Threshold discharge in tax prosecution denied where complaint showed prima facie material and defence raised disputed facts.

Discharge under Section 245(2) CrPC is available only where the complaint is groundless on its face; if the complaint discloses prima facie material and the defence turns on disputed questions of fact, the matter must go to trial. In a prosecution under Section 276CC of the Income-tax Act, the accused's contention that no tax was payable and that a refund was due raised factual disputes that could not be examined at the threshold. The court held that the accused were not entitled to discharge under Section 245(2), and the prosecution was permitted to proceed, with liberty to seek discharge later under Section 245(1) after prosecution evidence.

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Issues: Whether the accused, facing prosecution under Section 276CC of the Income-tax Act, 1961, were entitled to discharge under Section 245(2) of the Code of Criminal Procedure, 1973 at the threshold.

Analysis: The allegations in the complaint disclosed prima facie material for taking cognizance and issuing process. The plea that the petitioners were not liable to pay tax and that the Department owed a refund raised disputed questions of fact, which could not be examined in proceedings under Section 245(2) of the Code of Criminal Procedure, 1973. Discharge at that stage is justified only where the complaint is groundless on its face.

Conclusion: The petitioners were not entitled to discharge under Section 245(2) of the Code of Criminal Procedure, 1973, and the prosecution was allowed to proceed. The petition was closed with liberty to seek discharge under Section 245(1) of the Code of Criminal Procedure, 1973 after examination of prosecution witnesses.

Ratio Decidendi: Discharge under Section 245(2) of the Code of Criminal Procedure, 1973 can be granted only when the complaint is groundless on its face, and disputed questions of fact or prima facie material for prosecution must be left for trial.

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