Income-tax prosecution may begin before assessment ends, and possible future relief is no ground to quash proceedings.

Criminal prosecution for income-tax offences need not await completion of assessment or reassessment proceedings, and the mere pendency of those proceedings does not make the case premature. The High Court treated Section 279(2) of the Income-tax Act as confirming that compounding may occur before or after institution of criminal proceedings, and held that possible future relief under Section 273A or by compounding was only an expectancy. On that basis, inherent jurisdiction under Section 482 CrPC was not available to quash the prosecution at the threshold, and the challenge to maintainability failed.

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Issues: Whether a prosecution for offences under the Income-tax Act, 1961 and the Indian Penal Code, 1860 could be quashed as premature on the ground that assessment and reassessment proceedings were not yet completed.

Analysis: The petition sought exercise of inherent powers under Section 482 of the Code of Criminal Procedure, 1973 to stop the criminal case on the theory that the assessee might later secure reduction or waiver of penalty, or compound the offences. The Court held that no statutory provision barred launch of prosecution before completion of assessment proceedings. Section 279(2) of the Income-tax Act, 1961, which permits compounding either before or after institution of criminal proceedings, was treated as indicating that prosecution need not await completion of assessment. The possibility of future relief under Section 273A or compounding was regarded as a mere expectancy and not a ground to interfere at the threshold. The decision in Uttam Chand was distinguished because it did not decide the question whether prosecution could be initiated before assessment was complete.

Conclusion: The challenge to the prosecution as premature failed, and the criminal proceedings were not liable to be quashed on that ground.

Final Conclusion: The Court upheld the maintainability of criminal prosecution notwithstanding pending assessment-related proceedings, and refused to interfere in exercise of inherent jurisdiction.

Ratio Decidendi: Criminal prosecution for income-tax offences may be launched before completion of assessment proceedings, and the mere possibility of future relief in assessment or compounding does not by itself justify quashing the prosecution under inherent powers.

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