Once the findings on the basis of which a complaint has been set aside, the criminal proceedings initiated on the basis of the complaint should be quashed as the basis for the complaint no longer exists.

V.S.AGGARWAL, J.

1. The ITO, Chandigarh, filed a complaint with respect to offences under ss. 276C and 277 r/w s. 278B of the IT Act. It was asserted that the petitioner No. 1 is a partnership concern comprising petitioners Nos. 2 and 3 as its active partners. The petitioner No. 1 filed its return on income for the asst. yr. 1980-81 on 14th July, 1980. It declared a loss of Rs. 30,540. It was found that the petitioner No. 1 had debited a sum of Rs. 30,500 on account of provisional purchases allegedly made from Camera India Photographic Co. Ltd., New Delhi and Camera Works Pvt. Ltd., Bombay. It was further revealed that no such goods were supplied to the petitioner No. 1. It had introduced bogus purchases under the garb of provisional purchases. This was done only in order to reduce the correct income of the petitioner No. 1. This amount was added towards bogus purchases. The income of petitioner No. 1 was assessed with profit of Rs. 34,071. Subsequently, penalty proceedings were initiated against the petitioner No. 1. A penalty was levied. It was asserted that the petitioners had deliberately and wilfully concealed the real income in order to avoid payment of taxes. Hence the complaint was filed.

2. The petitioners filed the present writ petition invoking Arts. 226/227 of the Constitution. However, at the time of arguments, only one plea was pressed namely, that the second appeal filed by the petitioners against the penalty imposed has been accepted by the Tribunal. It is claimed that since the appeal has been accepted, the proceedings should be quashed as are pending in the Court of the Chief Judicial Magistrate, Chandigarh, on the basis of the said complaint.

3. The sole question that arises for consideration is as to when the appeal against the penalty imposed has been accepted, whether the proceedings initiated on the basis of the complaint should be quashed or not. Learned counsel appearing on behalf of the respondents, however, strongly relied upon the judgment of the Supreme Court in the case of P. Jayappan V/s. S. K. Perumal, ITO (1984) 149 ITR 696 (SC) One of the arguments advanced before the Supreme Court was that the assessment proceedings started against the petitioner in that case were not completed and, therefore, prosecution was premature on the ground that reassessment proceedings were going on. The Supreme Court while considering the said question as to the effect of reassessment proceedings of the prosecution held 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. It was held as under :

"At the outset, it has to be stated 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. Sec. 279 of the Act provides that a person shall not be proceeded against for an offence punishable under s. 276C or s. 277 of the Act except at the instance of the CIT."

Subsequently while discussing different other provisions, it was concluded that mere expectation of success in some proceedings cannot come in the way of the institution of the criminal proceedings. A specific finding so arrived at reads as under : "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 s. 276C and s. 277 of the Act and in the criminal case all the ingredients of the offence in question have to be established in order to secure the conviction of the accused. A criminal Court no doubt has to give due regard to the result of any proceedings under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act. It does not, however, mean that the result of a proceeding under the Act