1995 (4) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Conviction under Section 277 of the Income-tax Act, 1961.
2. Conviction under Sections 192, 193, 196, and 420 read with Section 511 of the Indian Penal Code, 1860.
3. Penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961.
4. Mens rea (criminal intent) requirement for offenses under the Income-tax Act and Indian Penal Code.

Detailed Analysis:

1. Conviction under Section 277 of the Income-tax Act, 1961:

The revision petitioner, an income-tax assessee, was convicted by the Additional Chief Metropolitan Magistrate for filing a false statement under Section 277 of the Income-tax Act, 1961. The petitioner omitted to mention the notional rental income for his self-occupied property in his income-tax return for 1984-85, which was considered a deliberate act to conceal ownership of more than one housing property. The Sessions Judge, however, found that there was no wilful suppression of income and acquitted the petitioner under Section 276C(1) but upheld the conviction under Section 277, stating that the false statement in the return, irrespective of mens rea, constituted an offense.

2. Conviction under Sections 192, 193, 196, and 420 read with Section 511 of the Indian Penal Code, 1860:

The petitioner was also convicted for offenses under Sections 192, 193, 196, and 420 read with Section 511 of the Indian Penal Code by the Additional Chief Metropolitan Magistrate. The Sessions Judge upheld these convictions, reasoning that the omission of notional rental income was not wilful. However, the Principal Sessions Judge's view that mens rea was immaterial for these offenses was incorrect, as these sections require the offense to be committed intentionally.

3. Penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961:

The Income-tax Appellate Tribunal had canceled the penalty imposed on the petitioner under Section 271(1)(c) of the Income-tax Act, 1961, for claiming an exemption under Section 54F. The Tribunal held that making untenable claims is not an offense under Section 271(1)(c). The Tribunal's decision was not based on whether the omission was intentional or incidental but on the approach of the Income-tax Officer in imposing the penalty.

4. Mens rea (criminal intent) requirement for offenses under the Income-tax Act and Indian Penal Code:

The Principal Sessions Judge's interpretation that no mens rea is required for an offense under Section 277 of the Income-tax Act was incorrect. Section 277 clearly states that the false statement must be made with the knowledge or belief that it is false. The absence of mens rea or criminal intention means that the offense under Section 277 cannot be constituted. Similarly, the offenses under Sections 182, 196, and 420 read with Section 511 of the Indian Penal Code also require intentional commission.

Conclusion:

The High Court set aside the conviction and sentence, acquitting the revision petitioner of all charges. The court concluded that the omission to mention the notional rental income was not wilful, and therefore, the petitioner could not be punished under Section 277 of the Income-tax Act, 1961, or the relevant sections of the Indian Penal Code. The revision was allowed, and the petitioner was acquitted.