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of <h1>Criminal prosecutions under s.276C, s.277 and ss.193,196 IPC maintainable despite pending reassessment; s.279 allows Commissioner action</h1> The SC held that prosecutions under s. 276C and s. 277 of the Act and ss. 193 and 196 IPC were maintainable despite pending reassessment proceedings. ... Reassessment proceedings - Discrepancies in the accounts - Whether prosecutions for offences punishable u/s 276C and s. 277 of the Act and under ss. 193 and 196 of the Indian Penal Code instituted by the Department while the reassessment proceedings under the Act are pending are liable to be quashed on the ground that they were not maintainable - Held That:- Section 279 of the Act provides that a person shall not be proceeded against for an offence punishable under s. 276C or s. 277 of the Act except at the instance of the Commissioner. It further provides that a person shall not be proceeded against for an offence punishable under those provisions in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him under clause (iii) of sub-s. (1) of s. 271 has been reduced or waived by an order under s. 273A. The Commissioner has the power either before or after the institution of proceedings to compound any such offence. In this case it is not claimed that the Commissioner has not initiated the proceedings for instituting the complaints. No other legal bar for the institution of the proceedings is urged except stating that in the event of the petitioner being exonerated in the reassessment proceedings, the prosecutions may have to be dropped. There is no rigid rule which makes it necessary for a criminal court to adjourn or postpone the hearing of a case before it indefinitely or for an unduly long period only because some proceeding which may have some bearing on it is pending elsewhere. But this, however, has no relevance to the question of maintainability of the prosecution. The prosecution in those circumstances cannot be quashed on the ground that it is premature one. On a careful consideration of the relevant provisions of the Act, we are of the view that the pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under s. 276C or s. 277 of the Act. The institution of the criminal proceedings cannot in the circumstances also amount to an abuse of the process of the court. The High Court was, therefore, right in refusing to quash the prosecution proceeding in the four cases instituted against the petitioner under s. 482 of the Code of Criminal Procedure. Issues:- Whether prosecutions for offenses under the Income Tax Act and Indian Penal Code can be quashed due to pending reassessment proceedings.Analysis:The petitioner, a proprietor of a company, filed a return for the assessment year 1977-78 under the Income Tax Act, disclosing income. Subsequently, a search revealed discrepancies in the accounts, leading to complaints for offenses under the Act and Indian Penal Code. The petitioner sought to quash the proceedings citing pending reassessment. The Supreme Court addressed the issue of whether prosecutions can be quashed due to reassessment proceedings. The Court noted that there is no legal provision barring the institution of prosecutions during pending reassessment. Section 279 of the Act specifies conditions for proceeding against an individual for offenses under the Act. The Court emphasized that the pendency of reassessment does not prevent the initiation of criminal proceedings. It clarified that a favorable finding in reassessment does not bind the criminal court. The Court cited a case where a similar contention was rejected, emphasizing the independence of criminal proceedings from tax assessments. The Court disagreed with a Calcutta High Court decision that linked prosecution initiation to the completion of penalty proceedings. The Court highlighted that the power to reduce or waive penalties does not restrict the initiation of prosecutions. It further clarified that a criminal court may adjourn proceedings if a related tax assessment is imminent but noted that this does not affect the maintainability of the prosecution. The Court concluded that reassessment pendency does not bar criminal prosecutions and upheld the refusal to quash the proceedings initiated against the petitioner. The special leave petition was dismissed, affirming the validity of the prosecutions.This judgment clarifies that pending reassessment proceedings do not prevent the initiation of criminal prosecutions for offenses under the Income Tax Act and Indian Penal Code. The Court emphasized the independence of criminal proceedings from tax assessments and rejected the notion that prosecutions must await the completion of penalty proceedings. The Court highlighted that a favorable tax assessment finding does not bind the criminal court, and adjourning criminal proceedings for tax assessments is discretionary and should not unduly delay the legal process. The judgment underscores that the pendency of reassessment does not constitute an abuse of the court process and upholds the validity of prosecutions initiated despite ongoing tax assessments.
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