1995 (3) TMI 71 - HC - Income Tax

Summary

Issues Involved:
1. Fabrication of false evidence under Section 193 of the Indian Penal Code (IPC).
2. Cheating under Section 420 read with Section 511 of the IPC.
3. Attempt to evade tax under Section 276C of the Income-tax Act, 1961.

Detailed Analysis:

1. Fabrication of False Evidence under Section 193 IPC:
The respondent was accused of fabricating false evidence by preparing an account book (Exhibit P-8) that did not reflect the actual sales turnover, thereby concealing real income. The fabricated document was intended to be used in judicial proceedings before the Income-tax Department, which constitutes an offense under Section 193 IPC. The court clarified that the offense under Section 193 is complete upon the fabrication of the document with the intention of using it in judicial proceedings, regardless of whether it was actually used. The respondent admitted that Exhibit P-8 was a fabricated account book, and the court found that the intention to use it before the Income-tax Department was evident. The court cited precedents to support that the preparation of a document for judicial use constitutes the offense under Section 193 IPC.

2. Cheating under Section 420 read with Section 511 IPC:
The respondent was also accused of attempting to cheat the Income-tax Department by preparing and intending to use the fabricated account book (Exhibit P-8) to evade tax. The court held that the act of preparing and producing the fabricated document before the Commercial Tax Officer indicated an attempt to use it for income-tax purposes as well. The court emphasized that the respondent's failure to file income tax returns for several years, despite notices from the department, further demonstrated his intent to cheat. Citing Supreme Court judgments, the court explained that an attempt to commit an offense is established when deliberate steps are taken towards its commission, even if the final act is not completed. The respondent's conduct of creating and using Exhibit P-8 before one wing of tax authorities was sufficient to prove an attempt to cheat.

3. Attempt to Evade Tax under Section 276C of the Income-tax Act:
The respondent was charged with attempting to evade tax by concealing real income through the fabricated account book (Exhibit P-8). The court noted that the respondent did not file the income tax return for the assessment year 1976-77 within the stipulated time, and only did so after the seizure of documents by the Income-tax Department. This delay and subsequent filing of returns under pressure indicated an attempt to evade tax. The court referred to legal precedents to assert that a return filed under the constraint of exposure to adverse action is not considered voluntary disclosure. The court concluded that the creation of Exhibit P-8 and the delay in filing returns were clear indicators of the respondent's attempt to evade tax.

Conclusion:
The court found the respondent guilty of the offenses under Sections 193 and 420 read with Section 511 IPC, and Section 276C of the Income-tax Act. The order of acquittal by the lower court was set aside. The respondent was sentenced to six months rigorous imprisonment and fined for each offense, with sentences to run concurrently. The court also clarified that the benefits of any Government orders regarding sentence remission would not apply as the matter falls under the jurisdiction of the Central Government.