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TMI Blog1995 (1) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... istered firm which was engaged in the business of printing and in that capacity was an assessee under the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Petitioner No. 2, as the managing partner, was directly responsible for the management of the firm. It is the allegation of the prosecution that petitioner No. 2 on behalf of petitioner No. 1 filed a return on September 16, 1980, for the assessment year 1980-81 along with some annexures and its verification was signed by him. The closing stock was shown at Rs. 25,232.12 only. For the subsequent assessment year 1981-82, petitioner No. 2 on behalf of petitioner No. 1 filed a return on October 6, 1981, along with annexures, the verification of which was also signed by him. The opening stock was shown at Rs. 42,181.13 only. When the inflation between the closing stock of the assessment year 1980-81 and the opening stock for the assessment year 1981-82 to the tune of Rs. 16,949.01 was detected by the Income-tax Officer, notice was issued to the petitioners to show cause as to why the aforesaid difference should not be treated as "concealed income" and added to the income returned. Petitioner No. 2 in a written memo submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the evidence brought out in the cross-examination on account of which the findings recorded against the petitioners are vitiated. Sri Ray, learned counsel appearing for the prosecution, on the other hand, submitted that the findings recorded against the petitioners are based on evidence and cannot be held to be wrong or illegal. Section 276C of the Act provides that if a person willfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under the Act, he shall be punishable with the sentences specified therein. Section 277 states that if a person makes a statement in any verification under the Act or under the rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with the sentences specified therein. Section 278B deals with an offence under the Act committed by a company. A bare reading of the provisions of sections 276C and 277 would show that the existence of mens rea is the sine qua non for prosecution. No doubt, section 278E provides that in any prosecution for any offence under the Act which requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s [1982] 136 ITR 855. It was a case where the assessee, a partner in a firm and carrying on proprietary business, filed returns signed under his verification which were filled up by the accountants and the assessee was not present at the time of filing of the returns. The prosecution of the assessee for false verification in the returns was held to be unjustified because the prosecution failed to prove the mens rea or deliberate intention by the assessee to defraud revenue. The Gujarat High Court in B. T. X. Chemicals (P.) Ltd. v. Suraj Bhan [1989] 177 ITR 425 held that an accused can be convicted under section 276C of the Act if dishonest intention or mala fide intention is established. It was observed therein as follows : " . . . . bona fide mistakes made by an assessee while filling in the income-tax return forms would not necessarily amount to an intention to commit a crime and if section 276C were to be used for penalising every delinquent assessee on that score, it would wreak havoc. What is to be found by the court is as to whether the assessee wanted to defraud the Revenue. . . . " This court in Endupuri Sriram Murty v. ITO (Criminal Revision No. 694 of 1988 decided o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, filed the returns which were signed by petitioner No. 2 as per the instructions of the tax practitioner. D. W. 1 corroborates P. W.-2 by stating that the assessment proceeding was completed by the Income-tax Officer with the assistance of their tax practitioner. It has been brought out in the cross-examination of P. W.-2 that the accounts of a firm are compiled by the accountant which are placed before the income-tax advocate for preparation of the income-tax returns which are signed by the managing partner or proprietor of the firm. P. W.-2 has also candidly admitted that if a printing press owner files a return without any accounts, assessment can be done as per the returns and assessment can be done even without calling for the books of account. The prosecution did not examine the predecessor of P. W-2, Shankar Sardar, who had completed the assessment for the assessment year 1980-81. Thus, the evidence of D. W.-1 which finds ample corroboration from the evidence of P. W.-2 remains unchallenged to the effect that in the assessment proceedings, the petitioners were represented by their tax practitioner, C. R. K. Patnaik, on whose submissions the assessments were completed. P. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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