2004 (6) TMI 29 - HC - Income Tax

Order of acquittal under sections 181, 193 of the Indian Penal Code read with section 136 Income-tax Act, sections 276C(1) and 277 of the Income-tax Act - Appreciation of facts and evidence by the trial court does not suffer from any infirmity. The view taken by the trial court cannot be said to be unreasonable or manifestly erroneous. Offences under sections 276C(1) and 277 of the Income-tax Act and sections 181 and 193 of the Indian Penal Code are not established by the prosecution beyond reasonable doubt. Considering the fact that the Departmental proceeding favourably ended and that the Department has found that the accused have fully co-operated with the Department and that the Department itself has waived the interest, etc., there is no justifiable reason warranting interference in the order of acquittal. These appeals have no merit and are liable to be dismissed.

Summary

Issues Involved:
1. Whether the order of acquittal under sections 276C(1) and 277 of the Income-tax Act suffers from infirmity.
2. Whether the order of acquittal under sections 181 and 193 of the Indian Penal Code suffers from perversity.

Detailed Analysis:

Issue 1: Acquittal under Sections 276C(1) and 277 of the Income-tax Act
The respondents were alleged to have made false statements during a search under section 132 of the Income-tax Act, failing to disclose ownership of bank lockers and wilfully evading tax. The trial court acquitted the accused, finding no intention to defraud the Department. The High Court noted that the accused were non-assessees at the time and had time to file returns for the year 1981-82. The Income-tax Officer could not ascertain the specific year of income, and thus, no culpable mens rea could be attached to the accused. The court emphasized that to attract sections 276C and 277, the prosecution must establish wilful evasion and false statements, which was not proven. The Departmental proceedings ended favorably for the accused, and the waiver of interest indicated no wilful evasion. The High Court found no justifiable reason to continue criminal prosecution, noting that the accused had time to file returns and could not be presumed to have attempted to evade tax. The High Court upheld the trial court's acquittal, finding no manifest error or illegality.

Issue 2: Acquittal under Sections 181 and 193 of the Indian Penal Code
The High Court considered whether the trial court's acquittal under sections 181 and 193 of the IPC was perverse. The trial court had found that the accused did not wilfully attempt to evade tax or make false statements. The High Court reiterated that the accused were yet to be assessed and had time to file returns. The presumption under section 132(4A) of the Income-tax Act did not establish the ingredients of the offences under sections 276C and 277. The High Court found that the trial court's appreciation of facts and evidence did not suffer from any infirmity and that the view taken was reasonable. The High Court noted that the Departmental proceedings ended favorably for the accused, with the Department waiving interest and finding full cooperation from the accused. The High Court found no reason to interfere with the trial court's acquittal, as the prosecution failed to establish the offences beyond reasonable doubt.

Conclusion:
The High Court dismissed the appeals, upholding the trial court's acquittal of the accused under sections 276C(1) and 277 of the Income-tax Act and sections 181 and 193 of the Indian Penal Code. The court found no manifest error or illegality in the trial court's judgment and noted that the Departmental proceedings ended favorably for the accused, with no evidence of wilful evasion or false statements.