1990 (10) TMI 58 - HC - Income Tax

Issues Involved:
1. Conviction and sentence of A-2 and A-3 under sections 276C and 277 read with section 278 of the Income-tax Act.
2. Enhancement of sentence by the Income-tax Department.
3. Validity of evidence and documents presented by the prosecution.
4. Role and liability of A-2 as the managing partner of A-1 firm.
5. Admissibility of secret account books (Exhibits P-15 and P-16).
6. Intentional suppression of income by A-1 firm.
7. Proper filing of the complaint by the correct Income-tax Officer.

Detailed Analysis:

1. Conviction and Sentence of A-2 and A-3:
The Special Judge for Economic Offences, Hyderabad, acquitted A-1 of all charges but convicted A-2 and A-3 under sections 276C and 277 read with section 278 of the Income-tax Act. A-2 was sentenced to pay a fine of Rs. 2,000 under each count and imprisonment till the rising of the court, with a default sentence of six months' simple imprisonment. A-3 received a similar sentence with a fine of Rs. 1,000 under each count. The appeals by A-2 and the Income-tax Department were heard together.

2. Enhancement of Sentence:
The Income-tax Department filed an appeal for enhancement of the sentence. However, the court found that the lower court had given cogent and proper reasons for not awarding the minimum sentence prescribed under the Act and dismissed the appeal for enhancement.

3. Validity of Evidence and Documents:
The defense contended that the documents, including the return of income, profit and loss account, and secret books, were not properly proved. The prosecution argued that these were public documents and were properly proved by PWs 1 and 2. The court found that the prosecution had thoroughly appreciated the evidence and convicted the accused based on valid evidence.

4. Role and Liability of A-2:
A-2, the managing partner of A-1 firm, claimed he signed blank forms that were later filled by others. However, D.W. 1, an income-tax practitioner, testified that A-2 signed and filed the returns. The court found no force in A-2's contention, noting that as the managing partner, A-2 was responsible for the firm's affairs and had knowledge of the contents of the returns.

5. Admissibility of Secret Account Books:
The defense argued that there was no evidence to show that Exhibits P-15 and P-16 were seized from A-3's house. P.W. 1 testified that the books were impounded during a survey authorized by the Income-tax Officer, and the court found that these documents were admissible as they were public documents. The court dismissed the contention that the secret account books were planted by the Department.

6. Intentional Suppression of Income:
The defense argued that the difference in income between the original and revised returns did not establish intentional suppression. The court noted that the original return showed an income of Rs. 1,14,970, while the revised return showed Rs. 4,01,050, indicating a suppression of Rs. 2,86,080. This significant discrepancy, along with the evidence from PWs 1 and 2, led the court to infer intentional suppression.

7. Proper Filing of the Complaint:
The defense contended that the complaint should have been filed by the Income-tax Officer, E-Ward, not A-Ward. The court referred to a previous judgment (Veerakistiah v. ITO) and found that the prosecution by P.W. 1, the Income-tax Officer, A-Ward, was valid. The court dismissed the appeal by A-2, affirming the conviction and sentence.

Conclusion:
The court dismissed both the appeal by A-2 challenging his conviction and the appeal by the Income-tax Department for enhancement of the sentence. The court found that the evidence presented was sufficient to convict A-2 and A-3 and that the lower court had rightly sentenced them considering the circumstances of the case.

← Previous Next →