2000 (1) TMI 25 - HC - Income Tax

Summary

Issues involved:
1. Requirement of a show-cause notice before filing a complaint for prosecution under sections 276C and 277 of the Income-tax Act, 1961.

Analysis:
The High Court of Himachal Pradesh dealt with the issue of whether a show-cause notice is necessary before launching a prosecution under sections 276C and 277 of the Income-tax Act, 1961. The respondents, a partnership firm and its partners, were acquitted by the Chief Judicial Magistrate, Shimla, based on the absence of an opportunity for them to be heard before prosecution. The appellant contended that no show-cause notice was required under the Income-tax Act, and the evidence supported the prosecution. The respondents' counsel supported the acquittal based on the grounds detailed in the judgment.

The court referred to a case before the Rajasthan High Court, where it was held that principles of natural justice must be applied unless expressly excluded. The Karnataka High Court also emphasized the importance of providing an opportunity to the accused before prosecution. In contrast, the Madras and Madhya Pradesh High Courts held that no notice was necessary before initiating prosecution. However, the Supreme Court's decision in C. B. Gautam v. Union of India supported the requirement of natural justice in such cases unless expressly excluded.

The High Court agreed with the Rajasthan, Karnataka, and Calcutta High Courts, emphasizing that notice before prosecution is essential unless expressly excluded. The court concluded that the absence of a show-cause notice rendered the prosecution bad, affirming the respondents' acquittal. The appeal was dismissed, and the bail bonds of the respondents were cancelled and discharged.