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Issues Involved:
1. Whether the complainant proved the case beyond all reasonable doubt. 2. Whether the accused are guilty of the offenses charged under sections 34, 120B, 193, 196, and 420 of the Indian Penal Code and sections 276C(1) and 277 read with section 278B of the Income-tax Act. 3. Whether due regard should be given to the order passed by the Deputy Commissioner of Income-tax (Appeals). Detailed Analysis: Issue 1: Proof Beyond Reasonable Doubt The complainant, the Income-tax Officer, alleged that the accused, being partners of a firm, conducted transactions outside their account books to evade income tax. The prosecution's case relied heavily on the statements of the accused and an employee, Muthu. The defense argued that the amounts covered by the demand drafts were not recorded in the firm's books, and thus, there was no concealment of income. The court noted the lack of direct evidence connecting the firm's funds to the demand drafts and found the prosecution did not prove the case beyond reasonable doubt. Issue 2: Guilt of the Accused The prosecution claimed that the accused conspired to fabricate false account books and filed false returns to evade taxes. The court examined the statements of the accused and found inconsistencies. The second accused, Shahul Hameed, and the fourth accused, Rajah Hussain, admitted to purchasing the demand drafts but did not link them to the firm's funds. The court found no evidence that the other partners were aware of these transactions. Additionally, the court highlighted the lack of correlation between the demand drafts and specific transactions of the firm. Consequently, the court held that the prosecution failed to prove the guilt of the accused beyond reasonable doubt. Issue 3: Order of Deputy Commissioner of Income-tax (Appeals) The defense presented an order from the Deputy Commissioner of Income-tax (Appeals), which deleted the additions made to the firm's income based on the demand drafts. The court gave due regard to this order, noting that it found no nexus between the firm and the demand drafts. The prosecution argued that the criminal court should independently judge the case, but the court emphasized that due regard must be given to the findings of the income-tax appellate authority. The court held that the order of the Deputy Commissioner of Income-tax (Appeals) undermined the basis of the prosecution's case, leading to the conclusion that the firm did not conceal income. Conclusion: The court confirmed the orders of acquittal passed by the Additional Chief Judicial Magistrate, Madurai, in C.C. Nos. 51 and 52 of 1985. The prosecution failed to prove the case beyond reasonable doubt, and the findings of the Deputy Commissioner of Income-tax (Appeals) supported the defense's argument that the amounts covered by the demand drafts did not belong to the firm. Thus, both Criminal Appeals Nos. 817 of 1987 and 818 of 1987 were dismissed.
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