2005 (4) TMI 23 - HC - Income Tax

Offence acquittal of accused - wilful attempt - This is a criminal appeal filed by the Income-tax Department against the judgment of the Court of Sessions Judge, Sirsa, whereby the appeal filed by Shiv Kumar, the respondent, against the judgment of the Chief Judicial Magistrate, Sirsa, convicting him for offence under sections 276C and 277 of the Income-tax Act, 1961, had been accepted and Shiv Kumar had been acquitted - it cannot be said that there had been wilful attempt. As such, I hold that the case for offence under sections 276C and 277 of the Income-tax Act was not proved as against the respondent. He had been rightly acquitted by the Sessions Judge, Sirsa, after accepting the appeal. I find no merit in this appeal and the same is accordingly dismissed

Summary

Issues:
Appeal against acquittal under sections 276C and 277 of the Income-tax Act, 1961.

Analysis:
The case involved an appeal by the Income-tax Department against the acquittal of the respondent by the Sessions Judge, Sirsa, under sections 276C and 277 of the Income-tax Act, 1961. The respondent, along with others, was prosecuted for concealing income by not showing a refund amount in the profit and loss account. The Income-tax Officer added the amount to the income during assessment and imposed a penalty, leading to a prosecution. The Chief Judicial Magistrate convicted the respondent but acquitted other partners. However, the Sessions Judge acquitted the respondent, finding no wilful concealment as the return was filed through an income-tax advocate and there was a valid explanation for not adding the amount to income.

The appellant argued that intentional concealment was evident as one refund amount was directly taken to the capital account without being shown in the profit and loss account. The Income-tax Officer's assessment order revealed that the amount was not included initially as it was considered a liability to be refunded to the Market Committee. Sections 276C and 277 of the Income-tax Act apply to wilful attempts to evade tax and false statements in verification, respectively. The Supreme Court precedent established that wilful evasion must be proven for section 276C to apply.

In this case, the accused partners had a valid explanation for not adding the amount to income, believing it was a liability to be refunded based on an ordinance. The assistance of an advocate in handling the matter and the Income-tax Officer's consideration of allowing deduction upon refund indicated no wilful attempt to evade tax. The Court concluded that the prosecution failed to prove wilful evasion, leading to the respondent's rightful acquittal by the Sessions Judge. The appeal was dismissed, upholding the acquittal decision.