Law:

Section:

Section 276C, read with section 277, of the Income-tax Act, 1961 - Offences and prosecution - Wilful attempt to evade tax, etc. - Assessment year 1975-76 - Whether it will not be right to quash prosecution proceedings on ground of delay, if otherwise an offence has been committed, unless some special feature or prejudice is shown - Held, yes FACTS The petitioner filed revised return on 20-10-1978 for the assessment year 1975-76 in response to a notice under section 148 and the re-assessment was framed on 16-10-1979. The Tribunal, vide order dated 5-5-1987, decided the matter against the petitioner against which a reference was pending in the High Court. The department filed a complaint on 26-3-1990 under sections 276C and 277 alleging concealment of income. On writ for quashing the complaint, the petitioner contended that cause of action for filing a complaint was on 16-11-1979, when a finding of concealment of income was recorded and, in any case, on 5-5-1987, when the Tribunal restored the said finding and that the complaint could not be allowed to be filed long after finding of concealment was recorded unless there was a valid explanation. HELD There cannot be hard and fast rule to hold when delay is a ground for holding that the prosecution is vitiated. The extent of sentence, nature of the offence and circumstances of case have to be taken into account. [Para 5] Even though a bar of limitation laid down under Chapter XXXVI of the Code of Criminal Procedure is not applicable to the Income-tax Act, in view of provisions of the Economic Offences (Inapplicability of Limitation) Act, 1974, article 21 of the Constitution confers a right to speedy trial and even where there is no statutory bar of limitation, prosecution can be held to be barred, if there is undue delay. Though the cause of action for initiating prosecution is furnished on the date when income is concealed or on the date when concealment becomes known to the department, once proceedings are finalised, the prosecution has to be commenced within a reasonable period. [Paras 5, 8] Further, as held in S. Vaidyanathan, ITO v. Dr. B. Mathuram & Sons [1989] 179 ITR 463 [1992] 53 Taxman 126 (Mad.), a…

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