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2023 (9) TMI 115 - HC - Income TaxProsecution u/s 276C(1) - willful default of payment of tax - penalty proceeding was also initiated u/s 271(1)(c) - assessee is alleged to have attempted to evade the tax liability by furnishing inaccurate particulars of income leads to concealment of income - HELD THAT:- A criminal prosecution for an offence under a special statute must not be initiated as a matter of course where the prosecution would involve intricate questions of interpretation of the Income Tax Act. The object of launching criminal prosecution for willful default in complying with the provisions of the Income Tax Act is to prevent evasion of tax. See GOPALJI SHAW case [1988 (3) TMI 41 - CALCUTTA HIGH COURT] The Hon'ble Supreme Court in G.L. Didwania & another [1993 (11) TMI 3 - SUPREME COURT] has held that if the appellate tribunal has set aside the order of penalty, how the criminal proceeding can be sustained. Thus once penalty order is set aside, it will be presumed that there is no concealment and quashing of prosecution under Section 276C(1) of the Income Tax Act is automatic. The petitioner cannot be allowed to suffer and to face criminal trial and the same cannot sustain in the eyes of law. There is no doubt that penalty proceeding and prosecution can go simultaneously in the facts and circumstances of the cases, however, in the case in hand, the penalty proceeding has already been set aside in view of the appellate order. The Court finds that in view of the above judgments, the case of the petitioner is fit to be allowed. Further, if the penalty proceeding has been set aside, mens rea is one of the essential ingredient of a criminal offence. Petition allowed.
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