Here is an interesting case on the scope of the prosecution proceeding under Income Tax Act as under:

A. Latha

[2022] 141 , 11 (Madras)

Let us have a short overview of the case:

Where Assessing Officer in view of order passed by Commissioner (Appeals) determined tax payable by assessee at certain amount and issued demand notice and as assessee failed to comply demand notice, Deputy Commissioner lodged a private complaint against assessee under section 296C(2) read with section 278E, as Tribunal on appeal preferred by assessee against order of Commissioner (Appeals) set aside order of Commissioner (Appeals), assessee could not be held liable to pay demand based on order passed by Commissioner (Appeals) and, thus, prosecution laid based on alleged failure to comply demand notice will not survive

The proceeding was related to Section 276C, read with section 278E, of the Income-tax Act, 1961 with regard to Offence and prosecution & Wilful attempt to evade tax, etc. 

It was related to  Assessment year 2014-15 

– Assessing Officer in view of order passed by Commissioner (Appeals) determined tax payable by assessee at certain amount and issued demand notice under section 156

 – As assessee failed to comply demand notice, Deputy Commissioner after obtaining sanction to prosecute lodged a private complaint against assessee under section 276C(2) read with section 278E

  – Assessee filed petition to quash private complaint 

– She stated that pending prosecution initiated based on order passed by Commissioner (Appeals), she preferred an appeal against order of Commissioner (Appeals) before Tribunal and Tribunal set aside order of Commissioner (Appeals) and, therefore, very foundation of prosecution against her for alleged wilful default to demand falls to ground and prosecution had to be quashed

 – The issue before HC was whether in view of order of Tribunal assessee could not be liable to pay demand based on order passed by Commissioner (Appeals) and criminal prosecution laid based on alleged failure to comply demand notice will not survive 

 – HC held it as Yes.

  – Another issue was whether criminal petition filed by assessee deserved to be allowed 

HC here again held it as yes.