Penalty waiver under tax law bars prosecution for concealment offences and also defeats the connected abetment charge.

Section 279(1A) bars prosecution for offences under sections 276C and 277 where the penalty under section 271(1)(iii) has been reduced or waived under section 273A. Once the penalty was waived, the statutory condition for criminal prosecution no longer existed, and the proceedings could not continue. The connected abetment charge under section 278 also could not survive because it was inseparable from the main offences. The criminal proceeding was therefore liable to be quashed, and the revision succeeded in favour of the accused on the basis of the statutory bar created by the waiver of penalty.

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Issues: Whether prosecution for offences under sections 276C and 277 of the Income-tax Act, 1961, and the related charge of abetment under section 278, could continue after the penalty had been waived under section 273A.

Analysis: Section 279(1A) of the Income-tax Act, 1961, bars prosecution for offences under sections 276C and 277 in relation to an assessment year where the penalty imposed or imposable under section 271(1)(iii) has been reduced or waived by an order under section 273A. Once the penalty was waived, the statutory condition for proceeding with the criminal prosecution ceased to exist. The bar extended to the allied charge of abetment, since it was inseparable from the main offences.

Conclusion: The prosecution for offences under sections 276C and 277, and the connected offence under section 278, could not proceed and was liable to be quashed.

Final Conclusion: The revision succeeded and the criminal proceeding was terminated in favour of the accused on the basis of the statutory bar arising from the waiver of penalty.

Ratio Decidendi: Where the penalty under section 271(1)(iii) is reduced or waived under section 273A, section 279(1A) creates an absolute bar against prosecution for offences under sections 276C and 277, and the connected abetment charge cannot survive.

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