My prosecution sanction under s.279(1) was signed by the Principal Director of Income Tax (Investigation), not the Principal Commissioner. Is the sanction bad, and can I say the complaint is premature because no assessment has been made?
Neither point succeeded. 'Commissioner' in s.279 is read with the definition in s.2(16) and the hierarchy in s.116, so it means and includes the Director and the Principal Director of Income Tax; a sanction by the Principal Director (Investigation) is by a competent authority under a different nomenclature. The complaint is not premature merely because assessment proceedings had not been completed, P. Jayappan being applied.
Decided by the High Court (Neena Bansal Krishna J) on 2025-07-23, reported as CRL.M.C. 219/2018 and CRL.M.C. 222/2018 (High Court of Delhi); cited in a later Delhi High Court judgment as [2025] 176 taxman.com 857 (Delhi). It bears on section 276C(1), section 277A, section 279, section 279(1), section 2(16), section 116, section 132, section 132(9A), section 131(1A), section 153A of the Income Tax Act 1961, in Prosecution and Search, Survey & Block Assessment matters.
The jurisdictional attack on the sanction is the first thing most practitioners reach for, and this judgment closes off the most common version of it in the Investigation Wing cases. It also disposes of three related arguments in one place: that the complaint filed by a Deputy Director (Investigation) is unauthorised, that a sanction which reproduces the section but does not specify the sub-section is vague, and that s.132(9A) transfers jurisdiction to the Assessing Officer sixty days after the last authorisation is executed so that the Investigation Wing is functus officio. The Court left the authority of the officer who filed the complaint open to be raised at the appropriate stage, which is worth preserving in the trial court. Set this against the Madras High Court's contrary conclusion on a Deputy Director's complaint launched on third-party material, which is under appeal — the two lines are not easy to reconcile and the difference lies in whether incriminating material came from the accused himself.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A search under s.132 was carried out at the petitioner's premises at Hauz Khas, New Delhi, between 13.06.2014 and 17.06.2014 and documents were seized. In statements on oath under s.132(4) on 13.06.2014 and 17.06.2014 the petitioner admitted that, besides share broking, he provided accommodation entries and explained the modus operandi. Searches and surveys under s.133A on ten beneficiaries followed, in which the beneficiaries admitted taking accommodation entries from him. The complaint alleged he had dealt with cash of over Rs.700 crores, over Rs.104 crores in FY 2014-15 relevant to AY 2015-16, and that on his own estimate of 2 per cent his undisclosed commission income was Rs.14 crores, of which Rs.2.08 crores related to FY 2014-15. He retracted his statement by letter dated 14.10.2014, but in a further statement under s.131(1A) on 26.03.2015 confirmed his earlier stand. A show-cause notice dated 30.01.2015 was issued by the DIT (Inv.)-I; the reply of 23.02.2015 was found unsatisfactory. Sanction was obtained on 12.03.2015 and criminal complaints under s.276C(1) and s.277A were filed for AY 2015-16 before the ACMM, who took cognizance on 07.08.2015 and issued summons. Pre-charge evidence closed on 18.04.2017 and charges were framed on 28.06.2017 without first deciding a pending discharge application. A criminal revision was dismissed on 14.09.2017. The petitioner then moved the High Court under s.482 CrPC read with Article 227.
Both petitions were dismissed. A sanction under s.279(1) granted by the Principal Director of Income Tax (Investigation) is a sanction by the competent authority, because 'Commissioner' in s.2(16) means a person appointed to be a Commissioner, a Director, a Principal Commissioner or a Principal Director of Income-tax under s.117(1), and s.116 places Principal Directors and Principal Commissioners in the same class. The objection that the Deputy Director (Investigation) could not file the complaint was premature and could be raised at the appropriate stage. A sanction that reproduces the whole of the sub-section before sanctioning is not vague and does not show non-application of mind. The complaint was not premature for want of a completed assessment, the pendency of assessment or reassessment being no bar to prosecution under s.276C or s.277. The observations were expressly stated not to be a final expression on merits.
On the sanction point the Court read s.2(16) with s.116 and held that their combined reading makes it clear that 'Commissioner' means and includes the Director and Principal Director of Income Tax (paras 39 to 41). It followed D.K. Shivkumar v. Income Tax Department (2020) 421 ITR 529 (Kar), where the same sections were read to the same effect and it was held that it is not the Principal Commissioner alone who is the competent authority (para 42). Dr. Nalini Mahajan v. DIT (Inv.) 257 ITR 123 (Del), relied on by the petitioner, was distinguished as concerning the exercise of a Director's powers of authorisation for search under s.132(1), not the grant of sanction for prosecution (para 43). On the complaint being filed by the Deputy Director, the Court read s.279 as permitting the complaint to be filed by an officer notified by the Principal Director General, so that an inference at that stage that the complaint was filed by an unauthorised person could not be drawn, with liberty reserved to raise the objection later (paras 46 and 47). On vagueness, the sanction order itself reproduced the sub-section, which implied that the sanction was under that sub-section (paras 48 and 49). On prematurity, the Court applied P. Jayappan v. S.K. Perumal, First Income Tax Officer [1984] 149 ITR 696, that the pendency of reassessment proceedings is no bar to the institution of criminal prosecution under s.276C or s.277, and observed that proceedings under s.153A by the Assessing Officer are different from and do not pertain to the jurisdiction of the Investigation Unit (paras 51 and 52).
The combined reading of these two Sections make it clear that Commissioner means and includes the Director and Principal Director of Income Tax.
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Handle my notice → Ask a CA on WhatsAppNeither point succeeded. 'Commissioner' in s.279 is read with the definition in s.2(16) and the hierarchy in s.116, so it means and includes the Director and the Principal Director of Income Tax; a sanction by the Principal Director (Investigation) is by a competent authority under a different nomenclature. The complaint is not premature merely because assessment proceedings had not been completed, P. Jayappan being applied. This was decided by the High Court (Neena Bansal Krishna J) and bears on section 276C(1), section 277A, section 279, section 279(1), section 2(16), section 116, section 132, section 132(9A), section 131(1A), section 153A of the Income Tax Act 1961. It is reported as CRL.M.C. 219/2018 and CRL.M.C. 222/2018 (High Court of Delhi); cited in a later Delhi High Court judgment as [2025] 176 taxman.com 857 (Delhi). The jurisdictional attack on the sanction is the first thing most practitioners reach for, and this judgment closes off the most common version of it in the Investigation Wing cases. It also disposes of three related arguments in one place: that the complaint filed by a Deputy Director (Investigation) is unauthorised, that a sanction which reproduces the section but does not specify the sub-section is vague, and that s.132(9A) transfers jurisdiction to the Assessing Officer sixty days after the last authorisation is executed so that the Investigation Wing is functus officio. The Court left the authority of the officer who filed the complaint open to be raised at the appropriate stage, which is worth preserving in the trial court. Set this against the Madras High Court's contrary conclusion on a Deputy Director's complaint launched on third-party material, which is under appeal — the two lines are not easy to reconcile and the difference lies in whether incriminating material came from the accused himself. If it applies to you, the first step is this: Before attacking the sanctioning authority, check s.2(16) and s.116 — a sanction by a Director or Principal Director of Income Tax will not fall merely because s.279(1) names the Principal Commissioner or Commissioner.
A search under s.132 was carried out at the petitioner's premises at Hauz Khas, New Delhi, between 13.06.2014 and 17.06.2014 and documents were seized. In statements on oath under s.132(4) on 13.06.2014 and 17.06.2014 the petitioner admitted that, besides share broking, he provided accommodation entries and explained the modus operandi. Searches and surveys under s.133A on ten beneficiaries followed, in which the beneficiaries admitted taking accommodation entries from him. The complaint alleged he had dealt with cash of over Rs.700 crores, over Rs.104 crores in FY 2014-15 relevant to AY 2015-16, and that on his own estimate of 2 per cent his undisclosed commission income was Rs.14 crores, of which Rs.2.08 crores related to FY 2014-15. He retracted his statement by letter dated 14.10.2014, but in a further statement under s.131(1A) on 26.03.2015 confirmed his earlier stand. A show-cause notice dated 30.01.2015 was issued by the DIT (Inv.)-I; the reply of 23.02.2015 was found unsatisfactory. Sanction was obtained on 12.03.2015 and criminal complaints under s.276C(1) and s.277A were filed for AY 2015-16 before the ACMM, who took cognizance on 07.08.2015 and issued summons. Pre-charge evidence closed on 18.04.2017 and charges were framed on 28.06.2017 without first deciding a pending discharge application. A criminal revision was dismissed on 14.09.2017. The petitioner then moved the High Court under s.482 CrPC read with Article 227. The matter was decided on 2025-07-23 by the High Court (Neena Bansal Krishna J). On those facts the High Court held as follows. Both petitions were dismissed. A sanction under s.279(1) granted by the Principal Director of Income Tax (Investigation) is a sanction by the competent authority, because 'Commissioner' in s.2(16) means a person appointed to be a Commissioner, a Director, a Principal Commissioner or a Principal Director of Income-tax under s.117(1), and s.116 places Principal Directors and Principal Commissioners in the same class. The objection that the Deputy Director (Investigation) could not file the complaint was premature and could be raised at the appropriate stage. A sanction that reproduces the whole of the sub-section before sanctioning is not vague and does not show non-application of mind. The complaint was not premature for want of a completed assessment, the pendency of assessment or reassessment being no bar to prosecution under s.276C or s.277. The observations were expressly stated not to be a final expression on merits.
On the sanction point the Court read s.2(16) with s.116 and held that their combined reading makes it clear that 'Commissioner' means and includes the Director and Principal Director of Income Tax (paras 39 to 41). It followed D.K. Shivkumar v. Income Tax Department (2020) 421 ITR 529 (Kar), where the same sections were read to the same effect and it was held that it is not the Principal Commissioner alone who is the competent authority (para 42). Dr. Nalini Mahajan v. DIT (Inv.) 257 ITR 123 (Del), relied on by the petitioner, was distinguished as concerning the exercise of a Director's powers of authorisation for search under s.132(1), not the grant of sanction for prosecution (para 43). On the complaint being filed by the Deputy Director, the Court read s.279 as permitting the complaint to be filed by an officer notified by the Principal Director General, so that an inference at that stage that the complaint was filed by an unauthorised person could not be drawn, with liberty reserved to raise the objection later (paras 46 and 47). On vagueness, the sanction order itself reproduced the sub-section, which implied that the sanction was under that sub-section (paras 48 and 49). On prematurity, the Court applied P. Jayappan v. S.K. Perumal, First Income Tax Officer [1984] 149 ITR 696, that the pendency of reassessment proceedings is no bar to the institution of criminal prosecution under s.276C or s.277, and observed that proceedings under s.153A by the Assessing Officer are different from and do not pertain to the jurisdiction of the Investigation Unit (paras 51 and 52). In the words reproduced by the source cited on this page: "The combined reading of these two Sections make it clear that Commissioner means and includes the Director and Principal Director of Income Tax." The decision followed or applied D.K. Shivkumar v. Income Tax Department (2020) 421 ITR 529 (Kar) — followed; P. Jayappan v. S.K. Perumal, First Income Tax Officer [1984] 149 ITR 696 — applied; Dr. Nalini Mahajan v. DIT (Inv.) 257 ITR 123 (Del) — distinguished.
It was decided by the High Court on 2025-07-23 and is reported as CRL.M.C. 219/2018 and CRL.M.C. 222/2018 (High Court of Delhi); cited in a later Delhi High Court judgment as [2025] 176 taxman.com 857 (Delhi). 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 276C(1), section 277A, section 279, section 279(1), section 2(16), section 116, section 132, section 132(9A), section 131(1A), section 153A, 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. Both petitions were dismissed. A sanction under s.279(1) granted by the Principal Director of Income Tax (Investigation) is a sanction by the competent authority, because 'Commissioner' in s.2(16) means a person appointed to be a Commissioner, a Director, a Principal Commissioner or a Principal Director of Income-tax under s.117(1), and s.116 places Principal Directors and Principal Commissioners in the same class. The objection that the Deputy Director (Investigation) could not file the complaint was premature and could be raised at the appropriate stage. A sanction that reproduces the whole of the sub-section before sanctioning is not vague and does not show non-application of mind. The complaint was not premature for want of a completed assessment, the pendency of assessment or reassessment being no bar to prosecution under s.276C or s.277. The observations were expressly stated not to be a final expression on merits. It arises in Prosecution and Search, Survey & Block Assessment matters, on section 276C(1), section 277A, section 279, section 279(1), section 2(16), section 116, section 132, section 132(9A), section 131(1A), section 153A of the Income Tax Act 1961, and was decided by Neena Bansal Krishna 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. Look at what the sanction order actually reproduces: here the objection that it did not identify s.276C(1) as against s.276C(2) failed because the sanction set out the whole of the sub-section before sanctioning. Preserve, without pressing at the quashing stage, the objection that the officer who signed the complaint was not notified for that purpose — the Court expressly left liberty to raise it later. Do not rest a quashing petition on the absence of a completed assessment alone; on this line of authority a search-based prosecution can be launched before assessment. If a discharge application was filed and never decided on its own terms, record the additional grounds in it — the Court refused relief here because nothing beyond the grounds argued on charge had been raised.
Validity check could not be completed. Validity check could not be completed. No search for an appeal against this judgment was carried out. It was, however, relied on by a Division Bench of the same High Court in Saumya Chaurasia v. Union of India, W.P.(C) 8191/2025, decided 08.12.2025, where Revenue counsel cited it (reported there as [2025] 176 taxman.com 857 (Delhi)) for the proposition that there is no estoppel against initiation of criminal proceedings until reassessment proceedings are complete; that later judgment was read in full on this pass. 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.
The report carries several obvious typographical slips that a reader should not be misled by: para 18 refers to 'Section 379(1) of the Act' where s.279(1) is meant; paras 48 and 49 refer to 'Section 276-C(1) of 276 (2)' and to 'the entire Section 276 (1)' where s.276C(1) and s.276C(2) are meant; para 34 refers to 'Section 267-C'; and para 35 refers to 'Section 276(1)'. Para 46 paraphrases s.279 rather than reproducing it and describes a proviso in terms that do not track the section's language, so the paragraph should not be used as a statement of the text of s.279. The judgment reproduces s.2(16) and s.116 in paras 39 and 40. 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.
Both petitions were dismissed. A sanction under s.279(1) granted by the Principal Director of Income Tax (Investigation) is a sanction by the competent authority, because 'Commissioner' in s.2(16) means a person appointed to be a Commissioner, a Director, a Principal Commissioner or a Principal Director of Income-tax under s.117(1), and s.116 places Principal Directors and Principal Commissioners in the same class. The objection that the Deputy Director (Investigation) could not file the complaint was premature and could be raised at the appropriate stage. A sanction that reproduces the whole of the sub-section before sanctioning is not vague and does not show non-application of mind. The complaint was not premature for want of a completed assessment, the pendency of assessment or reassessment being no bar to prosecution under s.276C or s.277. The observations were expressly stated not to be a final expression on merits.
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When must the satisfaction note be recorded before proceedings are taken against a third party?
The seized documents say nothing about the years being assessed. Can s.153C still be used for them?
The search party carted away all our books. Does the way a search was conducted make it illegal?
The search was before June 2015 but the notice came later. Which version of s.153C applies?