Guidelines for sending proposals regarding prosecution u/s 277. - Income Tax - 411/CBDT

INSTRUCTION NO. 411/CBDT Dated: May 9, 1972 Section(s) Referred: 277 Statute: Income - Tax Act, 1961 Notwithstanding the instructions contained in Boards Instruction No. 258 dated 5-1-1971 proposals for obtaining the Board's administrative approval for launching prosecution reveal material omissions making it necessary to seek clarifications from the Commissioners. This causes delay in launching prosecution. The Board, therefore, desires that the following aspects may be kept in mind before sending the proposal:- (i) For proving an offence u/s 277 of the I.T. Act it is not only necessary to establish by cogent evidence that the verification signed or account delivered was false but that it was false to the knowledge of the assessee. Most of the proposals deal with the first ingredient of the offence but do not mention the evidence by which it is proposed to prove the second ingredient. (ii) Except cases processed by the Intelligence Wing at Madras the details of the evidence oral and documentary on which reliance would be placed by the prosecution, are not furnished. In addition to furnishing a statement showing the various witnesses and documents and the facts that are proposed to be proved by each witness or document, it is necessary not only to furnish the information in the prescribed proforma but it is also necessary to discuss fully the case for and against the prosecution. (iii) The opinion of the prosecution Counsels or of the branch of the law Ministry at Bombay enclosed along with the proposals only indicated that there is a prima facie case for prosecution. The Board expects the prosecution Counsels to weigh the evidence for and against the prosecution and indicate whether the case is a good one for prosecution. This aspect should be mentioned when referring the matter to the prosecution Counsel for his opinion. 2. In Board's Instruction mentioned above, it was stated that the assessee's reaction to the proposed prosecution should be sent along with the proposal. This matter has been reconsidered by the Board. So far as prosecutions u/s 276 and the allied sections are concerned, a conviction is possible only in the absence of reasonable cause for the default. In such prosecutions, therefore, the assessees reaction may continue to be obtained through in obtaining the assessee's reaction it should not be stated that it is proposed to prosecute him. It is preferable that he is informed that there appears to be prima facie case for prosecution but before any decision on this question is taken it would be helpful. The assessee's reaction should however be obtained only after all the material on which it is proposed to rely has been kept in safe custody. So far as prosecutions u/s 277 are concerned, it is felt that obtaining of the assessee's reaction not only causes delays but the assessee gets an early opportunity of preparing his defence either by fabricating evidence or destroying evidence against him. Moreover in most of these cases the assessee's explanation in connection with proceeding u/s 271(1)(c) would already be with the Department. In the circumstances the practice of obtaining assessee's reaction to such prosecutions may be discontinued.