Penalty relief by appellate authority does not bar tax prosecution; authorised complaint also satisfies section 195 CrPC.

Section 279(1A) bars prosecution under sections 277 and 278 of the Income-tax Act only where penalty under section 271(1)(c) is reduced or waived by the Commissioner under section 273A; appellate cancellation or remission of penalty does not trigger that bar, so the objection to prosecution failed. A complaint for offences under sections 177 and 193 of the IPC was not vitiated by section 195 CrPC where the Income-tax Officer acted on Commissioner authorisation and the statutory complaint procedure was satisfied. Proceedings were treated as judicial under section 136 of the Income-tax Act, and the criminal proceedings were held maintainable.

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Issues: (i) Whether prosecution under sections 277 and 278 of the Income-tax Act, 1961 was barred because the penalty imposed on the assessee had been cancelled or remitted. (ii) Whether the complaint and prosecution for offences under sections 177 and 193 of the Indian Penal Code were vitiated for non-compliance with section 195 of the Code of Criminal Procedure, 1973.

Issue (i): Whether prosecution under sections 277 and 278 of the Income-tax Act, 1961 was barred because the penalty imposed on the assessee had been cancelled or remitted.

Analysis: The statutory bar under section 279(1A) applies only when the penalty under section 271(1)(c) has been reduced or waived by the Commissioner in exercise of power under section 273A. The cancellation of penalty by the Appellate Assistant Commissioner and remission by the Appellate Tribunal were not orders passed by the Commissioner under section 273A. The authorisations for prosecution had been granted by the Commissioner under section 279, and the existence of appellate relief in penalty proceedings did not attract the statutory bar.

Conclusion: The prosecution was not barred under section 279(1A), and this objection failed.

Issue (ii): Whether the complaint and prosecution for offences under sections 177 and 193 of the Indian Penal Code were vitiated for non-compliance with section 195 of the Code of Criminal Procedure, 1973.

Analysis: The complaint was filed by the Income-tax Officer pursuant to authorisation by the Commissioner, and section 195(1)(a) was therefore satisfied for the offence under section 177 of the Indian Penal Code. Further, by virtue of section 136 of the Income-tax Act, proceedings before income-tax authorities are deemed judicial proceedings for the relevant purposes, and the Income-tax Officer was competent to lodge a written complaint in the manner contemplated by the statute. The challenge based on section 195 was accordingly untenable.

Conclusion: The prosecution was not bad for want of compliance with section 195 of the Code of Criminal Procedure, 1973.

Final Conclusion: The criminal proceedings were held maintainable and the petitions were rejected, with the trial court directed to proceed in accordance with law.

Ratio Decidendi: Section 279(1A) creates a bar only where penalty is reduced or waived by the Commissioner under section 273A, and a prosecution under the Income-tax Act is not defeated merely because penalty relief was granted by an appellate authority; compliance with section 195 of the Code of Criminal Procedure, 1973 is satisfied where the complaint is filed by an authorised income-tax in proceedings treated as judicial by statute.

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