Wilful attempt to evade tax requires proof beyond reasonable doubt; stock discrepancy and later disclosure were insufficient.

A stock discrepancy detected in a survey was treated as only an initial preparation, not a completed wilful attempt to evade tax under Section 276C. The books did not show unbilled stock or unrecorded bills, and the valuation was corrected before filing the return, with supplementary profit disclosed thereafter. On those facts, the required mens rea and proof of a wilful attempt beyond reasonable doubt were absent, so the criminal prosecution could not be sustained and acquittal followed.

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Issues: Whether the accused had made a wilful attempt to evade tax so as to attract Section 276C of the Income-tax Act, 1961, on the basis of the stock discrepancy noticed during survey and the subsequent disclosure of supplementary profit.

Analysis: The survey under Section 133A showed a discrepancy in stock valuation, but the books of account did not disclose any unbilled stock or unrecorded bill. The accused corrected the valuation before filing the return and showed the supplementary profit thereafter. On these facts, the discrepancy was treated as an initial preparation and not as a completed attempt to evade tax. In the absence of proof of a wilful attempt beyond reasonable doubt, the criminal charge could not be sustained.

Conclusion: The prosecution under Section 276C was not established, and the accused was entitled to acquittal.

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