Karnataka High Court
K.E. Sunil Babu, Asst. Commr. Of Income ... vs Steel Processors Bangalore ... on 1 June, 2006
Equivalent citations: (2006)206CTR(KAR)615, [2006]286ITR315(KAR), [2006]286ITR315(KARN)
Author: K. Sreedhar Rao
Bench: K. Sreedhar Rao
JUDGMENT K. Sreedhar Rao, J.
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1. The account books of A.1 to 3 disclosed a sum of Rs. 100000/- as loan from A.4. Accordingly, the returns were filed by A.1 to 3 for the assessment period Page 0716 1986-87. The tax authorities conducted search of the premises of A.4 and found that there is no corresponding entries in the accounts of A.4 to corroborate the loan of Rs. 100000/- to A.1 to 3. A.4 was not able to substantiate the source, hence stated to the income tax authority that the entry is a false entry relating to loan from A.4 shown by A.1 to A.3. The income tax accepted the version of A.4. The income tax authorities issued notice to A.1 to 3 for submitting false return. A1 to 3 filed revised returns Under Section 139(5) of the Income Tax Act. The revised return is accepted. Accordingly, the tax liabilities have been recovered. Later on the department launched prosecution of A.1 to 4 for committing offence Under Section 276(c), 277 read with Section 278 of the I.T. Act. The provisions of Section 139(5) reads thus:
139(5) If any person, having furnished a return under Sub-section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier:
2. The provisions of Section 276(c), 277 and 278 reads thus:
276-C. Wilful attempt to evade tax etc.,-(1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or impossible under this Act, he shall, without prejudice of this Act, be punishable,-
(i) in a case where the amount sought to be evaded exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to seven years and with fine;
(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.
(2) If a wilfully attempts is any manner whatsoever to evade the payment of any tax, penalty, or interest tinder this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine.
277. False statement in verification etc.- If 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 known or believes to be false or does not believe to be true, he shall be punishable,-
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(i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to three years and with fine.
278. Abetment of false return, etc.- If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to be true or to commit an offence under Sub-section (1) of Section 276-C he shall be punishable,-
(i) in a case where the amount of tax, penalty or interest which would have been evaded, if the declaration, account or statement had been accepted as true or which is wilfully attempted to be evaded exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;
(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extent to three years and with fine.
3. The assessee is permitted to file revised return if there is any bonafide mistakes in the returns filed. The assessing authority upon proof of the bonafide reasons can accept the revised return and pass necessary orders in accordance with law. The revised returns are accepted by the authorities. Yet the department notwithstanding acceptance of the revised return Under Section 139(5) has launched prosecution against the accused for the offence Under Section 276(c), 277 and 278.
4. The conscious and willful attempt to evade the tax is the primary ingredient of the offence under the above provisions. When once the income tax authorities have accepted the revised returns Under Section 139(5) it becomes explicit that the earlier return filed was a bonafide mistake and does indicate any mensereal element. Therefore, after having accepted the revised return, it is impermissible for the income tax authorities to launch prosecution Under Section 276(c), 277 and 278 of the Act. In that view of the matter, the order of acquittal granted is sound and proper. The appeal is dismissed.