This revision petition hat been filed for quashing the criminal proceedings in Case No. 10 C/84 pending in the Court of the Chief Judicial Magistrate, Dibrugarh and also for setting aside the order dated 17.7.85 passed by him. 2. Sri L. Nampui, Inspecting Assistant Commissioner of the Income Tax, Assessment II, Guwahati, filed a complaint in the Court of the Chief Judicial Magistrate to imtiate trial against the petitioners under sections 776 (c) and 277 of the Income Tax Act (for short the Act). On receipt of the aforesaid complaint the Chief Judicial Magistrate took cognizance of the offence under the aforesaid sections and issued process. 3. The complainant stated, inter alia, that the first petitioner is a firm of which second to fourth petitioners ate partners. The firm is an assesses under the Act. The assessee firm filed its return of income before the Income Tax Officer A Ward, Dibrugarh for assessment year 1976-77 on 30.11.76 and the said return was signed and verified by the second petitioner. In the return the assessee firm bad shown to have received cash credit of Rs. 30,450/- i. e. Rs. 29,000/- in cash and Rs. 1,…..50/- as interest accrued thereon from Hanutram Sharma. This cash credit was entered on 1.4.75 in the books of account of the petitioner firm. The Income Tax Officer (for short the ITO) doubted the genuineness of the said entry and asked the petitioner firm to prove it, and in response to this the asses see firm filed a copy of the creditors account to confirm the receipt of the amount. The creditor was also an assessee within the jurisdiction of the said Income Tax Officer, A Ward, Dibrwgarh. The ITO was not satisfied with it, and therefore, directed the assessed firm to establish the identity of the creditor and to prove the confirmed copy of the account filed by them. The assessee, however, failed to comply with the direction and thereby the ITO found that the assessee failed to substantiate his claim about the receipt of money as claimed. 4. It is further stated that the creditor, Hanutram Sharma, had filed the return for the assessment year 1971-72 to 1975-76 simultaneously on 17.6.75. The assessee, however, failed to comply with the direction and thereby the ITO found that the assessee failed to substantiate his claim about the receipt of money as claimed. 4. It is further stated that the creditor, Hanutram Sharma, had filed the return for the assessment year 1971-72 to 1975-76 simultaneously on 17.6.75. On perusal of the return the ITO found that the expenses shown by said Hanutram Sharma was too low, which led the ITO to believe that the said Hanutram Sharma built up fictitious capital with a view to accommodate the assessee firm. The creditor Hanutram Sharma did not appear before the ITO and also according to the complainant the assessee wilfully and negligently failed to take steps to substantiate its claim in spite of full opportunity given to the assessee by adducing evidence to identify the creditor and his capacity to advance the credit. 5. On receipt of the summons the petitioners appeared in Court and filed petition, stating, inter alia, that against the order of the ITO the petitioners' firm preferred an appeal before the Commissioner of Income Tax (Appeals), Guwahat) under sections 274/271(1)(c) of the Act. The Comm­issioner of Income (Appeals) vide order dated 5.12.83 cancelled the penalty, and therefore, the petitioners were entitled to be discharged. 6. The petitioners' case was that they received a credit of Rs. 29,000/- from Sri Hanutram Sharma and the said amount was shown as cash credit in its books of account. Thus an amount of Rs. 30,450/- (i.e. 29,000/- and Rs. 1,450/- interest) was duly entered in the books of account of the petitioner firm, However, on the failure of the petitioners to prove the Identity M the creditor and to prove his capacity to advance the amount the cash credit was treated as assessees' income from undisclosed sources and added to the total income of the assessee's firm. The ITO imposed penalty of Rs. 15,000/- under section 271(1)(c) of the Act. Therefore, the petitioners filed appeal before the Commissioner of Income Tax (Appeals), Gauhati. The Commissioner of Income Tax (Appeals) after scrutinising the papers and after hearing the petitioners' counsel cancelled the penalty imposed upon the petitioners. While allowing the appeal the Commissioner of Income Tax (Appeals) observed as follows: "I have carefully considered the facts of the case and the submissions of the counsel of the appellant. The Commissioner of Income Tax (Appeals) after scrutinising the papers and after hearing the petitioners' counsel cancelled the penalty imposed upon the petitioners. While allowing the appeal the Commissioner of Income Tax (Appeals) observed as follows: "I have carefully considered the facts of the case and the submissions of the counsel of the appellant. It is an established law that simply for submission of an incorrect or false explanation penalty under section 271(1)(c) is not leviable. The ITO has not brought any material independent of the assessment to bring home the charge of concealment and has even failed to enforce summons under section 131 issued by him to the creditor Sri Hanutran Sharma. I, therefore, hold that this is not a fit case for levy of penalty under Section 271(1)(c) and the penalty imposed is, therefore, cancelled " Relying on this, the petitioners submitted before the trial Court that the Commissioner of Income Tax (Appeals) set aside the order of penalty imposed by the ITO, as such the criminal prosecution against the petitioners under sections 276 (c) and 277 of the Act is not maintainable. 7. The Chief Judicial Magistrate after hearing the petitioners by order dated 17.7.85 rejected the prayer of the petitioners and held that the result of the proceeding under the Act would be a binding on the criminal Court. According to the Chief Judicial Magistrate the criminal Court has to judge the case independently on the evidence placed before it and the criminal proceeding is maintainable in the present form at least at this stage. Hence this present petition. 8. I have heard Mr. D.N. Choudhury, learned counsel for the petitioners and Mr. O.K. Talukdar, learned standing counsel of Income-tax Department. Mr. Choudhury has submitted that the complaint petition does not disclose any offence against the petitioners. He has further submitted that even if the statements made in the petition are taken to be true on the face of it, no conviction is warranted on the basis of such statement, and therefore, the initiation of the said criminal proceeding is an abuse of the process of the Court and this Court by invoking its inherent power may quash and set aside the proceeding. 9. The main thrust of Mr. 9. The main thrust of Mr. Choudhury's arguments is that the provision under section 276 (c) of the Act is in applicable in the present case inasmuch as this section was introduced by the Taxation Laws (Amendment) 1975, i.e. after the alleged commission of offence. Present section 277 of the Act was also substituted by the said Taxation Laws (Amendment) Act, 1975, and these sections came into force with effect from 1.10.75. Mr. Choudhury has further submitted that the penalty imposed by the ITO having been cancelled by the appellate authority, there cannot be any criminal proceeding, more so, the ITO failed to take any steps to find out whether there was any material to show that the petitioner wilfully attempted in any manner, whatsoever, to evade any tax imposable under the Act. Moreover, the compl­aint petition does not contain any statement for initiation of a criminal case under the Act. The complainant in his complaint has not stated that the assessee firm wilfully attempted to evade tax, as envisaged under section 276(c) of the; Act. Further there is no specific statement that the petitioners made statement in their verification without specifying how and in what manner the petitioners viz., second petitioner, made verification of statement which were false and which he either knew and believed to be false and/or did not believe to be true. The complainant-petitioner simply quoted the ingredients of section 277 of the Act without specifying anything in that regard. In this regard Mr. Choudhury has placed reliance on the following decisions (i) (1982) 133 ITR 909 (Uttam Chand vs. ITO, Central Circle, Amritsar) (ii) (1984) 145 ITR 109 (Kanshi Ram Wadwa vs. ITO, Kurokslietra). 10. Mr. Talukdar, learned counsel for the Income-tax Department, has strenuously argued that the complaint filed by the complainant fully discloses the offence under section 276 (c) as well as under section 277 of the Act. He has further submitted that this is not the stage where this Court should interfere with the case by invoking the inherent power of this Court. He has also submitted that in a petition for quashing of the criminal proceed­ing the Court should always be slow in quashing such proceedings as held by the Apex Court and should d so in rarest of the rare case. He has also submitted that in a petition for quashing of the criminal proceed­ing the Court should always be slow in quashing such proceedings as held by the Apex Court and should d so in rarest of the rare case. Besides, he has further submitted that the facts and circumstances do not justify any interference from this Court at this stage, as evidence are yet to be adduced which may disclose the offence under section 276(c) and 277 of the Act as complained of. 11. Mr. Talukdar has also submitted that the Chief Judicial Magistrate discussed the entire aspect of the matter while passing the order dated 17.7.85 and he came to a just finding that the criminal proceeding was maintainable. 12. On the rival contention of the parties it is necessary to discuss, whether the criminal proceeding (Case No 10 c/84) pending in the Court of the Chief Judicial Magistrate, Dibrugarh, should be quashed and also the order dated 17.7.85 should be set aside. Regarding the first submission of Mr. Choudhury - that the Commissioner of Income Tax (Appeals) passed the appellate order dated 5.12.83 cancelling the penalty imposed upon him on the ground that in the assessment order passed by ITO there was no independent material to bring home the charge of concealment and has even failed to enforce under section 131 of the Act. Under section 276 (c) of the Act, an assessee is punishable under sub clause (1) (ii) depending on the amount sought to be evaded by him only when it appears that a person wilfu­lly attempted in any manner, whatsoever, to evade the tax, penalty or interest chargeable or imposable under this Act. To take cognizance of the offence by a Court under section 276 (c) the Court must be satisfied on the face of the complaint that the person wilfully made attempt to evade tax. Similarly for taking cognizance under section 277 of the Act also it must appear to the Court that a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true. On the failure to substantiate certain facts and statements or accounts by itself is not sufficient to take cognizance of the offence by a Court. On the failure to substantiate certain facts and statements or accounts by itself is not sufficient to take cognizance of the offence by a Court. Before taking cognizance of an offence under section 277 of the Act, the Court must be first satisfied that such statement or account is false to his knowledge as envisaged under section 277 of the Act. In the absence of such ingredients, the Court is not justified in taking cognizance of the offence. 13. In Uttam Chand vs. I TO, Central Circle, Amritsar, 133 ITR 909, the Supreme Court quashed the proceeding by allowing the appeal filed against the judgment dated May 22, 1978 passed by the Punjab & Haryana High Court. The Punjab & Haryana High Court relying on the decision in Dr D.N. Munshi vs. N.B. Singh (1978) 112 ITR 173, held that - "A close scrutiny of these observations of the Supreme Court would show that the proceedings can be quashed only when either there is a legal bar against the institution or the continuation of the criminal proceedings or the allegations in the compl­aint, even if taken at their fact value or accepted in entirety do not constitute the offence, or there is no legal evidence adduced or the evidence adduced clearly fails to prove the charge or there is an abuse of the Court " Admitt­edly, there was no legal bar on continuation of the criminal proceeding in that case and prima facie the complainant also did disclose the alleged offence. The learned Single Judge also observed that the Tribunal's finding was not binding on the criminal Court. According to the learned Single Judge, a criminal Court is to independently go into the allegations mentioned in the complaint on the face of the evidence to be adduced by the revenue and it is open to the petitioners to take any defence to prove their case before the Magistrate. This judgment was set aside by the Apex Court. 14. In Kanshi Ram Wadhwa vs. ITO, Kurukshetra, 145 ITR 109, the Punjab and Haryana High Court held that if there was no case for sustenance of penalty, if equally would not be a case for criminal prosecution. Therefore, the criminal complaint filed against the assessee was liable to be quashed. This judgment was set aside by the Apex Court. 14. In Kanshi Ram Wadhwa vs. ITO, Kurukshetra, 145 ITR 109, the Punjab and Haryana High Court held that if there was no case for sustenance of penalty, if equally would not be a case for criminal prosecution. Therefore, the criminal complaint filed against the assessee was liable to be quashed. In that case, an application under section 482 CrPC was filed by the assessee for quashing the criminal complaint filed by the ITO. A penalty of proceeding was initiated against the petitioner and later, that order was quashed by the appellate authority. On the strength of the order of ITO, a criminal prosecution was launched against the petitioner under section 277 of the Act. The petitioner taking aid of the order of the appellate authority apprised the learned Magistrate, before whom the complaint was pending, that when the case of the department for the imposition of penalty had faultered, there was no case to proceed against the petitioner in a criminal proceeding. The petitioner relied the decision in Uttam Chand (supra) and Praskash Chand vs. ITO (1982) 134 ITR 8 (P & H). The Punjab and Haryana High Court quashed the criminal proceeding and held as follows : "...It has to be borne in mind that the Court's time is precious and is not meant to be employed for proceedings which are directionless. Here, concededly, the Supreme Court has pronounced in Uttam Chand's case, that if there is no case for sustenance of penalty, it equally is not a case for criminal prosecution. In that view of the matter, the claim of the petitioner is well grounded. Rather, learned counsel for the income-tax department appearing for the respondent had nothing to say against it and did not even venture to distinguish that case. Thus, the petitioner has a clean sail. The complaint, and the proceedings taken thereon, must necessarily be quashed..." 15. The facts of the cases cited by Mr. Talukdar are not applicable in the instant case. Considering the decisions referred to above, I find that as the penalty imposed by the ITO was set aside by the appellate authority on the ground that there was no independent evidence on record to show that the petitioner was guilty of evasion of tax and verification of false statement as envisaged under section 276 (c) or 277 of the Act. 16. 16. The next submission of Mr. Choudhury is that at the time of alleged commission of offence for evasion of tax the provision of section 276 (c) was not incorporated in the Act. Section 276 (c) was substituted by Taxation Laws (Amendment) Act, 1975, which came into force with effect from 1.10 1975. Similarly, present section 277 was also substituted by the said Taxation Laws (Amendment) Act, 1975 and came into effect on the same date. Prior to incorporation of the present section 276 (c) there was no penal provision for evasion of tax. The scope of the old section 277 was also very limited and by the present amendment, its scope has been enlarged. As there was no vigorous prosecution policy for evasion of tax, the matter alongwith connected problems was referred to the Direct Taxes Enquiry Committee, commonly known as Wanchoo Committee. This Commi­ttee found that the public in general also tends to lose faith and confidence in the tax administration and once it knows that even when a tax evader is caught, the administration lets him get ^way lightly after paying only a monetary penalty - when money is no longer a major consideration with him if it serves his business interests. Unfortunately, in the present social milieu, such penalties carry no stigma either. In these circumstances, the provisions for imposition of penalty failed to instil adequate fear of the law in the minds of tax evaders. Prospect of landing in jail, on the other hand, is a far more draded consequence - to operate in terrorem upon the erring tax payers. Besides, a conviction in a Court of law is attended with several legal and social disqualifications as well. In order, therefore, to make enforcement of tax laws really effective, the Wanchoo Committee considered it necessary for the Department to evolve a vigorous prosecution policy and to pursue it unsparingly. On the basis of such report the penalty provision of section 276 (c) was incorporated by the aforesaid Taxation Laws (Amen­dment) Act, 1975. Therefore, a person can be convicted for an offence committed on and after 1.10.75, that is, from the date on which the said section came into force. Mr. Choudhury has submitted that any attempt to convict the petitioners for the offence allegedly committed prior to 1.10.75 would be violative of provisions of Constitution. 17. Submissions or Mr. Therefore, a person can be convicted for an offence committed on and after 1.10.75, that is, from the date on which the said section came into force. Mr. Choudhury has submitted that any attempt to convict the petitioners for the offence allegedly committed prior to 1.10.75 would be violative of provisions of Constitution. 17. Submissions or Mr. Choudhury find support from the Departmental Circular No. 179 dated 30th September, 1975, As per the said Circular also the provision will apply in relation to offences committed on or after 1st October, 1975. Admittedly, the alleged offence was committed some time in August 1975 and, therefore, the present section 276 (c) cannot be invoked to warrant a conviction against the petitioners. The present section 277 has enlarged the scope by enhancing the punishment. In the instant case, present section 277 is also not applicable. However, as per the old section a convic­tion may be warranted provided the ingredients of section 277 are fulfilled, On perusal of the complaint I find that there is no ingredients of section 277 to find out a prima-facie case under the aforesaid section. 18. For what has been stated above, I am of the opinion that the complaint petition does not justify initiation of any criminal proceeding and if such proceeding is allowed to continue it will amount to abuse of the process of the Court. Therefore, I quash the criminal proceeding No. 10c/84, pending in the Court of Chief Judicial Magirtrate, Dibrugarh. I also set aside the order dated 17.7.85 passed by the Chief Judicial Magistrate, Dibrugarh in Case No.10c/84. In the result, the petition is allowed. No order as to costs.