False prosecution under income-tax law can be quashed when appellate findings negate concealment and falsity.

Criminal prosecution for false statement and concealment under section 277 of the Income-tax Act could not survive where appellate findings had already accepted the original stock list as correct and rejected any concealment of income. Those findings removed the factual foundation of the complaint, and the material did not show the falsehood and knowledge required for a criminal trial. The High Court's inherent power under section 482 of the Code of Criminal Procedure remained available despite the existence of revision under section 397, because it may be used to prevent abuse of process and secure the ends of justice. On that basis, the complaint and pending proceedings were quashed.

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Issues: (i) Whether criminal proceedings under section 277 of the Income-tax Act, 1961 could continue after the appellate authorities had found that the original stock list was correct and that there was no concealment of income. (ii) Whether the High Court could invoke its inherent jurisdiction under section 482 of the Code of Criminal Procedure, 1973 despite the availability of revision under section 397 of that Code.

Issue (i): Whether criminal proceedings under section 277 of the Income-tax Act, 1961 could continue after the appellate authorities had found that the original stock list was correct and that there was no concealment of income.

Analysis: The prosecution was founded on the allegation that the assessee and the petitioner had filed a false statement of raw materials and concealed machinery components in stock. Both the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal, after scrutinising the records, accepted the original list as correct and held that the later list was wrongly prepared by the accountant on a mistaken basis. Those findings negated concealment and undermined the very foundation of the complaint. No additional material was shown to support the allegation that the statement relied upon in the complaint was false in the manner required by section 277. The amended provision also required the element of falsehood with knowledge or belief, and the material on record did not justify a criminal trial on that basis.

Conclusion: The prosecution under section 277 could not be sustained and the complaint and proceedings were liable to be quashed.

Issue (ii): Whether the High Court could invoke its inherent jurisdiction under section 482 of the Code of Criminal Procedure, 1973 despite the availability of revision under section 397 of that Code.

Analysis: The existence of a revisional remedy did not create an absolute bar to exercise of inherent powers. Those powers remain available to prevent abuse of process and to secure the ends of justice, though they must be used sparingly and with self-restraint. In the circumstances of the case, continuation of the criminal trial would have caused avoidable hardship and harassment and would have amounted to abuse of process, justifying intervention under section 482 notwithstanding the revisional provision.

Conclusion: The High Court was competent to invoke section 482 and grant relief notwithstanding section 397.

Final Conclusion: The complaint and the pending criminal proceedings were quashed because the foundation of the prosecution had been displaced by the appellate findings and continuation of the trial would have been an abuse of process.

Ratio Decidendi: Where the very basis of a prosecution under section 277 of the Income-tax Act stands negated by final appellate findings that no concealment or falsity existed, the High Court may quash the criminal proceedings in exercise of its inherent powers to prevent abuse of process and secure the ends of justice.

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