Income-tax prosecution complaints survived limitation and transfer challenges; search-based allegations were left for trial.

Criminal complaints under the Income-tax Act were not barred by limitation because offences under sections 276C(1), 277 and 278 fell within the Economic Offences (Inapplicability of Limitation) Act, 1974, so Chapter XXXVI CrPC did not apply. The complaints were based on search and seizure material, and disputed questions such as alleged suppression of sale consideration were left for trial, not quashing. The transfer of the matters from the Economic Offences Court to the Sessions Court was also upheld: in the absence of a designated Special Court, a Sessions Court could proceed without formal committal, and no legal prejudice was shown from the altered appellate or revisional route.

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Issues: (i) whether the criminal complaints under the Income-tax Act were barred by limitation and liable to be quashed; (ii) whether transfer of the complaints from the Economic Offences Court to the Sessions Court was illegal for want of committal or jurisdiction and for deprivation of appellate or revisional remedy.

Issue (i): Whether the criminal complaints under the Income-tax Act were barred by limitation and liable to be quashed

Analysis: The offences alleged under sections 276C(1), 277 and 278 of the Income-tax Act were held to be covered by the Economic Offences (Inapplicability of Limitation) Act, 1974. Since the Schedule to that Act includes the Income-tax Act, Chapter XXXVI of the Code of Criminal Procedure, 1973 does not apply to such complaints. The Court also found that the complaints were founded on search and seizure material and not merely on assessment proceedings, and that the disputed factual questions, including alleged suppression of sale consideration and reliance on third-party material, were matters for trial rather than for quashing.

Conclusion: The complaints were not barred by limitation and no ground was made out for quashing them.

Issue (ii): Whether transfer of the complaints from the Economic Offences Court to the Sessions Court was illegal for want of committal or jurisdiction and for deprivation of appellate or revisional remedy

Analysis: The Court considered the scheme of the Income-tax Act, the Code of Criminal Procedure, 1973, and the special court directions issued for cases involving MPs and MLAs. It held that, in the absence of a designated Special Court under section 280A of the Income-tax Act for Tamil Nadu at the relevant time, the complaints fell to be dealt with under the Code. The Court accepted that a Court of Session can entertain a transferred matter without formal committal, and held that the mere change of appellate forum or loss of a revisional stage under section 397 of the Code of Criminal Procedure, 1973 did not establish legal prejudice. It further found that the transfer was made in the context of the Supreme Court directions concerning fast-tracking of cases involving elected legislators, and declined to interfere with the administrative transfer.

Conclusion: The transfer to the Sessions Court was upheld and the challenge to jurisdiction and procedure failed.

Final Conclusion: The prosecution survived both the limitation challenge and the challenge to transfer, and the proceedings were permitted to continue before the transferee court.

Ratio Decidendi: Where a statute excludes the application of limitation to specified economic offences and no concrete prejudice is shown, criminal complaints founded on search and seizure material cannot be quashed on limitation or jurisdictional grounds merely because they are transferred to a higher court in implementation of special trial arrangements.

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