Prosecution based on assessment finding cannot survive once that finding is set aside; criminal complaint was quashed.

A criminal complaint under sections 276C and 277 of the Income-tax Act, 1961 was unsustainable after the appellate tribunal set aside the assessment finding on which it rested. The prosecution had been founded on the view that certain cash credit entries were not genuine and therefore represented income; once that finding was reversed, the factual and legal basis of the complaint disappeared. The allegations could not survive independently of the assessment finding, and the complaint was quashed.

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Issues: Whether the criminal complaint under sections 276C and 277 of the Income-tax Act, 1961 was liable to be quashed after the appellate tribunal set aside the assessment finding on which the complaint was founded.

Analysis: The complaint was founded on the Inspecting Assistant Commissioner's finding that certain cash credit entries were not genuine and constituted income. That finding having been set aside by the Income-tax Appellate Tribunal, the factual and legal basis of the prosecution disappeared. In such circumstances, the allegations in the complaint could not survive.

Conclusion: The complaint was quashed.

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