Patna High Court
Ram Gulam Shah And Sons And Ors. vs Commissioner Of Income-Tax And Anr. on 8 July, 1999
Equivalent citations: [2000]242ITR418(PATNA)
JUDGMENT Narayan Roy, J.
1. Heard counsel for the parties.
2. By this application under Section 482 of the Code of Criminal Procedure, the petitioners have prayed for quashing the entire criminal prosecution launched against them including the order taking cognizance dated March 3, 1992, under Sections 276C and 277 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), in Complaint Case No. 14 of 1992 pending in the Court of the Special Judge, Economic Offences, Muzaffar-pur.
3. It is contended by learned counsel appearing on behalf of the petitioners that though the Assessing Officer made two additions in the assessment order and though the same was the basis for the prosecution against the petitioners, the same has not wholly been sustained by the Commissioner of Income-tax (Appeals) and also by the Tribunal rather it has been held by the appellate authority and also by the Tribunal that the concealment made by the petitioners was not wilful in nature. Learned counsel, therefore, submitted that in the absence of a finding that there had been wilful evasion of tax on the part of the petitioners and any penalty was imposed by the authorities for the aforesaid evasion, the prosecution launched against the petitioner will be an abuse of the process of the court. Mr. Rastogi, learned senior counsel appearing on behalf of the Revenue, on the contrary, submitted that it would appear from the orders of the appellate authority and also from the order of the learned Tribunal that there is no total deletion and the additions made by the Assessing Officer have been sustained by the appellate authority and also by the learned Tribunal and in that view of the matter the prosecution launched against the petitioner will not he an abuse of the process of the court. The order of addition passed by the assessing authority and also the order of the appellate authority and the Tribunal have been brought on record. It appears that the assessing authority had made additions in two accounts. Firstly, for Rs. 1,52,063 and, secondly, for Rs. 4,08,179. The petitioners had gone in appeal before the Commissioner of Income-tax (Appeals) against the order of the assessing authorities and the Commissioner of Income-tax (Appeals) ultimately upheld the addition of Rs. 55,000 and Rs. 2,65,000 making the total figure of Rs. 3,20,000 and a relief was granted to the petitioners to the tune of Rs. 1,71,950. The petitioners thereafter went in second appeal before the Income-tax Appellate Tribunal. The learned Tribunal, however, after considering the facts and circumstances of the case, refused to interfere with the addition of Rs. 55,000 as cash credit and the same was accordingly sustained. On reading the orders passed by the Income-tax Commissioner in the appeals and the orders passed by the Income-tax Tribunal, it is manifestly clear that no finding has been recorded by the authorities showing that it was a case of wilful evasion of tax on the part of the petitioners or the petitioners had mens rea to conceal their income. There is also nothing on record to show that any penalty was imposed upon the petitioners for the alleged wilful evasion of tax. Learned counsel for the petitioners ultimately submitted that in the absence of any finding of the appellate authority and also of the Tribunal that there was wilful evasion of tax and there was mens rea in concealing the income, the prosecution launched against the petitioners is wholly unwarranted. In support of his proposition, learned counsel has relied upon the case of Prem Kwnar Keshri v. State of Bihar [1998] 230 ITR 252 (Patna). In the case of Prem Kumar Keshri v. State of Bihar [1998] 230 ITR 252 (Patna) while dealing with a case of quashing of the prosecution this court has held that merely because the Income tax Officer did not accept the correctness of the accounts of the assessee and made additions in two accounts on estimate basis which was not wholly accepted by the Commissioner of Income-tax (Appeals) could it be said that the assessee made a false statement in the verification in the return of income. Again in the case of Sir Shadilal Sugar and General Mills Ltd. v, C/T[1987] 168 ITR 705 (SC), it has been held that even if there had been certain omissions in the return filed by the assessee it cannot be construed that there was mens rea upon his part and in the absence of mens rea the prosecution under Sections 276C and 277 of the Income-tax Act, will be an abuse of the process of the court.
4. Section 276C of the Income-tax Act deals with wilful attempt to evade tax. The Explanation to this section reads as under :
"Explanation.--For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case, where any person-
(i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement ; or
(ii) makes or causes to be made any false entry or statement in such books of account or other documents ; or
(iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents ; or
(iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof."
5. The facts which have been narrated above do not bring out a case at least under any of the clauses mentioned above and in the absence of facts containing the ingredients of the offences in my view, no offence under Sections 276C and 277 of the Act is made out. I have already noticed above that the appellate authorities as also the Tribunal have not recorded a finding that there was wilful attempt on the part of the petitioner to evade any tax and merely because the Income-tax Officer did not accept the correctness of the account of the assessee and made additions in two accounts on estimate basis, the findings arrived at by the Income-tax Officer could not have held the petitioner liable for making a false statement in the verification in the return of income and thus the provision of Section 277 of the Act in no way is attracted in the case at hand.
6. For the reasons and discussions above and also in view of the legal proposition mentioned above, it is held that there is no wilful evasion on the part of the petitioners and since the additions made by the assessing authority has not been sustained in toto, the prosecution launched against the petitioners is wholly unwarranted and it is not sustainable in law. I, therefore, allow this application and quash the entire criminal prose cution launched against the petitioner.