Pendency of tax appeals does not bar prosecution for late return filing or willful tax evasion when suppression is alleged.

Pendency of income-tax appeals and belated tax payment do not, by themselves, bar prosecution for failure to file returns on time or for willful attempt to evade tax under the Income-tax Act. The offences were treated as distinct from assessment or appellate proceedings, and earlier compounding in some matters did not create an automatic entitlement to similar treatment in remaining cases. For quashing under Section 482 CrPC, allegations of mala fides, non-service, absence of the assessee, and communication gaps with a representative were found insufficient where the complaints disclosed late filing, suppression of income, and the statutory presumption under Section 278E applied.

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Issues: (i) Whether pendency of the income-tax appeal or belated payment of tax and compounding in some cases barred prosecution for offences under Sections 276CC and 276C(1) of the Income-tax Act, 1961; (ii) Whether the complaints were liable to be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the grounds of alleged mala fides, non-service, and absence of willful evasion.

Issue (i): Whether pendency of the income-tax appeal or belated payment of tax and compounding in some cases barred prosecution for offences under Sections 276CC and 276C(1) of the Income-tax Act, 1961.

Analysis: The statutory scheme treated failure to file returns within time and willful attempt to evade tax as distinct offences. The pendency of assessment or appellate proceedings did not operate as a bar to criminal prosecution. The fact that some earlier complaints had been compounded did not confer an automatic right to similar treatment in the remaining matters, particularly when the Department alleged concealment of income and belated filings after detection.

Conclusion: The pendency of the tax proceedings and the earlier compounding did not bar the present prosecutions; the issue was decided against the assessee.

Issue (ii): Whether the complaints were liable to be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the grounds of alleged mala fides, non-service, and absence of willful evasion.

Analysis: The materials showed non-filing of returns in time, belated filing after investigation, and suppression of income. Section 278E of the Income-tax Act, 1961 raised a presumption in prosecution for such offences, and the Court found that the facts alleged disclosed sufficient material to proceed. The plea of absence from India, communication gap with the representative, and the claim of mala fides were held insufficient to displace the statutory presumption or to justify quashing at the threshold.

Conclusion: The complaints were not liable to be quashed and the issue was decided against the assessee.

Final Conclusion: The prosecution for failure to file returns in time and for alleged willful attempt to evade tax was permitted to proceed, and the connected proceedings stood closed.

Ratio Decidendi: Pendency of tax adjudication or partial compounding does not, by itself, bar prosecution for tax offences where the complaint discloses non-filing and suppression of income, and the High Court will not quash such proceedings under inherent powers in the face of the statutory presumption under Section 278E.

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