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TMI Blog1997 (9) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the partnership concern. The return was accompanied by the power of attorney executed by the second accused in favour of Thiru V. D. Janakiraman, Income-tax Practitioner, Vellore. The books of account of the first accused firm were called for and examined. It was found that the firm had allegedly borrowed Rs. 20,000 on March 2, 1984, and Rs. 10,000 on March 13, 1984, from one Shri S. Dharmaraj, son of Subramaniam Chettiar, proprietor, Balaji Stores, Long Bazaar, Vellore. These amounts were shown to have been returned within a day or two after the borrowal. When the enquiries were conducted with Thiru Dharmaraj, he denied having advanced amounts to the accused firm on those dates and when this was put to the first accused firm and its partners, they were unable to produce any evidence in support of the alleged credits. The examination of books of account and the statements showed that the first accused firm had to pay an amount of Rs. 34,296.58 to Jupiter Rolling and Binding Works, a proprietary concern run by the fifth accused. The Income-tax Officer called for and examined the books of account of this firm after issuing summons to the fifth accused under section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accused firm, the return was presented under exhibit P-2 on January 4, 1985, showing the income of Rs. 38,960. They also produced the day book as well as parade. The date was fixed for the purpose of enquiry. There were entries in pages 137 and 240 for a sum of Rs. 34,296.58 is due and payable by the first accused firm to one Jupiter Rolling and Binding Works. Summons were issued to the fifth accused who is the proprietor of the company. He also produced the day book and parade, etc. The day book is exhibit P-6 and the parade is exhibit P-7 relating to the fifth accused. The entries in various pages were scored out and there were erasures and alterations. In exhibit P-7 pages 53 and 55 and also pages 57 and 58, entries were made. When the fifth accused was enquired with reference to the discrepancy, he stated that at the request of the third accused only, they were made and exhibit P-8 is the statement given by him. The sixth accused also gave a statement under exhibit P-9. Exhibit P-10 is the communication sent by one Dharmaraj to show that he had no transactions whatsoever with the first accused firm. Exhibit P-11 is the day book for the period March 1, 1984, to March 31, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 1985, and there were entries to show that a sum of Rs. 20,000 and Rs. 10,000 were borrowed from another concern and later on enquiry, the Department came to know that there was no such transaction and moreover there were also entries in the accounts of the first accused firm that the amounts were returned within a day or two after the borrowals. Similarly there were also erasures and alterations in the account books of the fifth accused firm and subsequently a ledger has been created and false entries were made in page 57. Statement of the fifth accused was also recorded by the Department officers. The sixth accused was working as a part-time accountant and his statement was also recorded. The statement given by accused Nos. 5 and 6 only indicated that this alteration and erasure were made only at the instigation of the partners of the first accused firm. Subsequently, a revised return was given on March 14, 1985, and it was signed by the fourth accused. The assessment was completed on March 20, 1985, and the income was taken for the purpose of assessment at Rs. 1,00,880. Learned counsel further pointed out that section 139(5) of the Income-tax Act, is not applicable since no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the third accused came to him and requested him to create the entries. These erasures were done by the fifth accused through the sixth accused who was his part-time accountant, at the request of the third accused. The statements from accused Nos. 5 and 6 were also recorded. Learned counsel for the accused stated that whatever statement was taken from the co-accused cannot be made use of against other accused. The prosecution witnesses were not able to show who were actually in charge of administration of the firm. No doubt the second accused had signed the first return of income and the fourth accused had signed the revised return of income on March 14, 1985. They also claimed benefit under section 139(5) of the Income-tax Act. It is quite probable that the other concerns may not have included the amount in their account because they would also be assessed to income-tax. Simply because there are erasures or alterations, it cannot be concluded that the accounts are false and there was concealment of income. Moreover, within a period of two months the revised return has been filed on coming to know of certain mistakes. Learned counsel for the appellant strenuously contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for an offence relating to concealment of income. There should have been sufficient mens rea to find out whether there was any intention on his part to conceal the income. No doubt the income-tax authorities have chosen to verify the accounts of the first accused firm relating to some of the entries but however within a period of two months, they had filed the revised return. Learned counsel for the appellant also relied on the case of S. Vasudeva Rao v. P. S. J. Sigamany [1995] 211 ITR 284 (Mad), relating to quashing of a prosecution under the Income-tax Act. This decision has no application to the facts on hand for the simple reason that in that case there was a search operation under section 132 of the Income-tax Act, 1961, and substantial unaccounted stock representing corals and pearls were seized and the same was estimated at Rs. 2,50,000. The petitioner filed a return of income for the assessment year 1981-82 on October 27, 1982, admitting a total income of Rs. 1,89,720 and a revised return of income was filed on August 3, 1983, fearing departmental action, declaring a total income of Rs. 3,29,750. This would only indicate that the original return was filed on October 27, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry possibility for erasures or alterations and this will not lead to any conclusion that the entire accounts are false. The fact that the sixth accused was included as one of the accused would only indicate that even the part-time accountant has not been spared and the action of the Department would only lead to dangerous consequences. The auditors and the chartered accountants who help or assist the firm in filing the revised return also can be made liable at one point of time The Department has failed to establish any mens rea on the part of the accused in the concealment of the income. The other sections pointed out by the Department also had no application to the facts and only if mens rea was established then only they can be made applicable. Furthermore, when an opportunity was given to the assessee under section 139(5) of the Income-tax Act, it has been made use of by the accused and, hence I am of the view that the court below has rightly come to the conclusion that the accused have not committed any offence. The evidence adduced before the court below has been properly appreciated and there was no miscarriage of justice and as such, I find no reasons to interfere with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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