Police can not investigate offences under Income Tax Act

[bpagrawal]

Police can not investigate offences under Income Tax Act
It may be mentioned here that Section 276C of the Income Tax Act provides for punishment for wilful attempt to evade tax, etc. It is also to be noted in this connection that Sub-section (1) of Section 279 of the Income Tax Act provides that a person shall not be proceeded against for an offence Under Section 275A, Section 276, Section 276A, Section 276B, Section 276BB, Section 276C, Section 276CC, Section 276D, Section 277 or Section 278 except with the previous sanction of the Chief Commissioner or Director-General or Commissioner unless the prosecution is at the instance of the Commissioner (Appeals) or of the appropriate authority referred to therein. Section 279A of the Income Tax Act provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence punishable Under Section 276B or Section 276C or Section 276CC or Section 277 or Section 278 shall be deemed to be non-cognizable within the meaning of that Code. Reading Section 279A and Section 279 together it is evident that offences Under Section 277 and Section 278 of the Income Tax Act are not cognizable offences and as such the police have no power of their own to investigate any such offence and any prosecution for any such offence can be launched by a complaint with the previous sanction of the Chief Commissioner or Director-General or Commissioner. As we have seen the F.I.R. in this case mentions Sections 277 and 278 of the Income Tax Act but the offences under the said sections being non-cognizable the police cannot investigate the same on the basis of their own power as a matter of course although prosecution under those sections can be launched by filing complaint with the previous sanction or at the instance of any of such authorities as mentioned in Section 279 of the Income Tax Act which evidently is not the case here. There is no doubt that the F.I.R. of the present case also includes several sections of the Indian Penal Code, such as, Sections 120B, 420, 468 and 471. From the averments contained in the F.I.R. it is evident, apparent and transparent that substantially the allegation on the basis of which the investigation has been started is that the petitioners in collusion and conspiracy with others evaded payment of proper income tax and also submitted income tax returns based on false statements and forged and fabricated materials. The basic offences, if any, being under the Income Tax Act the requirement regarding sanction for prosecution and the bar of lack of authority on the part of the police to investigate such offences in view of the specific provisions of the Income Tax Act cannot be circumvented by inclusion of some other ancillary offences under the Indian Penal Code which are only components of or rather only incidental to or instrumental in the commission of the basic offences under the Income Tax Act or which are closely linked up with such offences and which have no separate conseqnences other than what are sought, to be prevented by enacting specific penal provisions in the Income Tax Act, namely, evasion of tax and steps in that direction. In that view of the matter also the F.I.R. cannot be sustained simply because offences punishable under certain sections of the Indian Penal Code, such as, Sections 420, 468, 471 read with Section 120B have been included in the F.I.R. along with the main offences punishable under the Income Tax Act which, under law, the police cannot investigate on the basis of their own authority.


Calcutta High Court
Hiralal Banka And Ors. vs Mr. P.S. Bose And Ors. on 8 April, 1993
Equivalent citations: 1995 (1) ALT Cri 7, (1993) 2 CALLT 299 HC, 98 CWN 396
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