Independent sanction under income-tax prosecution law cannot depend on prior approval; prosecution was quashed.

Sanction for prosecution under the Income-tax Act must be an independent exercise of statutory discretion by the competent authority. Where the Commissioner of Income Tax first sought and obtained prior approval from the Chief Commissioner before issuing sanction under Section 279, the Commissioner's satisfaction was not independent and the process did not reflect a proper application of mind by the approving authority. Since the statutory scheme did not require such prior approval, the sanction procedure was held to be inconsistent with Section 279. The sanction order and the resulting criminal prosecution under Section 276CC were therefore invalid and quashed.

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Issues: Whether the sanction for prosecution under Section 279 of the Income-tax Act, 1961 was vitiated because it was preceded by prior approval of the Chief Commissioner of Income Tax, thereby rendering the prosecution under Section 276CC unsustainable.

Analysis: The sanctioning authority under Section 279 was the Commissioner of Income Tax, and the statutory scheme did not require prior approval from the Chief Commissioner. The file showed that the Commissioner first sought approval from the superior authority and then issued the sanction order. This made the Commissioner's satisfaction dependent on the Chief Commissioner's approval, so the sanction could not be treated as an independent exercise of statutory discretion by the competent authority. The approval also did not disclose any clear application of mind by the Chief Commissioner. The procedure adopted was therefore not in accordance with Section 279.

Conclusion: The sanction order and the consequent criminal proceedings were invalid and were quashed.

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