Court quashes cognizance order under Income-tax Act; no offence established without prohibitory orders

The court quashed the order of cognizance under section 275A of the Income-tax Act, as no prohibitory orders were issued for the account in question where transactions occurred. The court found that since the account was not under any prohibitory order, no offence under section 275A could be established. The proceedings in Complaint Case No. 78(C) of 2000 were dismissed, specifically addressing the prosecution initiated by the CBI against the petitioner and bank officials for alleged withdrawals from a different account. The court emphasized that it was not intervening in the CBI's case, allowing the petitioner's application and quashing the impugned order and related proceedings.

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Issues:
Quashing of order under section 275A of the Income-tax Act, 1961.

Analysis:
The petitioner filed an application seeking to quash the order passed by the Special Judge, Economic Offences, Patna, in Complaint Case No. 78(C) of 2000, which took cognizance of the offence under section 275A of the Income-tax Act, 1961, against the petitioner. The petitioner's counsel argued that the Income-tax Department had issued prohibitory orders only with regard to specified accounts, not the account in question where transactions occurred. The court noted that no prohibitory orders were issued for the account in question, as mentioned in the complaint petition and annexure B to the counter affidavit. It was highlighted that no transactions took place in the accounts covered by the prohibitory orders. The court concluded that no offence under section 275A of the Income-tax Act could be established based on the complaint, as it admitted that the operation of the account was not under any prohibitory order. Therefore, the order of cognizance was deemed unsustainable and quashed, leading to the dismissal of the proceedings in Complaint Case No. 78(C) of 2000.

The court clarified that its decision was specific to the prosecution initiated by the CBI against the petitioner and bank officials for alleged withdrawals from a different bank account, conducted under conspiracy and collusion. The court stated that it was not within its purview to address the CBI's case, emphasizing that the law should proceed independently in that matter. Consequently, the application filed by the petitioner was allowed to the extent indicated above, leading to the quashing of the impugned order and related proceedings under section 275A of the Income-tax Act, 1961.

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