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Issues: (i) Whether the criminal proceedings were liable to be discharged for want of territorial jurisdiction. (ii) Whether the complaint was vitiated because the sanction order did not cover all the penal provisions invoked in the complaint.
Issue (i): Whether the criminal proceedings were liable to be discharged for want of territorial jurisdiction.
Analysis: Jurisdiction under Section 124(1)(b) of the Income-tax Act, 1961 depends on the assessee's place of residence or business. The materials indicated that the petitioner's residence, the assessment-related circumstances, and the property transaction were connected with Krishnagiri, which created a substantial doubt about the competence of the Madurai court to proceed. Where territorial jurisdiction itself is doubtful on the admitted and prima facie material, the matter cannot be left to trial as a mere evidentiary issue.
Conclusion: The objection as to territorial jurisdiction was accepted, and the proceedings were held not maintainable before the Madurai court.
Issue (ii): Whether the complaint was vitiated because the sanction order did not cover all the penal provisions invoked in the complaint.
Analysis: The sanction order referred only to one penal provision, whereas the complaint invoked additional offences. A prosecution under the Income-tax Act, 1961 must rest on valid sanction for the offences actually proceeded with, and a sanction that does not encompass the invoked offences creates a foundational infirmity. The court treated this defect as going to the root of the prosecution and not as a matter to be cured merely by evidence at trial.
Conclusion: The sanction-related objection was upheld, and the complaint was found legally unsustainable at the threshold.
Final Conclusion: The revisional court set aside the order refusing discharge, discharged the accused from the prosecution, and left liberty to institute a fresh complaint before the competent court after obtaining proper sanction.
Ratio Decidendi: Where the material prima facie shows absence of territorial jurisdiction and the sanction does not validly cover the offences alleged, the prosecution is liable to be terminated at the discharge stage.
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