The section 276CC complaint against me was filed by an Assistant Commissioner although my case was with the Income-tax Officer, and no assessment was ever made on the capital gain the complaint alleges. Can that prosecution stand?
No, on this decision. The Madras High Court quashed the complaint. Only the officer on whom jurisdiction has been conferred by directions or orders is the Assessing Officer; here the show cause notice came from the Income-tax Officer of the ward while the complaint was laid by the Assistant Commissioner, with no transfer under section 127 and no intimation under section 129, so the sanction under section 279 had been given without any application of mind to the question of jurisdiction. Separately, no regular assessment had ever been made, so the tax threshold in the proviso to section 276CC could not be tested and the prosecution was premature.
Decided by the High Court (High Court of Madras - G.K. Ilanthiraiyan, J.) on 2026-04-30, reported as [2026] 186 taxmann.com 159 (Madras); Crl OP No. 19461 of 2023 and Crl MP No. 13139 of 2023 [Assessment year 2014-15]. It bears on section 276CC, section 279, section 120, section 127, section 129, section 271F of the Income Tax Act 1961, in Prosecution and Assessment & Scrutiny matters.
Two defences that are usually raised late and half-heartedly are here treated as going to the root. The first is who may prosecute: the Court insists that the Assessing Officer is the officer vested with jurisdiction by order, not simply any officer in the range, and that a sanction granted without looking at that question is no sanction at all. The second is sequence: the proviso to section 276CC excuses a person whose tax on regular assessment, less advance tax and tax deducted, does not exceed the threshold, and if no regular assessment has been made there is nothing against which to measure it. Together they give a taxpayer facing a non-filing prosecution two clean, documentary points to take at the quashing stage rather than at trial.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner and his wife sold a property for Rs 75 lakhs during the financial year 2013-14. Tax was deducted at source on that transaction and on his salary. He did not file a return for assessment year 2014-15 by the due date of 31 July 2014, on the belief that nothing was due - the sale proceeds having been reinvested and the salary having borne tax at source. The Income-tax Officer, Non Corporate Ward 17(1), Chennai issued a show cause notice dated 15 September 2017. After the petitioner replied, he paid the tax with interest. The Assistant Commissioner of Income Tax, Non Corporate Circle 17, then launched a prosecution under section 276CC, having obtained sanction from the Principal Commissioner, and the complaint was taken on file as EOCC No. 42 of 2019. No regular assessment had been made on the capital gain. The petitioner moved the High Court to quash the complaint.
The petition was allowed and the proceedings in EOCC No. 42 of 2019 were quashed. The Court held that only the officer vested with jurisdiction by virtue of directions or orders is the Assessing Officer. Jurisdiction over the petitioner lay with the Income-tax Officer, who had issued the show cause notice; the complaint was filed by the Assistant Commissioner, and no order of transfer and no intimation of succession had been placed on record. The sanction under section 279 had accordingly been granted without application of mind to the very question of jurisdiction. The Court also held that in the absence of any proceeding to make a regular assessment on the petitioner, the initiation of prosecution was void - there being no assessed liability against which the threshold in the proviso to section 276CC could be measured. It further held, applying K.C. Builders, that prosecuting without penalty proceedings having been initiated made the exercise an idle formality and an abuse of process.
The Court's first step was to fix who the Assessing Officer is. The Act does not leave that to convenience: jurisdiction is conferred by directions or orders under section 120, moved by an order of transfer under section 127, and a successor takes over with the intimation contemplated by section 129. Measured against that scheme the record showed the Income-tax Officer of the ward acting first and the Assistant Commissioner of the same circle laying the complaint, with nothing to bridge the two. A sanction under section 279 is not a formality; the sanctioning authority has to satisfy itself that the officer proposing the prosecution is competent, and here that question had not been looked at, so the sanction could not support the complaint. The second step was on timing. Section 276CC punishes a wilful failure to furnish a return in due time, but its proviso spares a person whose tax on regular assessment, reduced by advance tax paid and tax deducted at source, does not exceed the prescribed sum. That calculation presupposes a regular assessment. None had been made, so the defence the proviso gives could not even be tested, and the prosecution had been launched before the foundation for it existed. The Court added that penalty proceedings had not been taken either, which on the reasoning in K.C. Builders made continuing the criminal case an abuse of process.
In the absence of any proceeding to make the regular assessment to the petitioner the initiation of prosecution is void.
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Handle my notice → Ask a CA on WhatsAppNo, on this decision. The Madras High Court quashed the complaint. Only the officer on whom jurisdiction has been conferred by directions or orders is the Assessing Officer; here the show cause notice came from the Income-tax Officer of the ward while the complaint was laid by the Assistant Commissioner, with no transfer under section 127 and no intimation under section 129, so the sanction under section 279 had been given without any application of mind to the question of jurisdiction. Separately, no regular assessment had ever been made, so the tax threshold in the proviso to section 276CC could not be tested and the prosecution was premature. This was decided by the High Court (High Court of Madras - G.K. Ilanthiraiyan, J.) and bears on section 276CC, section 279, section 120, section 127, section 129, section 271F of the Income Tax Act 1961. It is reported as [2026] 186 taxmann.com 159 (Madras); Crl OP No. 19461 of 2023 and Crl MP No. 13139 of 2023 [Assessment year 2014-15]. Two defences that are usually raised late and half-heartedly are here treated as going to the root. The first is who may prosecute: the Court insists that the Assessing Officer is the officer vested with jurisdiction by order, not simply any officer in the range, and that a sanction granted without looking at that question is no sanction at all. The second is sequence: the proviso to section 276CC excuses a person whose tax on regular assessment, less advance tax and tax deducted, does not exceed the threshold, and if no regular assessment has been made there is nothing against which to measure it. Together they give a taxpayer facing a non-filing prosecution two clean, documentary points to take at the quashing stage rather than at trial. If it applies to you, the first step is this: Obtain the jurisdiction order under section 120 and check that the officer who signed the complaint is the same officer who held jurisdiction over your file.
The petitioner and his wife sold a property for Rs 75 lakhs during the financial year 2013-14. Tax was deducted at source on that transaction and on his salary. He did not file a return for assessment year 2014-15 by the due date of 31 July 2014, on the belief that nothing was due - the sale proceeds having been reinvested and the salary having borne tax at source. The Income-tax Officer, Non Corporate Ward 17(1), Chennai issued a show cause notice dated 15 September 2017. After the petitioner replied, he paid the tax with interest. The Assistant Commissioner of Income Tax, Non Corporate Circle 17, then launched a prosecution under section 276CC, having obtained sanction from the Principal Commissioner, and the complaint was taken on file as EOCC No. 42 of 2019. No regular assessment had been made on the capital gain. The petitioner moved the High Court to quash the complaint. The matter was decided on 2026-04-30 by the High Court (High Court of Madras - G.K. Ilanthiraiyan, J.). On those facts the High Court held as follows. The petition was allowed and the proceedings in EOCC No. 42 of 2019 were quashed. The Court held that only the officer vested with jurisdiction by virtue of directions or orders is the Assessing Officer. Jurisdiction over the petitioner lay with the Income-tax Officer, who had issued the show cause notice; the complaint was filed by the Assistant Commissioner, and no order of transfer and no intimation of succession had been placed on record. The sanction under section 279 had accordingly been granted without application of mind to the very question of jurisdiction. The Court also held that in the absence of any proceeding to make a regular assessment on the petitioner, the initiation of prosecution was void - there being no assessed liability against which the threshold in the proviso to section 276CC could be measured. It further held, applying K.C. Builders, that prosecuting without penalty proceedings having been initiated made the exercise an idle formality and an abuse of process.
The Court's first step was to fix who the Assessing Officer is. The Act does not leave that to convenience: jurisdiction is conferred by directions or orders under section 120, moved by an order of transfer under section 127, and a successor takes over with the intimation contemplated by section 129. Measured against that scheme the record showed the Income-tax Officer of the ward acting first and the Assistant Commissioner of the same circle laying the complaint, with nothing to bridge the two. A sanction under section 279 is not a formality; the sanctioning authority has to satisfy itself that the officer proposing the prosecution is competent, and here that question had not been looked at, so the sanction could not support the complaint. The second step was on timing. Section 276CC punishes a wilful failure to furnish a return in due time, but its proviso spares a person whose tax on regular assessment, reduced by advance tax paid and tax deducted at source, does not exceed the prescribed sum. That calculation presupposes a regular assessment. None had been made, so the defence the proviso gives could not even be tested, and the prosecution had been launched before the foundation for it existed. The Court added that penalty proceedings had not been taken either, which on the reasoning in K.C. Builders made continuing the criminal case an abuse of process. In the words reproduced by the source cited on this page: "In the absence of any proceeding to make the regular assessment to the petitioner the initiation of prosecution is void." The decision followed or applied K.C. Builders v. Asstt. CIT [2004] 135 Taxman 461/265 ITR 562 (SC).
It was decided by the High Court on 2026-04-30 and is reported as [2026] 186 taxmann.com 159 (Madras); Crl OP No. 19461 of 2023 and Crl MP No. 13139 of 2023 [Assessment year 2014-15]. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 276CC, section 279, section 120, section 127, section 129, section 271F, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The petition was allowed and the proceedings in EOCC No. 42 of 2019 were quashed. The Court held that only the officer vested with jurisdiction by virtue of directions or orders is the Assessing Officer. Jurisdiction over the petitioner lay with the Income-tax Officer, who had issued the show cause notice; the complaint was filed by the Assistant Commissioner, and no order of transfer and no intimation of succession had been placed on record. The sanction under section 279 had accordingly been granted without application of mind to the very question of jurisdiction. The Court also held that in the absence of any proceeding to make a regular assessment on the petitioner, the initiation of prosecution was void - there being no assessed liability against which the threshold in the proviso to section 276CC could be measured. It further held, applying K.C. Builders, that prosecuting without penalty proceedings having been initiated made the exercise an idle formality and an abuse of process. It arises in Prosecution and Assessment & Scrutiny matters, on section 276CC, section 279, section 120, section 127, section 129, section 271F of the Income Tax Act 1961, and was decided by High Court of Madras - G.K. Ilanthiraiyan, J.. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask for any order of transfer under section 127 and any intimation under section 129 - their absence is the point, and it has to be established from the record. Check whether a regular assessment has actually been made before the complaint; if none has, take the proviso to section 276CC at the outset. Read the sanction under section 279 and see whether it shows any application of mind to jurisdiction, not merely to the default.
Searched for later treatment; none was found. That is not the same as a source affirming it. Two searches, nothing found. The citedby search on the doc id is empty. A search combining the party name with '276CC' returns 28 results, all of which are either much older decisions on the section or unrelated proceedings; nothing after 30 April 2026 considers this judgment. No later decision has adopted, doubted or distinguished the holding that only the officer on whom jurisdiction has been conferred by directions or orders is the Assessing Officer, so that a complaint by an officer other than the one who issued the show cause notice is bad. No appeal against it was traced, and the time for one had not run when this was checked. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read on Indian Kanoon's copy; the Madras High Court's own site could not be searched. The judgment carries a third strand the page this replaces did not mention - that prosecuting without initiating penalty proceedings is, on K.C. Builders, an idle formality and an abuse of process. The order refers to the penalty provision for non-filing; I have taken that as section 271F. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The petition was allowed and the proceedings in EOCC No. 42 of 2019 were quashed. The Court held that only the officer vested with jurisdiction by virtue of directions or orders is the Assessing Officer. Jurisdiction over the petitioner lay with the Income-tax Officer, who had issued the show cause notice; the complaint was filed by the Assistant Commissioner, and no order of transfer and no intimation of succession had been placed on record. The sanction under section 279 had accordingly been granted without application of mind to the very question of jurisdiction. The Court also held that in the absence of any proceeding to make a regular assessment on the petitioner, the initiation of prosecution was void - there being no assessed liability against which the threshold in the proviso to section 276CC could be measured. It further held, applying K.C. Builders, that prosecuting without penalty proceedings having been initiated made the exercise an idle formality and an abuse of process.
TaxSphere, “B. Mohammad Iqbal v ACIT”, https://taxnotice.vittsphere.com/caselaw/case/b-mohammad-iqbal-v-acit-276cc-jurisdiction-and-regular-assessment/ (validity last checked 2026-09-01)
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