2023 (4) TMI 1218 - HC - Income Tax

Sustainability of judgment of acquittal - Suppression of income - charge u/ss. 276(G)/277 of IT Act - accused had constructed a costly building at Modipara without disclosing the source of such investment and, thereby, the ITO reopened the assessment proceeding by doubting the correctness of the return so filed by the respondent-accused. HELD THAT - Admittedly, this is an appeal against acquittal, which was recorded by the learned trial Court way back in the year 1993 and law is very well settled that in case of acquittal, the presumption of innocence of accused as provided under law, is reinforced and unless there appears miscarriage of justice and compelling reasons, no judgment of acquittal can be interfered with after near about 30 years, more particularly in a case of this nature, where the offences with which the respondent accused was charged. In this case, the appellant was charged for offence u/s 276(C)/277 but offence u/s 276(C) of IT Act can be established by way of evidence that such persons willfully attempted in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act. Similarly, offence U/S.277 of IT Act can be established by way of evidence that such persons made a statement in any verification under this Act or under any rule made there under or delivered an account of statement, which is false, and which he either knows or believes it to be false or does not believe it to be true. Penalty proceeding was initiated against the Respondent-accused for concealment of the income, but such penalty proceeding was, however, dropped by the Income Tax Authority vide order under Ext.B. This Court does not find any error with the finding of the learned trial Court with regard to the offence U/S. 276(C). Charge for offence u/s 277 of IT Act, it is alleged that the Respondent accused had furnished wrong and false information by verifying those returns as true knowing or having reason to believe that the information contained in her returns was false. There is no point by the Income Tax Authority to disbelieve the explanation offered by the respondent-accused for incurring loan which was in fact shown by the accused-respondent in her second return. Further, there is no evidence on record to show that the accused made deliberately or intentionally false statement. It is also found from the evidence on record that the accused-respondent had furnished first return by showing her income as Rs. 8,860/-, but when she was asked, she filed subsequent return showing a loan taken by her from one Mr. Gyan Singh Sandhu and in fact, when there is a provision for filing revised returns which was admitted by P.W. 1 in his evidence and, therefore, adding Rs. 25,000/- to Rs. 8,860/- in the second return would not certainly be considered as a false statement, which was verified by the respondent accused. On analysis of the evidence on record and scrutinizing the impugned order in this case, this Court does not find any error apparent with the impugned order directing acquittal of respondent-accused warranting any interference by this Court.

Issues involved:
The appeal challenges the judgment of acquittal of the respondent passed by the Additional Chief Judicial Magistrate under Section 378 of the Code of Criminal Procedure.

Summary:

Issue 1: Reopening of assessment and non-disclosure of income
The respondent, an income tax assessee, was charged for constructing a costly building without disclosing the source of investment. Despite filing a subsequent return, the assessment was completed at a higher income. The complaint was filed by the Income Tax Officer, leading to the trial where the respondent was acquitted.

Issue 2: Grounds for appeal against acquittal
The appellant argued that the trial court erred in acquitting the respondent, contending that the prosecution had established the guilt of the respondent for the charges under the IT Act. The appellant sought to reverse the acquittal and convict the respondent.

Issue 3: Defence plea and trial proceedings
The respondent took a defence plea of non-maintainability of the complaint, emphasizing no willful evasion of income tax. The trial court proceeded with the trial, where prosecution witnesses and documents were presented. The trial court then acquitted the respondent, leading to the appeal.

Issue 4: Applicability of law and evidence analysis
The appeal against acquittal was made after nearly 30 years, emphasizing the presumption of innocence of the accused. The charges under Sections 276(C) and 277 of the IT Act required evidence of willful tax evasion and false statements. The evidence presented did not establish the charges against the respondent.

Issue 5: Analysis of evidence for Section 276(C) charge
The evidence showed that penalty proceedings for concealment of income were dropped by the Income Tax Authority. The court found no error in the trial court's decision regarding the charge under Section 276(C) of the IT Act.

Issue 6: Examination of evidence for Section 277 charge
The accusation of furnishing false information under Section 277 was based on the respondent's second return and loan disclosure. However, the evidence did not support intentional false statements, and the loan disclosure was not deemed false by the Income Tax Authority.

Issue 7: Court's decision and lack of error
After analyzing the evidence and the trial court's order, the court found no error warranting interference with the acquittal of the respondent. The appeal was dismissed without costs.

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