Tax evasion prosecution requires proof beyond reasonable doubt; unverified records and delay barred cognizance in this complaint.

In a prosecution for tax evasion, the Court held that the prosecution must prove deliberate concealment or a willful attempt to evade tax beyond reasonable doubt; disallowed purchases and uncorroborated departmental enquiries were insufficient, and suspicion could not replace proof. The acquittal was therefore justified. The Court also held that, where the alleged offence was punishable with imprisonment up to three years, the three-year limitation period under Section 468(2)(c) of the Code of Criminal Procedure applied; as the complaint was filed more than three years after the department acquired knowledge of the alleged offence, cognizance was barred and the complaint was time-barred.

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Issues: (i) Whether the prosecution had proved the offence under Section 276(C) of the Income-tax Act, 1961 beyond reasonable doubt. (ii) Whether the complaint was barred by limitation under Section 468 of the Code of Criminal Procedure, 1973.

Issue (i): Whether the prosecution had proved the offence under Section 276(C) of the Income-tax Act, 1961 beyond reasonable doubt.

Analysis: The accused had shown disputed purchases which were disallowed in assessment, but the evidence of the departmental witnesses did not establish deliberate concealment or a willful attempt to evade tax. The enquiry was not supported by authenticated records, the visit to the alleged supplier was not properly proved, and the material on record was insufficient to draw a presumption of culpable mental state. In a prosecution carrying penal consequences, suspicion, however strong, cannot take the place of proof.

Conclusion: The offence was not proved and the acquittal was justified.

Issue (ii): Whether the complaint was barred by limitation under Section 468 of the Code of Criminal Procedure, 1973.

Analysis: The offence alleged was punishable with imprisonment up to three years, attracting the three-year limitation period under Section 468(2)(c) of the Code of Criminal Procedure, 1973. The complaint was filed more than three years after the relevant date when the department had knowledge of the alleged offence, so cognizance could not validly be taken.

Conclusion: The complaint was barred by limitation.

Final Conclusion: The acquittal was upheld and the departmental appeal failed on both merits and limitation.

Ratio Decidendi: In a criminal prosecution for tax evasion, the prosecution must prove the offence beyond reasonable doubt, and where the complaint is filed beyond the applicable limitation period, cognizance is barred under Section 468 of the Code of Criminal Procedure, 1973.

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