TMI Blog1994 (9) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer did not accept the income returned. Basing on the materials collected during a search conducted in the assessee's premises, it was concluded that there was concealment of income. The main basis for enhancement was the conclusion that a large number of bank drafts were encashed in the State Bank of India, Kantabanji, by many unknown persons who had been identified by the assessee. In the course of assessment proceedings, the assessee failed to produce those persons, and even could not give their address and submitted evasive replies. The Assessing Officer held that the bank drafts related to concealed income of the assessee. The Commissioner of Income-tax, Orissa, gave sanction for lodging a complaint as according to him, it was evident that the assessee had wilfully attempted to evade tax, etc., and had made false statements in the verification. According to him, additions were made after giving detailed reasons. At this juncture, it is necessary to note the income returned, assessed, the amount of bank drafts involved and the suppressed turnover estimated in relation to such drafts for 1987-89. They are as follows : ________________________________________________ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was incorporated with effect from October 1, 1976, promoted by recommendation contained in paragraph 2.88 of the Wanchoo Committee's Final Report (Direct Taxes Enquiry Committee's 47th Report), dated February 28, 1972. The provision reads as follows : " 276C. (1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable,-- (i) in a case where the amount sought to be evaded exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine ; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1947] 2 All ER 574 (KB)). The concept of mens rea has received a new dimension in the Act, because of section 278E inserted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from September 10, 1986. The said provision prescribes that in any prosecution for any offence under the Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state, but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. The Explanation to sub-section (1) of section 278E states that " culpable mental state " includes intention, motive or knowledge of a fact, or belief in, or reason to believe, a fact. Under sub-section (2), a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability. What is wilful attempt to evade tax is clarified to certain extent by the Explanation appended to section 276C. Any person (i) who has in his possession or control any books of account or other documents (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary sanction by the authority prescribed in section 279, a complaint can be filed. " Reassessment " is included in the definition of " assessment " in terms of section 2(8) of the Act. Section 147 provides for assessment or reassessment in case income has escaped assessment. Section 251 deals with powers of the first appellate authority to direct fresh assessment after setting aside the assessment. Section 254 empowers the Appellate Tribunal to pass such order as it thinks fit. The mere existence of a reassessment proceeding or a fresh proceeding initiated on the basis of an appellate order does not in all cases necessitate dropping of a criminal procedure. Where without any final decision, and before final disposal, the appellate authority has merely directed further inquiry in terms of section 250(4) by the Assessing Officer, a criminal proceeding is not to be dropped. The position shall, however, be different where the basis of assessment is not accepted, and the appellate authority has directed de novo assessment as set out in section 251(1)(a). In such a case, the criminal proceeding can in a given case be dropped giving liberty to the Revenue to initiate fresh proceedings i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject of criminal proceedings. It should ordinarily be allowed to run its normal course, unless disposal of proceedings before the authority under the Act is imminent. In the cases at hand, the basis for accusation has not vanished. There was only a direction to do the assessment de novo after fixing the turnover, on the basis of proper enquiry and investigation. The assessee's challenge before the Commissioner of Income-tax (Appeals) related to fixation of turnover. Its plea was that the estimates were high when considered visa-vis the amount of bank drafts detected. The turnovers to be assessed may have relevance to the quantum of punishment, if any awarded. In that view of the matter, the order of the learned Additional Chief Judicial Magistrate is indefensible and is vacated. I make it clear that no observation or conclusion made shall be construed to be the expression of opinion about the merits of the case relating to liability for prosecution. The parties shall appear before the learned Additional Chief Judicial Magistrate on October 21, 1994, and indicate about the stage of fresh assessment. Further proceedings before the learned Additional Chief Judicial Magistrate shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
