Tax evasion prosecution survives pending reassessment where seized records show prima facie suppression and falsified accounts.

Pendency of reassessment proceedings does not bar criminal prosecution under sections 276C and 277 of the Income-tax Act where seized material shows a prima facie case of tax evasion and falsification of accounts. The record here indicated parallel cash and accounting entries, maintenance of double records, and suppression of transactions; a later reassessment after hearing the assessee did not obliterate those adverse findings. The principle that prosecution may fail when its very foundation is set aside was held inapplicable on these facts, so quashing of the complaint, charges, and revisional order was refused and the prosecution remained maintainable.

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Issues: Whether the criminal complaint and charges under sections 276C and 277 of the Income-tax Act, 1961 were liable to be quashed on the ground that the earlier assessment order had been set aside in appeal and reassessment proceedings were pending.

Analysis: The material seized from the assessee's premises showed parallel cash and accounting entries and indicated maintenance of double records and suppression of transactions. Although the earlier assessment was set aside for want of opportunity, a fresh assessment was later made after hearing the assessee and the adverse findings were reiterated. The pendency of reassessment proceedings does not, by itself, bar criminal prosecution for offences of tax evasion and falsification of accounts where the record discloses a prima facie case. The quashing principle arising from a subsequent setting aside of the very foundation of prosecution was held inapplicable on these facts.

Conclusion: The petitioners were not entitled to quashing of the complaint, framing of charges, or the revisional order; the prosecution was maintainable and the petition failed.

Final Conclusion: Criminal proceedings for tax evasion and false accounts can proceed despite pending reassessment when the record supports a prima facie case and the adverse findings have not been obliterated.

Ratio Decidendi: Pendency of reassessment proceedings does not bar prosecution under sections 276C and 277 of the Income-tax Act, 1961 where there is prima facie material showing evasion and falsification of accounts.

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