Stay of tax prosecution may be granted where pending appellate review may remove the factual basis of the alleged offence.

Criminal prosecution for tax offences is not ordinarily paused because parallel appellate proceedings are pending, and the criminal court remains bound to assess the evidence before it independently. Where, however, the very foundation of the complaint is under serious challenge in appellate proceedings and the appellate outcome may alter the existence of the alleged default, continuation of the prosecution may amount to abuse of process. In that situation, the Court may exercise inherent discretion to keep the criminal case in abeyance. The complaint was stayed until the Income-tax Appellate Tribunal's decision became available, without quashing the prosecution at that stage.

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Issues: Whether criminal proceedings for offences under the Income-tax Act should be stayed under the inherent powers of the Court pending the decision of the Income-tax Appellate Tribunal on the Commissioner's order.

Analysis: Prosecution for tax offences is not ordinarily to be stalled merely because parallel proceedings are pending, and the criminal court must act independently on the evidence before it. However, where the very foundation of the prosecution is under serious appellate challenge and the appellate result may materially affect the existence of the alleged omissions or commissions, continuation of the prosecution may amount to avoidable harassment and abuse of process. In such a situation, the Court may exercise discretion to keep the criminal proceedings in abeyance until the appellate decision becomes available.

Conclusion: The proceedings were directed to remain stayed until the decision of the Income-tax Appellate Tribunal became available, and the complaint was not quashed at this stage.

Final Conclusion: The petitioner obtained only interim protection against continuation of the prosecution pending the Tribunal's decision, leaving the question of further criminal proceedings open after that decision.

Ratio Decidendi: Where the basis of a tax prosecution is sub judice in parallel appellate proceedings and the appellate determination may remove the factual foundation of the alleged offence, the criminal court may, in the exercise of inherent and procedural discretion, stay the prosecution to prevent abuse of process.

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