Miraj Digvijay Shah Vs PCIT (Calcutta High Court)
The Calcutta High Court heard a writ petition challenging a show cause notice dated 11th May 2023 and a subsequent sanction order dated 12th June 2023 under Section 279(1) of the Income Tax Act, 1961. The notices relate to alleged offences under Sections 276C(1), 277, and 277A of the Act for the assessment year 2017-18. The petitioner contended that the show cause notice and sanction order were issued without jurisdiction, in violation of relevant CBDT circulars, and contrary to principles of natural justice.
The petitioner’s primary argument was that no assessment, penalty, or pending proceedings existed against him at the time the show cause notice and sanction order were issued, and thus the preconditions for initiating prosecution under Circulars No. 24/2019 and 5/2020 were not met. Circular 24/2019 states that cases involving alleged evasion or under-reported tax of Rs. 25 lakh or below require prior approval of a collegium of two CCIT/DGIT rank officers before prosecution can be initiated. Circular 5/2020 clarified that prosecution may be launched in deserving cases at any stage with prior collegium approval, but the same requirement of collegium approval applies for amounts below Rs. 25 lakh. The petitioner argued that the alleged evaded income, Rs. 27,31,215, would produce a tax effect below Rs. 25 lakh and thus the Principal CIT lacked authority to approve the prosecution independently.
