appropriate stage. The rules were disposed of accordingly by the High Court of Calcutta. *Judges*: A. N. Banerjee, N. C. Talukdar
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