Penalty cancellation did not bar criminal prosecution where concealment allegations and revised return acceptance remained distinct issues.

Cancellation of penalty by the Tribunal did not, by itself, establish that there had been no concealment of income, so the criminal prosecution for income-tax offences was not barred. The departmental proceedings and criminal proceedings were treated as parallel, and the findings in the tax proceedings were not binding on the criminal court. Section 279(1A) was held inapplicable because there had been no reduction or waiver of penalty under section 273A. Acceptance of the revised return also did not erase the allegation that the original return had suppressed income, so quashing was refused.

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Issues: Whether criminal prosecution for income-tax offences could be quashed on the basis that the penalty under the Income-tax Act had been cancelled by the appellate tribunal and that a revised return had been accepted.

Analysis: The cancellation of penalty by the Tribunal did not amount to a finding that there had been no concealment of income at all. The departmental and criminal proceedings were treated as parallel, and findings in the departmental proceedings were held not to bind the criminal court. Section 279(1A) was considered inapplicable because there had been no reduction or waiver of penalty under section 273A. Acceptance of the revised return also did not negate the allegation that the original return had suppressed income.

Conclusion: The request to quash the criminal proceedings was rejected.

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