Law: Income Tax Act, 1961

Section: 278B

Income-tax----Allegation of evasion of tax---Complaint---Prosecution pending before Court---Petition before High Court for quashing of proceedings ---Assessee, allegedly, in the normal course of business utilised certain demand drafts which did not find place in the account books maintained by him---Offence under Ss.276(c)(1) and 277 read with S.278-B, Indian Income Tax Act, 1961 had been alleged in the complaint and the averments in the complaint prima facie attracted the ingredients of the said offence ---Held, inherent powers to quash the pending prosecution could not be exercised if the averments in the complaint, without adding or subtracting, did indicate prima facie commission of the offence alleged---Detailed proof of the allegations would have to form part of the evidence to be recorded during trial---If the test of the existence of prima facie allegations in the complaint was satisfied, the prayer to quash the pending prosecution would have to be necessarily negatived. N. A. Palkhivala and BA. Palkhivala on The Law and Practice of Income Tax, Eighth Edn. p.455 and S. Vaidyanathan, I.T.O. v. Dr. B. Mathuram and Sons (1989) 179 ITR 463 (Mad.) ref. JUDGMENT Both these petitions are disposed of together since the point raised is common and the parties are also the same. In Criminal M.P. No.9493 of 1980, the prayer is to call for the records in C.C. No.177 of 1985, pending on the file of the Judicial First Class Magistrate, Coimbatore, and to quash the proceedings, therein as not maintainable and as an abuse of the process of Court. In Criminal M.P. No.9495 of 1986, the prayer is similar but it relates to C.C. No.176 of 1985, pending on the file of the same Court. The petitioner in each one of these petitions is being prosecuted at the instance of the respondent, who is the Income Tax Officer, Circle 111 (3), Coimbatore, for commission of offences punishable under sections 12013, 193, 196 and 420 read with section 34 of the Indian Penal Code and under section 276C(1) and 277 read with section 278B of the Income Tax Act, 1961. It is the prosecution case that in the normal course of business transactions, the first accused, Muruga Steel Corporation, which is…

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