Inherent criminal jurisdiction may survive failed revision where a debatable tax issue defeats wilful evasion allegations.
Inherent jurisdiction under section 482 of the Code of Criminal Procedure may still be invoked even after a revision against a charge order has failed, where intervention is needed to prevent miscarriage of justice. The note also states that, if the tax appellate material shows the underlying payment issue to be debatable and the disallowance has been reduced, the essential ingredient of a wilful attempt to evade tax under section 276C(1) is not established. On that reasoning, the criminal charge against the individual was quashed, while proceedings against the company were allowed to continue.
Issues: (i) Whether the High Court could exercise inherent jurisdiction under section 482 of the Code of Criminal Procedure, 1973 notwithstanding dismissal of the revision against the charge order. (ii) Whether, in view of the Income-tax Appellate Tribunal's order reducing the disallowance and treating the payment issue as debatable, a prima facie case for offence under section 276C(1) of the Income-tax Act, 1961 was made out against the petitioner.
Issue (i): Whether the High Court could exercise inherent jurisdiction under section 482 of the Code of Criminal Procedure, 1973 notwithstanding dismissal of the revision against the charge order.
Analysis: The inherent power under section 482 is meant to prevent miscarriage of justice and is not excluded merely because a revision against the order framing charge has failed. The availability of such jurisdiction depends on the facts of the case and the Court may examine the merits to determine whether interference is warranted.
Conclusion: The High Court held that it could exercise jurisdiction under section 482 in the facts of the case.
Issue (ii): Whether, in view of the Income-tax Appellate Tribunal's order reducing the disallowance and treating the payment issue as debatable, a prima facie case for offence under section 276C(1) of the Income-tax Act, 1961 was made out against the petitioner.
Analysis: The Tribunal had partly allowed the assessee's appeal and held that the reasonable rate for the work done by the related concern was higher than that adopted by the Assessing Officer, thereby reducing the disallowance. This showed that the question whether the payment was excessive was capable of more than one view. In such circumstances, the essential ingredient of deliberate intention to evade tax, required for section 276C(1), could not be said to exist against the petitioner.
Conclusion: No prima facie case under section 276C(1) was made out against the petitioner.
Final Conclusion: The charge against the petitioner was quashed and he stood discharged, while the complaint was permitted to continue against the company.
Ratio Decidendi: Where the material before the criminal court itself shows that the underlying tax issue is debatable and the appellate tax authority has taken a view inconsistent with deliberate evasion, the ingredient of wilful attempt to evade tax for prosecution under section 276C(1) is not established, and inherent powers may be used to prevent miscarriage of justice.
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AI Drafter ✕
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