Prosecution despite pre-assessment tax payment and the presumption under section 278E remained under interim stay.

Prosecution under the Income-tax Act was examined in relation to payment of return and tax with interest before the assessment order, and the alleged effect of such payment on continuation of proceedings. The document also notes the question whether the statutory presumption under section 278E was displaced by absence of mens rea. The Supreme Court issued notice, made it returnable in four weeks, and stayed further proceedings in the meantime. No final adjudication on the merits was made.

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Issues: Whether prosecution could proceed against the assessee despite the return and tax with interest having been paid before the assessment order, and whether the statutory presumption under section 278E of the Income-tax Act, 1961 was displaced by absence of mens rea.

Outcome: Notice issued, returnable in four weeks, and further proceedings stayed in the meantime. No final adjudication was made on the merits.

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