Gujarat High Court
B.T.X. Chemicals (P.) Ltd. And Ors. vs Suraj Bhan And Anr. on 14 October, 1988
Equivalent citations: (1989)1GLR181, [1989]177ITR425(GUJ)
JUDGMENT D.C. Gheewala, J.
1. These Special Criminal Applications filed under article 226 of the Constitution of Indian seek to quash the complaints which have been filed against the petitioners who are the assesses. Petitioner No. 1 is a company of which the remaining petitioners are the directors. In the accounting year ending June 30, 1979, the petitioner-company sustained a loss on account of some fire having taken place in the company's premises. The said loss was reimbursed by the insurance company and in the return that was filed of June 30, 1980, this particular reimbursement made by the insurance company was not reflected with the result that the Income-tax Officer, while making the assessment, found that there was an attempt to conceal income and reap an advantage by claiming deduction, therefore, proceedings were started under section 276 of the Income-tax Act as well as also under the provisions of the Indian Penal Code. The petitioners being aggrieved by the same have preferred the present applications for quashing the complaints.
2. Lengthy arguments were advances by senior counsel appearing for the rival sides but it appears that what would be punishable under section 276C of the Income-tax Act would be dishonest intention or a mala fide intention and there should be mens rea for committing a particular crime before an assessee can be prosecuted. All bona fide mistakes made by an assessee while filling in the income-tax return forms would not necessarily amount to an intention to commit a crime and if section 276C were to be used for penalising every delinquent assessee on that score, it would wreck havoc. What is to be found by the court is as to whether the assessee wanted to defraud the Revenue. Thus, from that angle, it appears that, in the instant case, the assessee could not have harboured such an intention. I am tempted to hold this-wise for the simple reason that the return that was filed on June 30, 1980, would, therefore, reflect the picture of the company's finances and the company's affairs between the period July 1, 1978, and June 30, 1979. A thing which transpired in December 1979, namely, reimbursement by the insurance company would not be reflected in such a return because it was an event which had taken place subsequently. To except an assessee to reflect this thing in the return for the said period would be an anachronism.
3. The second ground which Mr. Bhatt, the learned advocate appearing for the Revenue, urged was that the loss of Rs. 1,00,112, if it was not deducted by the Income-tax Officer, would have resulted in an advantage to the assessee by way of double deduction and it was only when the Income-tax Officer drew the attention of the assessee that the assessee came out with a story that it was a mistake of the chartered accountant. Here also, there is a snag inasmuch as the assessee could not have escaped with impunity because this loss of Rs. 1,00,112 would have been definitely found out in the next year's opening stock and with the enormous powers with which the Income-tax Officers are armed for reopening the previous year's assessment, this would certainly have been found out. So, ultimately, it would not have resulted in any advantage to the assessee. I, therefore, feel that the complaints were misconceived and would, if allowed to continue, definitely amount to an abuse of the process of the court. Under the circumstances, the petitions are required to be allowed. They are accordingly allowed. The complaints are ordered to be quashed and the rule in each of these two petitions is made absolute accordingly.
4. Prosecution quashed.