Mens rea is essential for tax prosecution, and inadvertent non-compliance without guilty intent will not sustain conviction.

Prosecution for offences under Sections 276B and 278B failed because the assessees had disclosed the relevant interest in their returns and the omission to annex Form No. 15A and file Form No. 26A was found to be inadvertent. The evidence, including debit notes, supported the defence, and the courts recorded absence of mala fide intention and mens rea. As no perversity or infirmity was shown in those findings, the acquittal was upheld and the prosecution case was rejected.

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Issues: Whether the acquittal of the respondents for alleged violation of the Income-tax Act was liable to be interfered with, and whether the prosecution had established intentional default or mens rea for offences under Sections 276B and 278B.

Analysis: The trial court found that the assessees had disclosed the relevant interest in the returns, and the omission to annex Form No. 15A and file Form No. 26A under Rule 37(2A) of the Income-tax Rules, 1962, was inadvertent. The evidence, including debit notes, was accepted as supporting the defence, and the findings recorded absence of mala fide intention and mens rea. No perversity or infirmity in those findings was shown.

Conclusion: The acquittal was upheld and the appeal was dismissed.

Ratio Decidendi: Prosecution for offences of the kind alleged requires proof of intentional default and mens rea, and an acquittal based on a plausible finding of inadvertent non-compliance and absence of guilty intent will not be interfered with.

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