Sanction for prosecution requires conscious application of mind to material facts, including wilfulness and assessment records

Sanction for prosecution under the Wealth Tax Act must reflect conscious consideration of the material relevant to the alleged offence, including the assessment order and any related proceedings, because sanction is not a formality. The commentary also notes that wilful default and the statutory mental element must be examined before prosecution is launched, and that presumptions of culpable mental state cannot replace that inquiry at the sanction stage. It further addresses jurisdiction objections based on transfer notifications and rejects the argument that non-filing of the return is a continuing offence, treating the default as complete when the filing period expires.

---

---

Issues: (i) Whether the sanction for prosecution under the Wealth Tax Act was vitiated for want of application of mind, particularly for non-consideration of the consequential assessment order and related materials; (ii) Whether the prosecution could stand when the assessee claimed negative wealth and absence of wilful failure to furnish the return, invoking the proviso to the penal provision; (iii) Whether the objections based on lack of jurisdiction and the nature of the default as continuing could defeat the prosecution at the stage of discharge.

Issue (i): Whether the sanction for prosecution under the Wealth Tax Act was vitiated for want of application of mind, particularly for non-consideration of the consequential assessment order and related materials?

Analysis: The sanctioning authority was required to consider the material bearing on the prosecution before granting sanction. The consequential assessment order fixing the wealth tax liability was a vital document, yet it was not specifically referred to in the sanction order, nor was there any clear indication that the later assessment and the pendency of any appeal had been examined. The omission was treated as significant, because sanction is not an empty formality and must demonstrate conscious consideration of the relevant facts.

Conclusion: The sanction was held to be vitiated for non-application of mind, in favour of the petitioner.

Issue (ii): Whether the prosecution could stand when the assessee claimed negative wealth and absence of wilful failure to furnish the return, invoking the proviso to the penal provision?

Analysis: The court found that the protection under the proviso to the penal provision was not available on the record after the Tribunal's orders, since the assessee's taxable wealth was ultimately assessed above the statutory threshold. However, the court also held that the mental element required for the offence had to be assessed before launching prosecution and could not be presumed at the sanction stage under the provision dealing with presumption of culpable mental state. The petitioner's explanation for the delay and the circumstances surrounding the non-filing were treated as relevant to the absence of wilfulness.

Conclusion: The prosecution was not sustained on the ground of wilful default, and the petitioner was entitled to discharge, in favour of the petitioner.

Issue (iii): Whether the objections based on lack of jurisdiction and the nature of the default as continuing could defeat the prosecution at the stage of discharge?

Analysis: The jurisdictional challenge based on transfer notifications was rejected by reading the wealth tax scheme with the income-tax jurisdiction provisions incorporated by reference. The contention that non-filing of the return was a continuing offence was also rejected, because the offence was treated as complete on the expiry of the statutory time for filing the return and could not be converted into a continuing default for the charged offence.

Conclusion: The jurisdiction objection failed, and the continuing-offence argument was rejected, but these did not prevent discharge of the petitioner on the main sanction and wilfulness grounds.

Final Conclusion: The criminal revision succeeded, the discharge order was set aside, and the petitioner stood discharged from the prosecution under the Wealth Tax Act.

Ratio Decidendi: Sanction for prosecution must be granted only on conscious consideration of all material facts relevant to the alleged offence, and where the statutory mental element is integral to the charge, prosecution cannot be sustained if the sanctioning authority has not applied its mind to the material bearing on wilfulness and liability.

---