Income Tax Authority which has initiated prosecution must have sanction of law

Tirumala Tirupati Constructions India (P) Ltd. Vs Assistant Director of Income Tax (Telangana High Court)

Telangana High Court held that once sanction has been given to a particular authority, i.e., the Deputy Director of Income Tax, the prosecution has to be launched by him alone and not by the Assistant Director of Income Tax. Thus, the authority which has initiated the prosecution must have sanction of law. Otherwise, it amounts to illegal action.

Facts- A survey operation u/s. 133A of the Act was carried out in case of certain assessees. During the course of the survey it was found that the petitioners herein have sold the land at Budvel to different parties at the rates below the vahie of the Sub‑Registrar Office. Further, the petitioners have also not furnished the income tax returns. Accordingly, the summons were issued to the petitioners to show cause as to why prosecution should not be initiated against them as the tax was willfully avoided by the petitioners for the said assessment years.

Basing on the said complaint, the Special Court of Economic Offences, Hyderabad registered and numbered the case as C.C.No.263 of 2017 for prosecution against the petitioners for the offences punishable u/s. 276C(1) and 278B of the Act, 1961.

Challenging the said proceedings in C.C.No.263 of 2017, the petitioners have filed this quash petition contending that the initiation of the prosecution against the petitioner is illegal and void ab-initio.

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