Prosecution Can Be Initiated Without Waiting For ITAT Penalty Confirmation In High-Value Cases: Delhi High Court

The Delhi High Court has made it clear that approval of collegium of two CCIT/DGIT rank officers is only required in cases where tax evaded is less than the threshold limit of ₹25 Lakh.A division bench of Justices V. Kameswar Rao and Vinod Kumar held, “the appropriate authority for initiating the prosecution proceedings would be the sanctioning authority i.e., the PCIT and not the collegium of two CCIT/DGIT rank officers since the tax to be evaded exceeds Rs. 25 lacs.”The observation was made while dealing with challenge to sanction orders passed by the Principal Commissioner of Income Tax authorising the Assessing Officer to initiate prosecution against the petitioner under Section 276C (Wilful attempt to evade tax) of the Income Tax Act, 1961.Petitioner claimed that the impugned orders are contrary to the Circulars issued in 2019 and 2020, mandating previous administrative approval of two CCIT/DGIT rank officers, before prosecution can be launched by the sanctioning authority.The Department argued that the mandate of approval of a collegium of two CCIT/DGIT rank officers is only required in cases where the threshold limit is Rs.25 Lacs. Since the case of the petitioner involves an amount exceeding the threshold limit, the sanctioning authority for such offences is the PCIT alone.After perusing the two Circulars, the High Court agreed with the Department and observed,“In a case pertaining to Section 276(C)(1) of the Act, where the tax evaded exceeded Rs.25 lacs, the approving authority in such a case would be the sanctioning authority, i.e. PCIT…it is in cases where the evaded amount is Rs.25 lacs or below, the prosecution shall be proceeded with after the administrative approval of the collegium of two CCIT/DGIT rank officers…where tax which would have been evaded is more than Rs. 25 lacs in such cases the approving authority is the sanctioning authority. No pre-conditions have been attached while taking action in cases where the evasion is more than Rs.25 lacs.”The Court explained that the intent is not to launch prosecution in small cases and therefore, in cases where non-payment of tax is Rs. 25 lacs or below, in exceptional cases like those of habitual defaulters, prosecution may be initiated only with the previous administrative approval of a collegium of two CCIT/DGIT rank officers. “However, the case at hand differs to the extent that the amount demanded is more than Rs.348 crores for which the approval of the sanctioning authority would be adequate as per the aforementioned circulars. In other words, the decision of the Sanctioning Authority granting approval would suffice the requirement, which in this case is PCIT,” the Court held and dismissed the plea.Appearance: For the Petitioner : Mr Balbir Singh, Sr. Advocate with Mr Anshul Rai & Mr Harshwardhan, Advocates For the Respondent : Mr. Ruchir Bhatia, SSC and Mr Anant Mann, JSC for Revenue Mr. Premtosh K. Mishra, CGSC, Mr. Sarthak Anand, Mr. Prarabdh Tiwari, Mr. Anurag Tiwari and Mr. Shrey Sharma, Advocates for UOICase title: Saumya Chaurasia v. Union Of India & Others Case no.: W.P.(C) 8191/2025Click here to read order

Prosecution Can Be Initiated Without Waiting For ITAT Penalty Confirmation In High-Value Cases: Delhi High Court

Kapil Dhyani

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