Wilful tax evasion prosecution can proceed independently of assessment, and a remand does not bar sanction or complaint.

Criminal prosecution for wilful tax evasion was held maintainable even though the assessment had been set aside and reassessment proceedings were pending or remanded, because the complaint was based on alleged concealment and non-disclosure of capital gains rather than on the assessment order itself. The Court treated assessment and prosecution as separate and distinct, and held that prosecution need not await completion of assessment where the materials still supported concealment. The sanction for prosecution was also upheld as reasoned and not mechanical, since the authority considered the transactions, the assessee's representation, and the statutory position that prosecution is independent of assessment.

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Issues: (i) Whether criminal prosecution for wilful attempt to evade tax could proceed notwithstanding the setting aside of the assessment order and the pendency or remand of assessment proceedings; (ii) Whether the sanction for prosecution was vitiated on the ground that the appellate order setting aside the assessment was not considered.

Issue (i): Whether criminal prosecution for wilful attempt to evade tax could proceed notwithstanding the setting aside of the assessment order and the pendency or remand of assessment proceedings.

Analysis: The complaint was treated as one founded on the alleged concealment of share transactions and omission to disclose capital gains in the return, not as one dependent upon the assessment order. The assessment and reassessment proceedings were held to be separate and distinct from prosecution. It was further noted that prosecution need not await completion of assessment and that an exoneration on a technical ground does not bar prosecution where the alleged concealment survives on the materials.

Conclusion: The prosecution was held maintainable and the challenge on this ground failed.

Issue (ii): Whether the sanction for prosecution was vitiated on the ground that the appellate order setting aside the assessment was not considered.

Analysis: The sanctioning authority had considered the assessee's representation, the nature of the transactions, the non-disclosure of capital gains, and the statutory position that prosecution is independent of assessment proceedings. The order also recorded the applicability of the statutory presumption in cases of wilful evasion. The sanction was therefore found to be reasoned and not mechanical.

Conclusion: The sanction was held valid and the challenge on this ground failed.

Final Conclusion: The proceedings for prosecution under the Income-tax Act were upheld, and the request to quash the complaint was rejected.

Ratio Decidendi: Criminal prosecution for wilful tax evasion can proceed independently of assessment or reassessment proceedings, and a technical setting aside or remand of the assessment does not by itself extinguish the prosecution where concealment is otherwise alleged and supported by materials.

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