Income-tax prosecution for concealment fails when appellate findings negate concealment and accept the taxpayer's valuation method.

A criminal complaint under the Income-tax Act alleging concealment of income and false statements could not survive where the appellate authority had already found no concealment and had accepted the valuation method used for closing stock. Because the departmental findings negated the very factual basis of the prosecution, the criminal court could not proceed on allegations contrary to those findings. The complaint was therefore held not maintainable and was quashed.

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Issues: Whether the criminal complaint for concealment of income and false statements under the Income-tax Act could survive when the income-tax appellate authority had found no concealment and had accepted the valuation method adopted by the petitioner.

Analysis: The prosecution was founded on an allegation of undervaluation of closing stock and concealment of income. The appellate authority had already recorded findings that there was no concealment and that the valuation method adopted by the petitioner was not wrong or illegal. In such circumstances, the factual basis of the complaint ceased to exist, and the criminal court could not proceed on allegations that stood negated by the departmental findings on the very issue underlying the prosecution.

Conclusion: The complaint was not maintainable and was quashed.

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