1996 (12) TMI 28 - HC - Income Tax

Assessment Year Criminal Proceedings Criminal Prosecution Sanction For Prosecution Wilful Attempt To Evade Tax

Summary

Issues:
1. Prosecution under sections 276C and 277 of the Income-tax Act, 1961.
2. Quashing of prosecution based on similar assessment in a different year.
3. Inclusion of income from Hai clinic in the assessment.
4. Abuse of process of the court.

Analysis:
The petitioner, an income-tax assessee, sought to quash his prosecution under sections 276C and 277 of the Income-tax Act, 1961. The assessment for the year 1979-80 initially showed a total income of Rs. 14,770, but upon completion, it was assessed at Rs. 1,28,390, including income from the Hai clinic. Subsequently, the income from the clinic was reduced to Rs. 55,000 by the Commissioner of Income-tax (Appeals) and confirmed by the Tribunal. The petitioner was prosecuted for concealing income under sections 276C and 277. The petitioner argued that a similar assessment for the following year had been challenged, and the prosecution was quashed by the High Court. The Revenue counsel also acknowledged the quashing of prosecution for the subsequent year and agreed that the present prosecution could not stand based on the previous judgment.

The court found that including the income from the Hai clinic in the petitioner's total income was incorrect, as it belonged to his wife. Quashing the prosecution for a subsequent year under similar circumstances set a precedent. The court held that prosecuting the petitioner for concealing income in the assessment year 1979-80 was an abuse of the court's process, especially when the sanction order for prosecution covered both years. Consequently, the court allowed the writ application, quashed the prosecution, and deemed it an abuse of the court's process, ensuring justice.

In conclusion, the judgment highlighted the importance of consistency in legal proceedings and the need to avoid abusing the court's process. The court's decision to quash the prosecution was based on the incorrect inclusion of income from the Hai clinic, previous precedent of quashing a similar prosecution, and the overarching principle of upholding justice and fairness in legal matters.