In a recent decision the Telangana High Court ruled that the prosecution has to be launched by Deputy Director of Income Tax once sanction has been given to the authority and not by the Assistant Director of Income Tax, who did not have the power to launch the prosecution proceedings.
The Telangana High Court quashed the criminal proceedings before the Special Judge for Economic Offences, Hyderabad. In the present case the petitioner, Tirumala Tirupati Constructions India P Ltd, was charged under Sections 276C(1) and 278B of the Income Tax Act, 1961. Section 276C(1) of the Income Tax Act provides for the punishment where if a person wilfully attempts to evade any tax, penalty or interest chargeable or imposable under the Act. While Section 278B provides for an offence under the Income Tax Act committed by a company.
The Senior Counsel for the petitioner contended that there shall be sanction under Section 279(1) of the Act. As per the said sanction, dated 30.03.2017, the Principal Director of Income Tax (Inv.), issued sanction under Section 279(1) to the Deputy Director of Income Tax (Inv.), Unit – II, to file a complaint before the Special Judge for Economic Offences, Hyderabad against the petitioner-company. But the complaint was filed by the Assistant Director of Income Tax (Inv.), to whom the said sanction has not been granted, which is a grave irregularity as per the Act. Therefore, it was prayed to quash the impugned proceedings.
On the other hand, it was the specific contention of the standing counsel that, as per Section 319(1)(a) of the Income Tax Act, every person being company or firm, shall, on or before due date, furnish a return on its income during the previous year in the prescribed form and verified in the prescribed manner and setting forth any such other particulars as may be prescribed. And as the petitioner-company has not filed the returns of the income tax for the assessing year 2015- 2016 within the stipulated time, the authorities have every right to initiate prosecution against the petitioner-company.
A Single Bench of Justice G Anupama Chakravarthy observed that “It is evident that once sanction has been given to a particular authority, i.e., the Deputy Director of Income Tax, the prosecution has to be launched by him alone and not by the Assistant Director of Income Tax, who did not have the power to launch the prosecution proceedings. Though it is the contention of the learned Standing Counsel for the respondent that the Deputy Director of Income Tax is a senior officer and the Assistant Director of Income Tax is a junior officer and both were doing the same duties, the said contention cannot be taken into consideration as in the present case, the sanction is accorded to the Deputy Director of Income Tax for initiating prosecution and not to the Assistant Director of Income Tax.”
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