Section 279 of ITA, 1961 : Section 279: Prosecution To Be At Instance Of Principal Chief Commissioner Or Chief Commissioner Or Principal Commissioner Or Commissioner

Explanation using Example

Imagine a business owner, Mr. Sharma, who has willfully attempted to evade tax by hiding some of his income. The Income Tax Department conducts an investigation and finds evidence of tax evasion. Under the Income-tax Act, 1961, Mr. Sharma could potentially face prosecution for offences such as those under section 276C (wilful attempt to evade tax).

However, before any legal proceedings can be initiated against Mr. Sharma for these offences, the law requires that the tax authorities obtain prior sanction from a higher authority, such as the Principal Commissioner or Commissioner of Income Tax. This is to ensure that prosecutions are sanctioned at a senior level and are not initiated without adequate basis.

In Mr. Sharma's case, if the Principal Commissioner reviews the evidence and believes it is sufficient to proceed, they may grant sanction for prosecution. Alternatively, if Mr. Sharma has been cooperative during the investigation and the authorities believe that prosecuting him may not be in the best interest of justice, they might decide to compound the offence. This means that Mr. Sharma can settle the case by paying a certain sum of money without going to court, as permitted under sub-section (2) of Section 279.

Furthermore, if Mr. Sharma had previously been under the impression that any penalties he faced might be reduced or waived under section 273A and had provided statements or documents during the investigation, these would still be admissible in court. The law clarifies that such evidence cannot be excluded merely because Mr. Sharma believed he would receive some form of clemency.