Pendency of reassessment does not bar prosecution for alleged tax evasion under the Income-tax Act; quashing refused.

Pendency of reassessment or related tax proceedings does not, by itself, bar criminal prosecution for alleged tax evasion under sections 276C and 277 of the Income-tax Act, 1961. A writ court will not ordinarily quash the prosecution notice or the criminal case merely because assessment proceedings are ongoing or have been partly set aside, where the assessment controversy has not resulted in complete exoneration. The proceedings under the Act and the prosecution can continue independently, and the existence of appellate or reassessment proceedings does not automatically invalidate the notice initiating prosecution. The challenge to quash the prosecution notice and proceedings was rejected.

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Issues: Whether prosecution proceedings under sections 276C and 277 of the Income-tax Act, 1961, and the notice initiating such proceedings, could be quashed in writ jurisdiction merely because the assessment-related proceedings were pending or had been partly set aside.

Analysis: The pendency of reassessment or connected tax proceedings does not, by itself, bar criminal prosecution for offences punishable under sections 276C and 277. A writ court will not ordinarily interfere to quash prosecution at the stage when the proceedings are otherwise maintainable, especially where the assessment controversy has not resulted in complete exoneration and the prosecution is founded on alleged tax evasion. The rule applied is that prosecution and assessment proceedings can proceed independently, and the existence of appellate or reassessment proceedings does not automatically invalidate the notice or the criminal case.

Conclusion: The request to quash the prosecution notice and the proceedings was rejected; the challenge failed.

Ratio Decidendi: Pendency of assessment or reassessment proceedings is not a bar to criminal prosecution for offences under sections 276C and 277 of the Income-tax Act, 1961.

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