Actual payment under section 285, not mercantile accrual, was required; acquittal for alleged tax offence was sustained.

Time spent obtaining certified copies was treated as excludable when computing limitation for an appeal against acquittal under section 378(5) CrPC, so the appeals were held within limitation. Section 285 of the Income-tax Act was construed to require actual payment of interest, not mere accrual or book entries under the mercantile system; section 43 did not enlarge that meaning, and the contrast with section 194A confirmed the narrower wording. On that construction, failure to file returns based only on accrued interest did not establish offences under section 276B, and the acquittal was sustained.

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Issues: (i) Whether the appeals were within limitation by excluding the time spent in obtaining certified copies for an application under section 378(5) of the Code of Criminal Procedure, 1973; (ii) Whether failure to file returns under section 285 of the Income-tax Act, 1961, in respect of interest credited under the mercantile system constituted offences under section 276B of that Act.

Issue (i): Whether the appeals were within limitation by excluding the time spent in obtaining certified copies for an application under section 378(5) of the Code of Criminal Procedure, 1973.

Analysis: The limitation period for an appeal against acquittal had to be computed strictly, and the time taken to secure certified copies was treated as time properly excludable for the purpose of deciding whether the application was within six months. The exclusion was accepted notwithstanding the inapplicability in terms of section 12 of the Limitation Act, 1963, because a party could not fairly be expected to decide upon and formulate an appeal without the certified judgment.

Conclusion: The appeals were held to be within limitation.

Issue (ii): Whether failure to file returns under section 285 of the Income-tax Act, 1961, in respect of interest credited under the mercantile system constituted offences under section 276B of that Act.

Analysis: Section 285 was construed according to its plain language. The word "paid" in that provision was held to denote actual payment and not mere accrual or book entries under the mercantile system. Section 43 could not control the meaning of "paid" in section 285 because its definition was confined to sections 28 to 41 and section 43 itself. Section 194A was used as a contextual contrast because it expressly referred to credit entries as well as payment, whereas section 285 did not. The provision therefore did not cover notional payments, and the plea of absence of reasonable cause did not survive once the substantive offence itself failed.

Conclusion: The respondent was not guilty of offences under section 276B.

Final Conclusion: The acquittal was sustained because the return obligation under section 285 arose only on actual payment of interest other than interest on securities, and not on mere accrual entries in the mercantile books.

Ratio Decidendi: For section 285 of the Income-tax Act, 1961, "paid" means actual payment and does not include notional or accrued entries under the mercantile system of accounting.

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