1984 (12) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Legitimacy of the prosecution based on the original return despite the revised return.
2. Applicability of sections 193, 420 read with section 511 of the IPC, and sections 277 and 276C(1) of the Income-tax Act.
3. Competency of the respondent to institute the prosecution and the competency of the Commissioner of Income-tax to give sanction for the prosecution.

Summary:

Issue 1: Legitimacy of the prosecution based on the original return despite the revised return
The petitioner argued that the revised return filed u/s 139(5) of the Income-tax Act should replace the original return, rendering the original return non est in the eye of law. The court rejected this contention, citing precedents such as CIT v. Angara Satyam, Vadilal Ichhachand v. CIT, and Sivagaminatha Moopanar and Sons v. CIT, which established that the filing of a revised return does not expunge the contumacious conduct associated with the original return. The court held that the original return could still be the basis for penalty and prosecution proceedings.

Issue 2: Applicability of sections 193, 420 read with section 511 of the IPC, and sections 277 and 276C(1) of the Income-tax Act
The court found that the petitioner had submitted a false return showing an income of Rs. 1,03,740, while the actual income was adjudicated at Rs. 2,34,233. The profit and loss account submitted with the original return falsely showed collections of Rs. 14,89,681, which was significantly less than the actual collections. This false return and statement of accounts attracted the provisions of section 277 and section 276C(1) of the Income-tax Act. The court also noted that the mere possession of false account books constitutes an attempt to evade tax u/s 276C(1). Additionally, the submission of a false profit and loss account amounted to giving false evidence u/s 193 of the IPC, and attempting to deceive the Income-tax Officer to evade proper taxation invoked section 420 read with section 511 of the IPC. The court concluded that these matters should be examined in the trial court.

Issue 3: Competency of the respondent to institute the prosecution and the competency of the Commissioner of Income-tax to give sanction for the prosecution
The petitioner challenged the competency of the respondent and the Commissioner of Income-tax to sanction the prosecution. However, no arguments were advanced on this point before the court. The court allowed the petitioner to raise this contention in the trial court if so advised.

Conclusion:
The petition to quash the proceedings was dismissed, and the court held that the issues raised by the petitioner should be addressed in the trial court.