Income-tax prosecution for late return filing can continue despite pending proceedings; prima facie discharge review is limited.

Non-filing of an income-tax return in due time under section 276CC was treated as a continuing infraction, and pending assessment or appellate proceedings did not bar prosecution; the proviso applied only to the class of cases expressly covered and not where no return had been filed despite notice. At the discharge stage, the Magistrate was required only to assess whether the complaint disclosed a prima facie case, not to conduct a mini-trial, and the statutory presumption of culpable mental state under section 278E supported continuation of the proceedings. The prosecution sanction was upheld because the record showed independent application of mind and no mechanical approval.

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Issues: (i) Whether prosecution for failure to file returns in due time under section 276CC of the Income-tax Act, 1961 could continue despite pending assessment and appellate proceedings and whether the proviso to section 276CC applied. (ii) Whether the Magistrate was justified in refusing discharge under section 245 of the Code of Criminal Procedure, 1973 on the material placed, including the statutory presumption as to culpable mental state. (iii) Whether the sanction for prosecution under section 279(1) of the Income-tax Act, 1961 was vitiated.

Issue (i): Whether prosecution for failure to file returns in due time under section 276CC of the Income-tax Act, 1961 could continue despite pending assessment and appellate proceedings and whether the proviso to section 276CC applied.

Analysis: The expression "in due time" in section 276CC was held to refer to the time prescribed under section 139(1) and the notice provisions, and not to filing at a later stage. Failure to furnish the return was treated as a continuing infraction, and the pendency or possible success of assessment or appeal proceedings did not bar prosecution. The proviso was construed narrowly and was held to protect only the class of cases to which it expressly applied; it could not be invoked where no return had been filed at all and there had also been non-compliance with notice under section 142(1).

Conclusion: The prosecution was maintainable and the proviso to section 276CC did not assist the petitioners.

Issue (ii): Whether the Magistrate was justified in refusing discharge under section 245 of the Code of Criminal Procedure, 1973 on the material placed, including the statutory presumption as to culpable mental state.

Analysis: At the discharge stage the court was required only to see whether a prima facie case existed and not to conduct a mini trial or assess the probative value of the defence material. The complaint and supporting documents contained the necessary averments against the individual petitioners and the firm, and the statutory presumption under section 278E operated against the accused at that stage. The materials, if unrebutted, were sufficient to justify the continuation of the proceedings.

Conclusion: The refusal to discharge was upheld.

Issue (iii): Whether the sanction for prosecution under section 279(1) of the Income-tax Act, 1961 was vitiated.

Analysis: The sanction order and the evidence of the sanctioning authority showed consideration of the relevant materials and independent application of mind. The court found no breach of the governing principles governing judicial review of sanction orders, no indication of mechanical approval, and no ground to hold that the sanction was invalid.

Conclusion: The sanction for prosecution was valid.

Final Conclusion: The criminal revisions were liable to be dismissed, as the prosecution for non-filing of returns could proceed, discharge was unwarranted at the preliminary stage, and the sanction for prosecution suffered from no legal infirmity.

Ratio Decidendi: Non-filing of an income-tax return in due time is a continuing offence under section 276CC, pendency of assessment or appellate proceedings does not by itself bar prosecution, and at the discharge stage the court need only determine whether the complaint discloses a prima facie case, leaving rebuttal of statutory presumptions and factual defences to trial.

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