TMI Blog1997 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... s preferred in so far as it relates to the acquittal of A-2. The conviction of A-1-firm is not challenged in this appeal and the same has become final. From the facts narrated above, it is clear that I have to consider this appeal only in relation to A-2 who was said to be the managing partner of A-1-firm, Visakha Medical Stores. In order to appreciate the rival contentions of both the parties, it is necessary to briefly state the facts in this case. On the basis of the search and seizure conducted on December 3, 1986, certain books and other materials were seized from the house-cum-shop of A-2. On the basis of search, it was alleged on behalf of the Income-tax Department that the net income of A-1-firm would come to Rs. 1,00,000, whereas the return was filed only regarding the income of Rs. 26,010. The accused firm has not accounted for certain commission received by it. On that basis, the Department determined the income of A-1 firm at Rs. 1,00,000 and tax was also determined at Rs. 11,250. Against the said order, the assessee preferred an appeal, but the same was disposed of by the Commissioner of Income-tax with certain modifications by reducing the quantum to Rs. 50,000 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections, i.e., sections 276C and 277 of the Act, learned counsel for the appellant strenuously contended that A-2 wilfully evaded the tax. On the other hand, learned counsel for the respondent supported the order of acquittal contending that as per the sections that there should be wilful attempt on the part of the assessee to evade tax. In the instant case, there was no wilful attempt to evade the tax on the part of the assessee and it was due to the mistake committed by the accountant working under the assessee. Under section 277 not only such statement should be false but also he must also know or believe it to be false. Having regard to the circumstances of this case, no knowledge can be imputed to A-2. He submitted that at any rate there was no mens rea on the part of A-2 for filing a false return. When the Department pointed out certain mistakes, the accused accepted the mistakes only to buy peace with the Department. It was contended, on that basis, that there was no intention on the part of A-2 to commit the offence under the Act. I have given anxious consideration to the facts of this case. Regarding mens rea or wilfulness on the part of the accused, P.W.2, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar guilty state of mind in the person sought to be punished. The requisite mens rea is defined by the expression 'wilfully'. The Explanation runs thus : 'For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person-- (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement ; The Explanation does not in any way restrict or cut down the ambit of the expression 'wilfully' occurring either in clause (i) or (ii) of section 276C(1) of the Act. Mere possession or control of any books of account and other documents containing a false entry or statement is not punishable. It is only where a person in possession or control of such books of account or other document has knowledge of the false entry or statement that he renders himself punishable. Any other interpretation would sometimes lead to disastrous results. To take an example, if X carries on several businesses and maintains duplicate sets of accounts in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the maintenance by the accountant and the entries thereof. From the evidence of this official witness, it is clear that the Department itself is not asserting that there was any means rea on the part of accused No. 2 in filing the return. Therefore, as held by the court below, the Department has not brought home the guilt against the accused for the offences under sections 276C and 277 of the Income-tax Act. Lastly, learned counsel for the appellant submitted that in exhibit P-13 the accused has admitted that he was in charge of the firm and his father was not in charge of the firm and he was looking after the affairs of the firm, and in view of exhibit P-13 it is established that it was the accused who was in charge of the firm and he is guilty of the offences charged. It is further submitted that this statement made in exhibit P-13 could be used as evidence in terms of section 132(4) of the Income-tax Act. Therefore, the court below is in error in acquitting him. In order to appreciate this contention of the appellant I am extracting section 132(4) of the Income-tax Act which is as under : "(4) The authorised officer may, during the course of the search or seizure, examine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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