Section 279

Section 279 — the law in short

What the courts have decided on section 279, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Vijay Krishnaswami v DDIT (Investigation) Supreme CourtHelps taxpayer
  The Settlement Commission accepted my disclosure. Can the department still prosecute me for evasion?
  No. Every order of settlement is conclusive under s.245-I, so where the Commission has recorded full and true disclosure the factual foundation for a wilful attempt to evade under s.276C(1) is gone and continuing the prosecution is an abuse of process. The prosecution was quashed and costs of Rs. 2,00,000 were imposed on the Revenue.
• Madhumilan Syntex Ltd v Union of India Supreme CourtHelps department
  I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
  Yes. The offence under s.276B is complete once deducted tax is not credited to the Government within the prescribed time; depositing it later with interest is a civil consequence and does not wipe out the default. Directors identified as principal officers under s.2(35) were properly arrayed with the company under s.278B.
• P. Jayappan v ITO Supreme CourtHelps department
  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.
• B. Mohammad Iqbal v ACIT High CourtHelps taxpayerNo later treatment found
  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.
• Raj Kumar Kedia v Income Tax Office High CourtHelps departmentNo later treatment found
  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.
• L. T. Stock Brokers Pvt. Ltd. v Chief Commissioner of Income Tax High CourtHelps taxpayerNo later treatment found
  My compounding application was thrown out in one line because it was filed more than 36 months after the complaint. Is that the end of it?
  No. The Bombay High Court set the rejection aside because the Chief Commissioner treated the CBDT compounding guidelines as a binding statute and exercised no discretion at all. The Income-tax Act prescribes no limitation for a compounding application, so a rigid time-bar cannot be introduced through guidelines, and the competent authority must consider the facts and circumstances before refusing.
• Vishwanath C. Tarali v State of Karnataka High CourtHelps taxpayerNo later treatment found
  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.
• Vipul Aggarwal v ITO High CourtHelps taxpayerNo later treatment found
  The sanction for prosecution names the company as the assessee. Can the complaint proceed against me as its director?
  No. The Delhi High Court quashed the complaint against the director because the sanction placed on record identified only the company; there was no sanction against him, whether as a person, as a director, or as someone responsible for the conduct of the company's business. Without that sanction the department cannot proceed against him for the s.276CC offence.
• 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.