The complaint under s.276C and s.277 was filed while my reassessment is still running. Is it premature?
No. There is no provision that bars a prosecution until reassessment proceedings are completed. The criminal court judges the case on the evidence before it, and an expectation of success in an appeal or reference does not stand in the way of the complaint being instituted.
Decided by the Supreme Court (Supreme Court of India - E.S. Venkataramiah, O. Chinnappa Reddy and A.P. Sen, JJ. (the order of the Court delivered by Venkataramiah, J.); Petition for Special Leave to Appeal (Criminal) No. 1923 of 1984, from the judgment and order of the Madras High Court dated 19 June 1984 in Crl. M.P. Nos. 8164, 8166, 8168 and 8170 of 1983) on 1984-08-17, reported as (1984) 149 ITR 696 (SC); AIR 1984 SC 1693. The Supreme Court Reports citation is unsettled: it is given both as 1985 SCR (1) 536 and as [1985] 1 S.C.R. 538, two pages apart, and neither is preferred here.. It bears on section 276C, section 277, section 279 of the Income Tax Act 1961, in Prosecution matters.
It is the first answer the department gives to a quashing petition, and it is right as far as it goes. The useful part is the other half of the same reasoning: because the criminal court decides on its own evidence, a favourable outcome in the tax proceedings does not automatically end the prosecution either — you have to take it to the criminal court and ask. That is the doctrinal gap that K.C. Builders later filled for the case where the Tribunal finds there was no concealment at all.
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The petitioner was the proprietor of M/s. Ratnam Food Stuff Co., Tuticorin. He filed returns for the assessment years 1977-78 to 1980-81 - the 1977-78 return on 20 January 1978, disclosing income of Rs. 13,380 - and they were accepted. A search under s.132 at his residence on 20 and 21 August 1981 threw up documents showing undisclosed purchases, chicory seeds of Rs. 2,15,729 against Rs. 65,797 disclosed, undeclared bank accounts and other discrepancies. On the allegation that he had deliberately filed a false return and had kept false accounts with the intention of using them as genuine evidence in the assessment proceedings, four complaints, one for each year, were filed against him in the Court of the Additional Chief Judicial Magistrate (Economic Offences), Madurai, for offences punishable under s.276C and s.277 of the Act and under ss.193 and 196 of the Indian Penal Code. He moved the Madras High Court under s.482 of the Code of Criminal Procedure to quash the proceedings, contending that the prosecutions were premature because the reassessment proceedings started against him under the Act had not been completed. The High Court dismissed the petitions on 19 June 1984 and he petitioned the Supreme Court for special leave.
The petition for special leave was dismissed, so the prosecutions stood. The Court answered the single point before it - whether prosecutions under s.276C and s.277 of the Act and ss.193 and 196 of the Indian Penal Code instituted while the reassessment proceedings are pending are liable to be quashed as not maintainable - holding that 'there is no provision in law which provides that a prosecution for the offences in question cannot be launched until reassessment proceedings initiated against the assessee are completed', and that 'the pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under section 276C or section 277 of the Act'. A mere expectation of success in an appeal or reference cannot come in the way of the institution of the criminal proceedings. All the ingredients of the offence have to be established in the criminal case; and the criminal court has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue, and in an appropriate case may drop the proceedings in the light of an order passed under the Act.
The Court treated the assessment machinery and the criminal trial as answering different questions on different material. The result of an appeal, reference or reassessment is not a condition precedent to the complaint, and a mere expectation of success in those proceedings cannot stop the institution of criminal proceedings. Conversely, because the criminal court decides on the evidence before it, a later revised assessment in the assessee's favour is a matter to be placed before that court rather than something that terminates the prosecution automatically. The Court did leave room for the criminal court to drop proceedings where the tax proceedings have produced a finding that destroys the charge — but as a matter for that court to act on, not as an automatic consequence.
A mere expectation of success in some proceeding in appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings under section 276C and section 277 of the Act.
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Handle my notice → Ask a CA on WhatsAppNo. There is no provision that bars a prosecution until reassessment proceedings are completed. The criminal court judges the case on the evidence before it, and an expectation of success in an appeal or reference does not stand in the way of the complaint being instituted. This was decided by the Supreme Court (Supreme Court of India - E.S. Venkataramiah, O. Chinnappa Reddy and A.P. Sen, JJ. (the order of the Court delivered by Venkataramiah, J.); Petition for Special Leave to Appeal (Criminal) No. 1923 of 1984, from the judgment and order of the Madras High Court dated 19 June 1984 in Crl. M.P. Nos. 8164, 8166, 8168 and 8170 of 1983) and bears on section 276C, section 277, section 279 of the Income Tax Act 1961. It is reported as (1984) 149 ITR 696 (SC); AIR 1984 SC 1693. The Supreme Court Reports citation is unsettled: it is given both as 1985 SCR (1) 536 and as [1985] 1 S.C.R. 538, two pages apart, and neither is preferred here.. It is the first answer the department gives to a quashing petition, and it is right as far as it goes. The useful part is the other half of the same reasoning: because the criminal court decides on its own evidence, a favourable outcome in the tax proceedings does not automatically end the prosecution either — you have to take it to the criminal court and ask. That is the doctrinal gap that K.C. Builders later filled for the case where the Tribunal finds there was no concealment at all. If it applies to you, the first step is this: Do not plead prematurity as the main ground; it will fail on this authority.
The petitioner was the proprietor of M/s. Ratnam Food Stuff Co., Tuticorin. He filed returns for the assessment years 1977-78 to 1980-81 - the 1977-78 return on 20 January 1978, disclosing income of Rs. 13,380 - and they were accepted. A search under s.132 at his residence on 20 and 21 August 1981 threw up documents showing undisclosed purchases, chicory seeds of Rs. 2,15,729 against Rs. 65,797 disclosed, undeclared bank accounts and other discrepancies. On the allegation that he had deliberately filed a false return and had kept false accounts with the intention of using them as genuine evidence in the assessment proceedings, four complaints, one for each year, were filed against him in the Court of the Additional Chief Judicial Magistrate (Economic Offences), Madurai, for offences punishable under s.276C and s.277 of the Act and under ss.193 and 196 of the Indian Penal Code. He moved the Madras High Court under s.482 of the Code of Criminal Procedure to quash the proceedings, contending that the prosecutions were premature because the reassessment proceedings started against him under the Act had not been completed. The High Court dismissed the petitions on 19 June 1984 and he petitioned the Supreme Court for special leave. The matter was decided on 1984-08-17 by the Supreme Court (Supreme Court of India - E.S. Venkataramiah, O. Chinnappa Reddy and A.P. Sen, JJ. (the order of the Court delivered by Venkataramiah, J.); Petition for Special Leave to Appeal (Criminal) No. 1923 of 1984, from the judgment and order of the Madras High Court dated 19 June 1984 in Crl. M.P. Nos. 8164, 8166, 8168 and 8170 of 1983). On those facts the Supreme Court held as follows. The petition for special leave was dismissed, so the prosecutions stood. The Court answered the single point before it - whether prosecutions under s.276C and s.277 of the Act and ss.193 and 196 of the Indian Penal Code instituted while the reassessment proceedings are pending are liable to be quashed as not maintainable - holding that 'there is no provision in law which provides that a prosecution for the offences in question cannot be launched until reassessment proceedings initiated against the assessee are completed', and that 'the pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under section 276C or section 277 of the Act'. A mere expectation of success in an appeal or reference cannot come in the way of the institution of the criminal proceedings. All the ingredients of the offence have to be established in the criminal case; and the criminal court has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue, and in an appropriate case may drop the proceedings in the light of an order passed under the Act.
The Court treated the assessment machinery and the criminal trial as answering different questions on different material. The result of an appeal, reference or reassessment is not a condition precedent to the complaint, and a mere expectation of success in those proceedings cannot stop the institution of criminal proceedings. Conversely, because the criminal court decides on the evidence before it, a later revised assessment in the assessee's favour is a matter to be placed before that court rather than something that terminates the prosecution automatically. The Court did leave room for the criminal court to drop proceedings where the tax proceedings have produced a finding that destroys the charge — but as a matter for that court to act on, not as an automatic consequence. In the words reproduced by the source cited on this page: "A mere expectation of success in some proceeding in appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings under section 276C and section 277 of the Act."
It was decided by the Supreme Court on 1984-08-17 and is reported as (1984) 149 ITR 696 (SC); AIR 1984 SC 1693. The Supreme Court Reports citation is unsettled: it is given both as 1985 SCR (1) 536 and as [1985] 1 S.C.R. 538, two pages apart, and neither is preferred here.. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 276C, section 277, section 279, 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The petition for special leave was dismissed, so the prosecutions stood. The Court answered the single point before it - whether prosecutions under s.276C and s.277 of the Act and ss.193 and 196 of the Indian Penal Code instituted while the reassessment proceedings are pending are liable to be quashed as not maintainable - holding that 'there is no provision in law which provides that a prosecution for the offences in question cannot be launched until reassessment proceedings initiated against the assessee are completed', and that 'the pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under section 276C or section 277 of the Act'. A mere expectation of success in an appeal or reference cannot come in the way of the institution of the criminal proceedings. All the ingredients of the offence have to be established in the criminal case; and the criminal court has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue, and in an appropriate case may drop the proceedings in the light of an order passed under the Act. It arises in Prosecution matters, on section 276C, section 277, section 279 of the Income Tax Act 1961, and was decided by Supreme Court of India - E.S. Venkataramiah, O. Chinnappa Reddy and A.P. Sen, JJ. (the order of the Court delivered by Venkataramiah, J.); Petition for Special Leave to Appeal (Criminal) No. 1923 of 1984, from the judgment and order of the Madras High Court dated 19 June 1984 in Crl. M.P. Nos. 8164, 8166, 8168 and 8170 of 1983. 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. Press the quantum and penalty appeals towards a finding on the merits, then take that finding to the criminal court rather than expecting it to operate on its own. Where the department has moved before any assessment is even framed, argue the absence of material rather than the absence of an assessment. Check the sanction under s.279(1) separately — that is a jurisdictional point this decision does not touch.
Still good law. The order has now been read in full at https://indiankanoon.org/doc/812449/, so the status no longer rests on a digest. It remains the standing answer to the prematurity argument and nothing doubting it was found. Two qualifications travel with it. It is a reasoned order dismissing a petition for special leave and not a judgment on an appeal after leave, so the Madras High Court's order of 19 June 1984 does not merge in it - read this entry alongside the corpus entry on what a dismissed special leave petition is worth. And what it decides is narrow: the pendency of reassessment proceedings is not a bar to institution. The other half of the reasoning is preserved in the judgment itself - the Court's treatment of Uttam Chand & Ors. v. Income-tax Officer, Central Circle, Amritsar, that a prosecution once initiated may be quashed in the light of a finding favourable to the assessee recorded later by an authority under the Act, though that decision is no authority for the proposition that no proceedings can be initiated at all while some proceeding under the Act is pending. That finding was checked against a published source, which is linked on this page, on 2026-08-20. 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.
The judgment has now been read at https://indiankanoon.org/doc/812449/ and this entry is written from it rather than from the Supreme Court Reports reprint and a digest. The form matters: this is an order refusing special leave against the Madras High Court's judgment of 19 June 1984, not an appeal decided after leave, though it is fully reasoned and the reasons are the Supreme Court's own - the order closes 'The Special Leave Petition is, therefore, dismissed.' Three corrections and one addition. The complaints were laid under s.276C and s.277 of the Act read with ss.193 and 196 of the Indian Penal Code only; s.420 of the Penal Code, which this entry previously named, appears nowhere in the judgment - two differently worded probes agree and the only two sentences in the judgment that list Penal Code provisions name 193 and 196. Section 147 has been removed from the sections list: the judgment speaks throughout of 'reassessment proceedings ... under the Act' and never cites the section, and the numerals do not appear on the page, again on two probes. What the judgment does cite besides s.276C and s.277 is s.279 - a person shall not be proceeded against for an offence punishable under s.276C or s.277 except at the instance of the Commissioner - and clause (iii) of sub-section (1) of s.271; s.271 has not been added to the list, but a reader should know it is there. The page carries the law report's headnote above the judgment, so the key quote was checked to sit below the line at which the Court's own order begins. The decision is from 1984 and predates s.278E, so nothing in it addresses the presumption of a culpable mental state. The decision does not say what happens once the tax proceedings end in the assessee's favour — it says only that the criminal court decides for itself. For that, see kc-builders-v-acit-276c, where the Tribunal's finding of no concealment was treated as destroying the substratum of the complaint. Nor does it deal with limitation, sanction, or the s.278E presumption, none of which were in issue. 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 for special leave was dismissed, so the prosecutions stood. The Court answered the single point before it - whether prosecutions under s.276C and s.277 of the Act and ss.193 and 196 of the Indian Penal Code instituted while the reassessment proceedings are pending are liable to be quashed as not maintainable - holding that 'there is no provision in law which provides that a prosecution for the offences in question cannot be launched until reassessment proceedings initiated against the assessee are completed', and that 'the pendency of the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under section 276C or section 277 of the Act'. A mere expectation of success in an appeal or reference cannot come in the way of the institution of the criminal proceedings. All the ingredients of the offence have to be established in the criminal case; and the criminal court has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue, and in an appropriate case may drop the proceedings in the light of an order passed under the Act.
TaxSphere, “P. Jayappan v ITO”, https://taxnotice.vittsphere.com/caselaw/case/p-jayappan-v-ito-prosecution-and-pending-assessment/ (validity last checked 2026-08-20)
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The Deputy Director (Investigation) has filed a complaint under s.276C(1) and s.277 based on material seized from third parties, with no assessment or reassessment order against me. Can that prosecution stand?
The Income-tax Officer lodged a police complaint about false returns claiming refunds, the police filed a charge-sheet, and the Magistrate took cognizance of IPC offences. Can that be done without sanction under s.279 and a complaint by an authorised authority?
The Settlement Commission accepted my disclosure. Can the department still prosecute me for evasion?
The Tribunal cancelled my concealment penalty. Can the 276C prosecution still continue?
