SUPREME COURT DISMISSES SAUMYA CHAURASIA'S CHALLENGE TO SANCTION NOTICES IN INCOME TAX EVASION PROSECUTION:

The Supreme Court has dismissed a plea by Saumya Chaurasia, who previously served as Deputy Secretary to former Chhattisgarh Chief Minister Bhupesh Baghel, challenging sanction notices issued under the Income Tax Act. These notices authorized her prosecution for alleged tax evasion. A bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi heard the matter and rejected her challenge to an earlier order of the Delhi High Court, which had dismissed her petition on the same grounds.

The apex court clarified that Chaurasia remains free to raise all her contentions, including those questioning the validity of the prosecution sanction, at the appropriate stage before the competent trial court. It further directed that the competent court must examine these arguments independently, without being influenced by the Delhi High Court's previous ruling.

Senior Advocate Balbir Singh represented Chaurasia during the proceedings.

The case stems from assessment proceedings initiated against Chaurasia following a search and seizure operation conducted at her residence in Chhattisgarh in February 2020. In 2022, the Enforcement Directorate (ED) arrested her in connection with related matters. Subsequently, in 2024, the Economic Offences Wing (EOW) of Chhattisgarh police registered two FIRs against her, followed by a third FIR later on. The Assessing Officer completed the income tax assessments, prompting Chaurasia to file appeals before the Commissioner of Income Tax (Appeals). Meanwhile, the Supreme Court had earlier granted her interim bail in the ED case.

The Principal Commissioner of Income Tax (PCIT) later issued orders authorizing the initiation of prosecution under Section 276C of the Income Tax Act, 1961, seeking her conviction for wilful attempts to evade tax. Chaurasia approached the Delhi High Court last year, contesting specific orders dated February 10, 2025, February 11, 2025, and February 19, 2025, passed by the PCIT under Section 279(1) of the Act. These orders sanctioned the launch of prosecution and the filing of criminal complaints against her under Sections 276C and 278E for various assessment years, including 2011-12, 2012-13, 2014-15, 2017-18, 2019-20, 2020-21, and 2022-23. She also challenged the validity of CBDT Circular No. 5/2020 dated January 23, 2020.

In her arguments before the High Court, Chaurasia contended that prosecution could only be initiated after obtaining prior administrative approval from the appropriate authority. She asserted that such approval had not been secured. Additionally, she argued that since the Income Tax Appellate Tribunal (ITAT) had not yet confirmed or imposed any penalty, and her appeals remained pending before the CIT (Appeals), the initiation of prosecution was premature and improper.

The Revenue authorities countered these claims by stating that prosecution was launched only after obtaining the necessary approval from the sanctioning authority, namely the PCIT, given that the tax amount in question exceeded Rs. 25 lakhs. They maintained that in such high-value cases, approval from the PCIT sufficed, without the need for clearance from a collegium comprising two Chief Commissioners of Income Tax (CCIT) or Directors General of Income Tax (DGIT)-rank officers.

After considering the submissions from both sides, the Delhi High Court observed that the tax demanded amounted to more than Rs. 348 crores, far exceeding the Rs. 25 lakhs threshold. It held that in cases involving offences under Section 276C(1) where the tax evaded surpasses Rs. 25 lakhs, the appropriate approving and sanctioning authority is the PCIT alone, rather than a collegium of two CCIT/DGIT officers.

The Supreme Court's recent dismissal upholds this position, allowing the prosecution proceedings to move forward while preserving Chaurasia's right to contest the sanction's validity during the trial.