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Section 276C, read with sections 277 and 278B, of the Income-tax Act, 1961 - Offences and prosecutions - Willful attempt to evade tax, etc. - Whether where penalty for concealment had been deleted by appellate authorities, related prosecution proceedings had to be quashed - Held, yes FACTS During a raid conducted by the ITO the petitioner-firm was found to have allegedly concealed certain income on account of (a) investment in jewellery; (b) income from interest on the basis of accruals; (c) unexplained entry; and (d) unrecorded sale of meagre amount. On appeal, the Commissioner (Appeals) as well as the Tribunal observed that the assessee had explained the items (a), (b) and (c ) to their satisfaction and the unrecorded sale found on a piece of paper in the sum of Rs. 106 was hardly fit for the purpose of imposition of penalty. However, complaints were filed against the petitioner-firm under sections 276C, 277 and 278B. The petition by the petitioner-firm under section 482 of Code of Criminal Procedure, was for quashing complaint pending in court of Chief Judicial Magistrate: HELD In the instant case, the appellate authority and the Tribunal themselves had observed that the assessee had explained the items (a), (b) and (c ) to their satisfaction and the unrecorded sale found on apiece of paper of a meagre amount at the premises of a cloth merchant was hardly fit for the purpose of launching prosecution against the assessee. Therefore, the petition was accepted and the proceedings arising out of it, pending in the court of Judicial Magistrate, which were at a preliminary stage, were quashed. CASES REFERRED TO Sant Parkash v. CIT [1991 ] 188 ITR 732 (Pun). &Har.) and P. Jayappan v. S.K. Perumal, First ITO [1984] 149 ITR 696 (SC). J.R. Mittal and Baldev Singh for the Applicant. A.K. Mlttal for the Respondent EDITORIAL COMMENTS The crux of the decision is that the additions for the alleged concealments having been deleted in appeal by the appellate authorities, no grounds subsisted for prosecution under sections 276C, 277/278B of the Income-tax Act and sections 193 and 196 of the Indian Penal Code. In view of this, the proceedings pending in the court of…

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