Pendency of tax assessment does not bar prosecution, while responsibility and immunity in company offences remain matters for evidence.
Pendency of assessment proceedings, including appeal and remand, does not by itself bar criminal prosecution for Income-tax Act offences, and the later completion of assessment may reinforce the prosecution where the complaint rests on false claims, bogus vouchers, and non-existent suppliers. The complaint was not vitiated by the inclusion of deceased persons or nominee directors, because death only affects proceedings on proof and any immunity or absence of responsibility depends on evidence of good faith, control, and due diligence. Individual notices to each accused were not a condition precedent in this company-prosecution framework, so the absence of such notices did not invalidate the prosecution.
Issues: (i) Whether prosecution for offences under the Income-tax Act could be quashed because the assessment proceedings had been remanded and were pending when the complaint was filed; (ii) Whether the complaint suffered from non-application of mind by reason of the array of nominee directors and deceased persons as accused and by reason of the claimed statutory immunity; (iii) Whether the absence of individual notices to the petitioners prevented their being proceeded against as persons responsible for the company.
Issue (i): Whether prosecution for offences under the Income-tax Act could be quashed because the assessment proceedings had been remanded and were pending when the complaint was filed.
Analysis: Pending assessment proceedings, including proceedings carried in appeal and remand, do not bar the launching or continuance of criminal prosecution for tax offences. The subsequent completion of assessment only strengthened the basis for prosecution, since the alleged false claims, bogus vouchers, and non-existing suppliers remained the foundation of the complaint. Mere pendency or the possibility of a different outcome in assessment proceedings does not destroy the criminal proceeding.
Conclusion: The prosecution was maintainable and the challenge on this ground failed.
Issue (ii): Whether the complaint suffered from non-application of mind by reason of the array of nominee directors and deceased persons as accused and by reason of the claimed statutory immunity.
Analysis: The inclusion of persons who were stated to be dead did not vitiate the prosecution; at most, proceedings against such persons would abate on proof of death. As to nominee directors, the alleged immunity depended upon whether the acts were done in good faith and whether the persons were in charge of and responsible for the conduct of the company's business. Those matters required evidence and could not be conclusively decided at the threshold. The special liability provision under the Income-tax Act also contemplated prosecution of persons in charge of the company, subject to proof of absence of knowledge or due diligence.
Conclusion: The complaint was not liable to be quashed on this ground and the contention failed.
Issue (iii): Whether the absence of individual notices to the petitioners prevented their being proceeded against as persons responsible for the company.
Analysis: The requirement of determining a principal officer is relevant in specific tax-deduction contexts, but the present prosecution rested on the deeming and liability scheme applicable to offences by companies. Individual notices to each petitioner were therefore not a condition precedent for launching prosecution. The cited precedent concerning principal officer notices was held inapplicable on the facts.
Conclusion: The absence of individual notices did not invalidate the prosecution.
Final Conclusion: The petition to quash the criminal proceedings failed, and the prosecution was allowed to proceed.
Ratio Decidendi: Pendency, remand, or ongoing tax adjudication does not by itself bar criminal prosecution for statutory tax offences, and questions of responsibility, immunity, and due diligence in company prosecutions are ordinarily matters for evidence at trial.