Section 278 — the law in short
What the courts have decided on section 278, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Vishwanath C. Tarali v State of Karnataka
High CourtHelps taxpayerValidity unconfirmed
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?
No, on this decision. Reading s.279 with s.280B together, an offence under Chapter XXII can be taken cognizance of only on a complaint made by an authority authorised in that behalf under the Act, after the previous sanction of the competent authority. A Magistrate cannot take cognizance on the basis of a final report submitted by the police, and cognizance so taken is without authority of law, so that continuation of the proceeding is an abuse of process.
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Karti P. Chidambaram v Deputy Director of Income Tax (Investigation)
High CourtHelps taxpayerUnder appeal
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?
On this judgment, no. Although the Deputy Director can launch a prosecution under s.279 and although P. Jayappan holds that a prosecution need not await the assessment, the Madras High Court held that this is so where the complaint rests on the assessee's own statements under s.132(4) and incriminating material seized from him; where the material is collected from third parties and the prosecution itself treats it as merely corroborative, the Department must wait for the Assessing Officer's finding, and a complaint launched in the meantime is premature. The revisions were allowed and the prosecution held not maintainable, with liberty to the Department to act after a finding under s.153.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.