Income-tax prosecution based on a set-aside assessment was quashed because the foundation of the complaint no longer survived.

Criminal prosecution under the Income-tax Act cannot be sustained where the complaint and cognizance are founded on an assessment that has been annulled in appeal and remitted for fresh assessment, with no subsequent assessment shown to have been completed. On those facts, continuation of proceedings on the basis of the set-aside assessment was held unsustainable, and the prosecution as well as the cognizance order were quashed.

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Issues: Whether criminal prosecution for offences under the Income-tax Act could be quashed when the assessment order forming the basis of the prosecution had already been set aside in appeal.

Analysis: The complaint and cognizance were founded on the assessment for the relevant year. That assessment had been annulled by the appellate authority and the matter was remitted for fresh assessment, with no subsequent assessment shown to have been completed. In such circumstances, continuation of the prosecution on the basis of the set-aside assessment could not be sustained.

Conclusion: The criminal prosecution and the order taking cognizance were quashed as being unsustainable.

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