IMPORTANT POINTS
(1) Section 2(22) of the Act which may be constructed as expressly or impliedly bar institution of a complaint for an offence under Section 276B of the Act in the absence of any determination of the tax liability by an authority under the Act, which may be the basis of allegations constituting the offence.
(2) The expressions "ends of justice" and "to prevent abuse of the process of any court" used in Section 482 Cr. P.C. are intended to work both ways, either when an innocent person is unjustifiably subjected to an undeserving prosecution or if an ex-facie well merited prosecution is throttled at the threshhold.

JUDGMENT

Anand, J. - This is a composite petition, under section 482 of the Code, by PNB Finance and Industries Ltd., for short, the Company, its Chairman, Director, and Secretary, to quash 220 complaints against them by the Income-tax Officer, Company Circle, respondent herein, for an offence under section 276B of the Income-tax Act 1961, for short, the Act, and the orders summoning the petitioners in the complaints to stand their trial not only for an offence under the Act but also for an offence under section 409 of the Indian Penal Code.

2. Prior to July 19, 1969, the Company, which was then known as The Punjab National Bank Ltd., was a banking company, and the banking business of the company was transferred to and vested with the Punjab National Bank, a Corporation, wholly owned by the Government, with effect from the afore said date by virtue of an ordinance, which was later replaced by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The Company was paid a Slim of Rs. 10.20 crores as compensation for the take over of its banking business. The Company which has since 'changed its! .name and objects, has been carrying oil' other undertakings. Pursuant to the acquisition, the Company, by a Circular of February 28, 1973, gave option to its shareholders to sell to it shares held 'by them in it at Rs. 38/- per share, inclusive of dividend for the year 1972, in case they did not wish to continue to be its shareholders. It is claimed by the Company that before issuing the Circular it had obtained legal opinion of a former Chief Justice of India to the effect that the amount payable by the Company for the purpose opts own shares could not be considered as “deemed dividend", within the meaning of section 2(22) of the Act. It is further claimed that to put the matter beyond doubt before issuing the Circular, the Company addressed a letter to the Central Board of Direct Taxes seeking their confirmation that the amount would not be "deemed dividend". The Life Insurance Corporation of India, and the Unit Trust of India, were the major shareholders of the Company, and on their suggestion the price was missed from- Rs. 38/- per share to Rs. 40/ per share, exclusive of dividend that might be declared till the date of the payment of the price. Pursuant to the Circular, shareholders holding a total of 11,98,711,5 shares in the company exercised the option to sell the shares, as a result of which the Company resolved to purchase these shares at the aforesaid price, subject to consequent reduction of capital being confirmed by this Court. This Court eventually gave the necessary confirmation. The central Board of Direct Taxes, however, took no decision with regard to the question in spite a number of reminders. Meanwhile, the 'Life Insurance Corporation’ of India expressed the opinion that there was no question of deduction of any tax in the payment of the price since the payment was to be made to the shareholders on sale of their shares. It was further the view of the Corporation that the Company issued not treat the difference between the sale, prick and the face value of the shares, as dividend and had no right to deduct on such payment at source. This was the view which was generally shared by the shareholders; who has exercised the option to sell. It further appears that in the absence of any confirmation from the Board doubt lingered as to whether the price payable, or any part of it, could be considered "deemed dividend" and on the suggestion of the Corporation, the Company made payments on account (a) Rs. 33.10 per share to the shareholders, who had exercised the option, and the balance of Rs. 6.90 per share, out of the purchase price payable to them, was retained by the Company on the specific condition and understanding that the Company will be entitled to treat it as "tax deducted at source", in case it was ultimately held to be subject to tax, failing which, the retained amount would be paid to the ers