1992 (3) TMI 4 - SC - Income Tax

False Statement in Verification - bona fide mistake was committed in mentioning the date of cessation of business - for more than a decade now, the proceedings have been pending in the trial court - useful purpose will be served by proceeding with the complaint after such a long lapse of time - allow these appeals, set aside the order of the High Court and restore the order of the learned Magistrate discharging the appellants before us

Summary

Issues:
Appeal against the High Court's order reversing the discharge passed by the Magistrate based on the alleged false statements regarding the date of cessation of business and its correction.

Analysis:
The case involves three appeals arising from a common order of the High Court of Bombay, Nagpur Bench, reversing the discharge order passed by the Magistrate regarding alleged false statements made by one of the partners of a partnership firm concerning the date of cessation of business. The firm, engaged in manufacturing bidis, had ceased business on December 31, 1972, but mistakenly mentioned the cessation date as December 31, 1969, in their returns filed in 1973. The Income-tax Officer filed complaints against the partner for false statements under the Income-tax Act and IPC. The Magistrate discharged the accused, finding the mistake to be bona fide without mens rea. However, the High Court held that without recording evidence, the discharge was improper and remitted the complaints for further proceedings under section 34 of the IPC.

The Supreme Court admitted the appeals and granted a stay on further proceedings. After a decade of pending proceedings, the Court observed that no useful purpose would be served by continuing the case. The partner had corrected the mistake within ten days of the initial statement, indicating a bona fide error. Considering the circumstances, the Magistrate's inference of a genuine mistake was not grossly wrong. The Court concluded that due to the significant delay and staleness of the case, there was no justification for continuing the proceedings from 1977. Consequently, the Court allowed the appeals, set aside the High Court's order, and reinstated the Magistrate's decision to discharge the appellants.