1989 (11) TMI 35 - HC - Income Tax

High Court dismisses challenge to Income-tax Act order on false income return, emphasizes legal process for charges

The High Court dismissed the application challenging the order taking cognizance of the offence under sections 276C and 277 of the Income-tax Act, 1961. ... False Statement In Verification, Offences And Prosecution, Procedure For Prosecution Issues:1. Cognizance of an offence under sections 276C and 277 of the Income-tax Act, 1961.2. Allegations against the petitioners in relation to filing a false income return.3. Jurisdiction of the court to try the case under the Income-tax Act.4. Contention regarding mens rea in the alleged offence under section 276C.5. Application for discharge of the accused before the charge is framed.Analysis:1. The judgment concerns an application challenging an order taking cognizance of an offence under sections 276C and 277 of the Income-tax Act, 1961. The complaint alleged that the petitioners, partners in a firm, furnished a false income return for the assessment year 1980-81. The court considered the contentions raised by the petitioners' counsel, including issues related to the verification of the return and the necessity of establishing mens rea for the offence under section 276C. The court also discussed the jurisdictional aspect of trying the case under the Income-tax Act.2. The complaint filed by the Income-tax Officer accused the petitioners of submitting a false income return through a declaration made by a third party. The court examined the arguments put forth by the petitioners' counsel regarding the partners' liability in such cases and the requirement of specific allegations under section 278B of the Income-tax Act to proceed against the partners for an offence under section 276C.3. The jurisdictional issue raised in the case pertained to the notification issued by the State of Bihar, designating a Special Magistrate at Muzaffarpur to try all cases under the Income-tax Act. The petitioners contended that the court below lacked jurisdiction to take cognizance of the alleged offence. The court directed the lower court to determine its jurisdiction and transfer the case if necessary.4. The question of mens rea, an essential element in establishing an offence under section 276C, was debated. The petitioners argued that the complaint did not allege any wilful attempt to evade tax, as required for the offence. The court considered the precedents cited by the petitioners' counsel and emphasized that mens rea is a factual matter to be determined during the trial.5. Lastly, the judgment addressed the petitioners' application for discharge before the charge was framed. The court noted that the stage for discharge had not been reached as no witnesses were examined by the prosecution. It highlighted the procedural aspect of deciding on discharge or framing charges as per the Criminal Procedure Code, emphasizing that such decisions should follow the prescribed legal process.In conclusion, the High Court dismissed the application while providing directions for the lower court to address the contentions raised by the petitioners during the framing of charges and to consider the jurisdictional aspect in light of the designated Special Magistrate for Income-tax Act cases.