Wealth-tax prosecution quashed pending determination of liability after appellate remand.

The petitioner challenged proceedings alleging an offence under Section 35B of the Wealth-tax Act, 1957, in C.C. Nos. 185/2019 and 186/2019, and challenged the refusal to discharge him in C.C. No. 107/2018.

The petitioner relied on appeals concerning assessment years 2013–14, 2014–15 and 2015–16.

By an order dated 6 May 2026, the appellate authority found the grounds concerning the claimed debts satisfactory and remitted the matter to the Assessing Officer to verify and consider the claims.

The respondent submitted that the verification and decision remained pending, and that the petitioner had filed returns on 18 January 2021 after a search and notice.

The petitioner maintained that the returns were filed pursuant to the respondent’s notice.

1. Whether the pending Wealth-tax Act proceedings should be quashed when the appellate authority had remitted the petitioner’s tax claims to the Assessing Officer for verification and decision.

2. Whether the respondent could retain liberty to proceed in accordance with law if the Assessing Officer ultimately determined that wealth tax was payable and remained unpaid.

The Court considered the alleged offence under Section 35B of the Wealth-tax Act, 1957, and exercised its inherent jurisdiction under Section 482 of the Code of Criminal Procedure in these petitions.

The Court’s stated approach was that, where the petitioner’s tax claims were before the tax authorities for verification and adjudication, the criminal proceedings could be quashed subject to the outcome of that process; any tax found payable could be recovered, and the respondent could proceed in accordance with law if the amount remained unpaid within the applicable time.

The order cites no judicial precedents.

The Court noted that the appellate authority had found the petitioner’s grounds concerning the claimed debts satisfactory and had directed the Assessing Officer to verify and consider those claims, but no final decision had yet been made.

Because the tax liability underlying the prosecutions therefore remained subject to that determination, the Court considered that continuation of the criminal proceedings was not warranted at that stage.

It preserved the respondent’s ability to act in accordance with law if the tax authority found an amount payable and it was not paid.

If wealth tax was found payable and remained unpaid within the applicable time, the respondent was at liberty to proceed in accordance with law.