M V JAVALI Vs. MAHAJAN BOREWELL AND CO

JUDGEMENT

(1.) Special Leave granted. Heard the learned counsel for the parties.

(2.) The appellant, who is an Assistant Commissioner of Income-tax, filed a complaint in the Special Court for Economic Offences at Bangalore alleging commission of an offence under Section 276-B, read with Section 278-B of the Income-tax Act, 1961 (Act for short) by M/s. Borewell and Co., a registered partnership firm (the respondent No. 1) and its three partners (the respondent Nos. 2 to 4). The Special Court took cognisance of the offence alleged and issued process against the respondents for their attendance. After entering appearance they filed an application praying for their discharge under Section 245(2) of the Code of Criminal Procedure. The Special Court allowed the application on the ground that before granting sanction for their prosecution under Section 279(1) of the Act, the Sanctioning Authority did not give the respondents a personal hearing. The other grounds raised by the respondents for their discharge were, however, kept open. Assailing the order of discharge the appellant filed a revision petition in the High Court which was dismissed by the impugned order. Hence this appeal.

(3.) In upholding the order of discharge, the High Court did not deal with the ground that found favour with the Special Court but held - relying upon its earlier judgment in P. V. Pai v. R. L. Rinawna, ILR (1993) Kant 709- that the prosecution of respondent No. 1 under Section 276-B was not maintainable for if ultimately the Special Court found it to be guilty it (the Court) could not legally impose a substantive sentence upon it which was mandatory thereunder. As regards the other respondents, though the High Court found that the prosecution against them was maintainable for the above offence, it still upheld their discharge.