Belated return filed before prosecution sanction defeated Section 276CC prosecution and the criminal proceedings were quashed.

Section 276CC applies where an assessee fails to furnish a return within the prescribed time; where the return was filed belatedly but before sanction for prosecution under Section 279, and the return was later accepted and assessed, the statutory basis for launching and continuing prosecution was absent. On the admitted facts, the premise for sanction was incorrect, so the criminal proceedings under Section 276CC were quashed.

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Issues: Whether prosecution under Section 276CC of the Income-tax Act, 1961 could be sustained when the return of income had been filed belatedly before the sanction for prosecution and the return had been accepted and assessed.

Analysis: Section 276CC is attracted when an assessee fails to furnish the return within the prescribed time. On the admitted facts, the return had been filed before the order granting sanction under Section 279 of the Income-tax Act, 1961. The fact that the return was filed belatedly, and was thereafter accepted and assessed, meant that the premise on which sanction was granted was incorrect. In such circumstances, the statutory basis for launching and continuing the prosecution was absent.

Conclusion: The prosecution under Section 276CC of the Income-tax Act, 1961 was not sustainable and the criminal proceedings were quashed in favour of the petitioner.

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