2021 (12) TMI 879 - HC - Income Tax

Court rejects petition challenging prosecution under Section 276C(1) of Income Tax Act. Trial deemed necessary for substantiating charges.

Nayan Jayantilal Balu Versus Union of India. Through the Secretary Department of Revenue, Ministry of Finance, New Delhi, The Central Board of Direct Taxes, Principal Commissioner of Income Tax- 19 Designated Authority, Mumbai,  Income-tax Officer, 19 (2) (4),  Mumbai, Assistant Commissioner of Income-tax- 19 (1)  Mumbai,  State of Maharashtra

Nayan Jayantilal Balu Versus Union of India. Through the Secretary Department of Revenue, Ministry of Finance, New Delhi, The Central Board of Direct ... Issues:Challenging prosecution sanction under Section 276C(1) of the Income Tax Act, 1961 and complaint filed against the petitioner.Detailed Analysis:Issue 1: Challenging Prosecution SanctionThe petitioner challenged the order dated 25th January 2018 sanctioning the prosecution against him under Section 276C(1) of the Income Tax Act, 1961. The petitioner contended that the penalty exceeding &8377; 50,000 imposed under Section 271C(1) must be confirmed by the ITAT before initiating prosecution. The respondent argued that the petitioner's willful attempt to evade tax, as alleged, satisfies the ingredients of the offense under Section 276C(1). The court examined the relevant provision of the Income Tax Act and concluded that the order of sanction was granted after considering the necessary facts and material, indicating an attempt to evade tax by the petitioner.Issue 2: Quashing of ComplaintThe court referred to the case of State of Haryana v. Bhajan Lal, which provides categories of cases where the power to quash criminal proceedings can be exercised. The court noted that the allegations in the complaint against the petitioner, regarding evasion of tax, were supported by material on record. The court emphasized that at this stage, the truthfulness of the allegations cannot be evaluated, and the trial must proceed to allow the prosecution to substantiate the charges. Considering the accusations and material on record, the court found that the ingredients of the offense under Section 276C(1) were prima facie satisfied, leading to the dismissal of the petition challenging the complaint.Conclusion:The court dismissed the petition challenging the prosecution sanction and complaint against the petitioner under Section 276C(1) of the Income Tax Act, 1961. The court held that interference under Article 226 of the Constitution of India was not warranted at this stage, as the ingredients of the offenses were prima facie satisfied. The court emphasized the need for the trial to proceed for the prosecution to present evidence supporting the allegations made against the petitioner.