Invalid reassessment destroys criminal tax complaint under section 277 when the reopening itself is annulled.

A prosecution under section 277 of the Income-tax Act could not survive once the reassessment on which it was founded had been set aside by the Appellate Tribunal as ab initio void. The Tribunal had held that reopening based on an internal audit party's view on a point of law did not amount to valid information for reassessment, and that the substituted departmental provision relied on became effective only from 1 April 1976. With the reassessment annulled, the foundation for the criminal complaint disappeared, and the complaint was held not maintainable; the proceedings were quashed.

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Issues: Whether a prosecution under section 277 of the Income-tax Act, 1961 could be maintained when the reassessment on which it was founded had already been set aside by the Appellate Tribunal as ab initio void.

Analysis: The complaint was based on the inclusion of the minors' share of profits in the petitioner's income and on the allegation that the return originally filed was false. The Tribunal had already cancelled the reassessment on the ground that it had been initiated on the basis of the internal audit party's view on a point of law, which could not constitute valid information for reopening under the settled legal position. The Tribunal also held that the substituted provision relied upon by the department became effective only from 1 April 1976. Once the reassessment itself stood annulled, the foundation for the criminal complaint ceased to exist.

Conclusion: The complaint was not maintainable and the proceedings based on it were quashed.

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