Sanction for prosecution under the Income-tax Act may require remand when raised first time on appeal and factual material is missing.

Sanction for prosecution under the Income-tax Act must be granted on application of mind to all relevant material, and a sanction challenge raised for the first time on appeal may require factual examination at the trial stage. Where the complainant had no earlier opportunity to place the relevant papers on record, the appellate court may remit the matter so both sides can adduce material and the trial court can reconsider the sanction issue and other permissible contentions in accordance with law.

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Issues: (i) Whether the challenge to the sanction for prosecution under the Income-tax Act, 1961 required the acquittal to be affirmed or the matter to be remitted for consideration of relevant material. (ii) Whether the appeals against acquittal should result in setting aside the acquittal and remand for fresh disposal.

Issue (i): Whether the challenge to the sanction for prosecution under the Income-tax Act, 1961 required the acquittal to be affirmed or the matter to be remitted for consideration of relevant material.

Analysis: The sanction to prosecute was treated as going to the root of the matter, and the sanctioning authority was required to apply its mind to all relevant material before granting sanction. Since the validity of sanction had not been questioned before the trial court, the complainant had not had an opportunity to place the relevant papers on record. The plea relating to consideration of the possibility of compounding and the question of hearing before sanction were left open for examination by the trial court.

Conclusion: The challenge to sanction was not finally decided on merits at the appellate stage, and the parties were to be allowed to lead material before the trial court on that question.

Issue (ii): Whether the appeals against acquittal should result in setting aside the acquittal and remand for fresh disposal.

Analysis: Because the sanction issue was raised for the first time in appeal and required factual examination, the acquittal could not be finally sustained on the existing record. The appropriate course was to quash the acquittal and remit the matters so that the trial court could reconsider the cases in accordance with law after permitting both sides to adduce material and advance their contentions.

Conclusion: The acquittal was set aside and the matters were remanded for fresh disposal.

Final Conclusion: The appellate interference was allowed to the extent of remand, and the criminal cases were restored to the trial court for reconsideration in light of the sanction-related issues and other permissible contentions.

Ratio Decidendi: Where the validity of sanction for prosecution under the Income-tax Act is raised for the first time on appeal and the complainant had no earlier opportunity to place the relevant material on record, the proper course is to remit the matter for fresh consideration rather than finally affirming the acquittal on that ground alone.

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