1994 (5) TMI 16 - HC - Income Tax

Court Upholds Income Tax Act Charges Despite Stock Discrepancies

The court upheld the criminal proceedings under sections 276C and 277 of the Income-tax Act, 1961, despite discrepancies in stock being set aside by the ... False Statement In Verification, Income Tax Act, Offences And Prosecution, Wilful Attempt To Evade Tax, Writ Petition Issues:1. Quashing of complaint and proceedings under sections 276C and 277 of the Income-tax Act, 1961.2. Application for dropping criminal proceedings based on discrepancies in stock.3. Stay of criminal complaint proceedings pending a civil writ petition.4. Legal implications of appellate authority's order on criminal liability under section 276C of the Act.Analysis:1. The petitioners sought to quash the complaint and proceedings under sections 276C and 277 of the Income-tax Act, 1961. The complaint alleged false entries in account books and false verification of stocks to evade income tax. The petitioners argued that discrepancies in stock had been set aside by the Commissioner of Income-tax, rendering the complaint unsustainable. However, the trial court held that the order did not absolve the petitioners of liability under section 276C. The revision petition against this decision was also dismissed by the Additional Sessions Judge.2. The petitioners filed an application to drop the criminal proceedings based on the stock discrepancies being set aside by the appellate authority. The complainant contended that the petitioners were validly prosecuted for introducing a false cash credit entry and that the matter was sub judice due to an appeal. The trial court dismissed the application, emphasizing that the effect of the appellate order would be considered at the case's conclusion.3. The petitioners requested a stay on the criminal complaint proceedings pending a civil writ petition. However, the court held that mere expectations of success in a civil writ petition cannot impede criminal proceedings under sections 276C and 277 of the Act. Citing a Supreme Court decision, the court emphasized that the criminal court must independently assess the evidence before it, irrespective of civil proceedings.4. The court, after considering arguments from both parties, concluded that expectations of success in a civil writ petition should not hinder criminal proceedings under the Act. Relying on the Supreme Court decision in P. Jayappan's case, the court emphasized the need for independent judgment based on evidence presented in criminal cases. Consequently, the petition was dismissed based on this legal principle.