TMI Blog1980 (8) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri S. K. Sinha, ITO, Central Circle-X, Calcutta, filed a petition of complaint in the court of the Chief Metropolitan Magistrate, Calcutta, against the company and Kundanmal Lakhotia alleging the commission of an offence punishable under s. 277 of the I.T. Act, 1961 (hereinafter " the Act "). It was alleged, inter alia, that in the aforesaid return the company had shown a total profit in its business amounting to Rs. 66,62,114 from which a total amount of deduction amounting to Rs. 12,89,107 was claimed. The deduction included a sum of Rs. 1,14,212 which was received by the company as interest on advance income-tax paid for the assessment year 1967-68. It was further alleged that in claiming the said amount as deduction it was stated in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential ingredients of the offence under s. 277 of the Act, the continuance of further proceedings against the company would tantamount to an abuse of the process of law. Dr. Pal further submitted that the petitioner being a company and juristic person no prosecution can be initiated against it for an alleged offence under s. 277 of the Act as mens rea is an essential ingredient of the offence and the company cannot be charged for verification of a statement with the knowledge or belief that the said statement is false. Dr. Pal's further submission in this respect was that as imprisonment has been made compulsory for violation of s. 277 of the Act, it would clearly go to show that it was not the intention of the Legislature to punish a juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Court of Appeal in England in the case of Regina v. St. Margarets Trust Ltd. [1958] 1 WLR 522 (CCA), wherein it was held that a company could be prosecuted for violation of the Hire Purchase and Credit Sale Agreement (Central) Order, 1956, and although Parliament had prescribed imprisonment as one of the, punishments that may be inflicted for breach of the order, nevertheless, it would be left open to the court to use its powers to inflict any manner of punishment or none at all in appropriate cases. Mr. Pal also drew our attention to the decision of the Supreme Court in the case of State of Maharashtra v. Mayer Hans George [1965] 35 Comp Cas 557; AIR 1965 SC 722, where the decision of the Court of Appeal in the case of Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d s. 277 of the Act. The section as it stood with effect from October 1, 1975, when the Amending Act came into force is as follows : " If a person makes a statement in any verification under this Act or under any 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, (i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts done. For the default of the Hindu undivided family, therefore, in payment of tax, the karta cannot be arrested and detained in prison." In view of what has been stated above, we must hold that as the petitioner cannot be attributed with the requisite mens rea, its further prosecution in the court of the learned Magistrate for an offence under s. 277 of the Act would tantamount to an abuse of the process of the court. The application must, therefore, succeed and the proceedings pending against the petitioner-company in case No. C449 of 1979, in the Court of the Chief Metropolitan Magistrate, Calcutta, is quashed. The rule is made absolute. Mr. Ghosal, learned advocate appearing on behalf of the revenue, orally prays for leave for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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