In the case Indo Arya Central Transport Limited & Ors. vs. Commissioner of Income Tax (TDS), Delhi -1 & Anr. (http://lobis.nic.in/ddir/dhc/SKN/judgement/24-03-2018/SKN12032018CW39642017.pdf) ( 255TAXMAN50(Delhi)) the Hon'ble court propounded the following principles relating to sanction granted under Sec. 279 of the Income Tax Act, 1961, for prosecution of an offender:
- It is incumbent on the prosecution to prove that the valid sanction has been granted by the sanctioning authority after being satisfied that a case for sanction has been made out.
- The sanction order may expressly show that the sanctioning authority has perused the material placed before it and, after consideration of the circumstances, has granted sanction for prosecution.
- The prosecution may prove by adducing the evidence that the material was placed before the sanctioning authority and its satisfaction was arrived at upon perusal of the material placed before it.
- Grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute the offence.
- The adequacy of material placed before the sanctioning authority cannot be gone into by the court as it does not sit in appeal over the sanction order.
- If the sanctioning authority has perused all the materials placed before it and some of them have not been proved that would not vitiate the order of sanction.
- The order of sanction is a prerequisite as it is intended to provide a safeguard to a public servant against frivolous and vexatious litigants, but simultaneously an order of sanction should not be construed in a pedantic manner and there should not be a hyper-technical approach to test its validity."
From the above decision, it is clear that during the trial of the case it shall be a duty cast upon the prosecution to prove that a valid sanction has been granted for prosecution, which is based on documents and evidence before the sanctioning authority. Though the grant of sanction is a prima facie view formed by the sanctioning authority, but it should be shown that sanctioning authority perused all relevant material before it, as the adequacy of material / evidence before the sanctioning authority may not be of much consequence. However, the application of mind must be there while granting sanction based on certain material, and the sanction shall not be a mere ploy or arbitrary.
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