Tax prosecution cannot survive once the assessment foundation is set aside, leaving only the option of a fresh complaint after reassessment.

Where the assessment order forming the factual foundation of a tax-related criminal complaint is set aside in appeal, the complaint loses its substratum and cannot continue on the basis of the annulled assessment. The appellate order was treated as setting aside the entire assessment and remitting the matter for fresh determination, so the existing prosecution was quashed. A fresh complaint, if warranted after any reassessment, was left open, but the pending proceedings could not survive the obliterated assessment order.

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Issues: Whether the criminal complaint and the ensuing proceedings alleging concealment and false statements could continue after the entire assessment order forming the basis of the complaint had been set aside in appeal.

Analysis: The appellate order under section 251(1)(a) of the Income-tax Act, 1961 set aside the assessment and remitted the matter for fresh determination after consideration of additional documents. This was treated as a setting aside of the entire assessment and not merely a limited part of the computation. Once the assessment order that supplied the factual foundation of the complaint stood annulled, the complaint had no surviving substratum. The possibility of a fresh complaint, if warranted after fresh assessment, was left open, but the existing prosecution could not proceed on the basis of the quashed assessment.

Conclusion: The complaint and all subsequent proceedings were quashed in favour of the petitioner.

Final Conclusion: The criminal prosecution based on the original assessment could not survive after that assessment was set aside, and the petition was allowed.

Ratio Decidendi: Where the assessment order constituting the foundation of a tax-related criminal complaint is set aside in appeal, the complaint loses its substratum and the pending prosecution must be quashed, leaving room only for a fresh complaint after any subsequent reassessment if legally justified.

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