1994 (2) TMI 19 - HC - Income Tax

False Statement In Verification, Income Tax Authorities, Offences And Prosecution, Revised Return, Wilful Attempt To Evade Tax

Summary

Issues:
Accused filed a petition under section 482, Criminal Procedure Code, seeking to quash the complaint filed against them under various sections of the Indian Penal Code and the Income-tax Act, 1961.

Analysis:
The complaint alleged that the accused, a jeweler in Coimbatore, committed offenses under sections 193, 196, 420, and 511 of the Indian Penal Code, along with sections 276C and 277 of the Income-tax Act, 1961. The accusations stemmed from a search operation that revealed unaccounted stock of corals and pearls valued at Rs. 2,50,000. The accused initially filed a return admitting only Rs. 1,00,000 of the unaccounted stock but later revised the return to declare a total income of Rs. 3,29,750, including the full value of the seized stock. The complaint contended that the accused's actions constituted offenses related to false statements, concealment of income, and attempting to evade taxes, penalties, and interests under the Income-tax Act.

The petitioner argued that since the Income-tax Appellate Tribunal had set aside the penalty imposed under section 271(1)(c) of the Income-tax Act, the basis of the prosecution should be quashed. However, the respondent contended that the penalty's cancellation did not negate the offenses alleged in the complaint. The court cited precedent holding that findings in departmental proceedings are not binding on criminal courts, and the complaint's maintainability is not affected by such findings.

The court examined section 279(1A) of the Income-tax Act, which stipulates that a person cannot be prosecuted for offenses under sections 276C or 277 if the penalty imposed under section 271(1) has been reduced or waived under section 273A. As there was no reduction or waiver of penalty in this case, the court found that the prosecution could proceed.

Regarding the petitioner's argument that the acceptance of the revised return implied no concealment of income, the court disagreed. The complaint detailed how the accused initially disclosed only a portion of the unaccounted stock and later revised the return to include the full value, indicating a fear of departmental action rather than a genuine admission of wrongdoing. Therefore, the court rejected the petitioner's contentions and dismissed the petition, instructing the Magistrate to proceed with the case without influence from the court's observations.