Penalty deleted for no concealment: criminal tax prosecution cannot continue when the factual basis no longer survives.

Criminal prosecution for concealment of income and filing inaccurate particulars cannot be sustained where the Income-tax Appellate Tribunal has deleted the penalty under section 271(1)(c) and recorded a final finding that no concealment was made out. The Tribunal's order removes the factual basis on which complaints under sections 276C and 277 were launched, and once that finding attains finality, continuation of the criminal case serves no purpose. Section 245 of the Code of Criminal Procedure permits discharge at a previous stage where the charge is groundless, and the proceedings were liable to be dropped.

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Issues: Whether criminal proceedings for concealment of income and filing of inaccurate particulars could be sustained after the Income-tax Appellate Tribunal deleted the penalty and recorded a finding that no concealment was made out.

Analysis: Section 245 of the Code of Criminal Procedure, 1973 permits discharge at a previous stage where the charge is found to be groundless. The Tribunal's final order setting aside the penalty under section 271(1)(c) of the Income-tax Act, 1961 and holding that the assessee had not concealed income removed the factual on which the complaint under sections 276C and 277 had been launched. Once the finding of concealment no longer survived and the penalty order had attained finality, continuation of the criminal prosecution would serve no purpose.

Conclusion: The criminal proceedings could not be sustained and were liable to be dropped; the petition was dismissed.

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