Mens rea under section 277 of the Income-tax Act must be proved; later disclosure may negate deliberate falsity and sustain discharge.

Proceedings instituted before the new Code continued under the old Code because cognizance had already been taken, but a later request for adjournment to seek transfer did not create any mandatory duty to stay the case. The court's refusal to grant time was discretionary and did not make the discharge order without jurisdiction. On the charge under section 277 of the Income-tax Act, the prosecution had to show both a false statement and knowledge or belief of falsity. As the materials suggested prior disclosure and possible inadvertence rather than deliberate concealment, no prima facie case for framing charge was made out, and the discharge was restored.

---

---

Issues: (i) Whether the order discharging the accused was without jurisdiction because the court should have stayed the proceedings to enable the prosecution to move for transfer of the case under the old procedural law. (ii) Whether, on the materials before the trial court, a prima facie case under section 277 of the Income-tax Act, 1961 was made out so as to justify framing of charge.

Issue (i): Whether the order discharging the accused was without jurisdiction because the court should have stayed the proceedings to enable the prosecution to move for transfer of the case under the old procedural law.

Analysis: The proceeding had been instituted and cognizance taken before the new Code came into force, so the trial itself continued under the old Code by virtue of the transitional saving provision. However, the application for adjournment filed later to enable the prosecution to move for transfer was not a pending application when the new Code commenced, and the court was not bound to grant time merely because the prosecution intended to seek transfer. The power to adjourn in such circumstances was discretionary, and no mandatory rule required the court to halt the matter. The refusal of time therefore did not render the subsequent discharge a nullity.

Conclusion: The discharge order was not without jurisdiction and was valid.

Issue (ii): Whether, on the materials before the trial court, a prima facie case under section 277 of the Income-tax Act, 1961 was made out so as to justify framing of charge.

Analysis: Liability under section 277 requires not only a false statement in the return but also knowledge or belief that the statement was false. The record showed that the alleged omissions had been brought to the assessing authority's notice before assessment and that the assessee's explanation suggested inadvertence rather than deliberate concealment. The trial court was entitled to consider the admitted document showing the later disclosure, and the surrounding circumstances did not establish the requisite guilty intent. On that material, the prosecution had not shown a sufficient prima facie case to displace the finding of bona fide mistake.

Conclusion: No prima facie case for framing charge under section 277 was made out.

Final Conclusion: The impugned revisional order could not be sustained, and the order of discharge passed by the trial court was restored.

Ratio Decidendi: For an offence under section 277 of the Income-tax Act, 1961, the prosecution must establish both falsity of the statement and the requisite guilty knowledge or belief, and a post-return disclosure showing inadvertence may be relevant in negating mens rea; a later application for adjournment to seek transfer does not create a mandatory obligation to stay proceedings unless it was a pending application protected by the transitional provision.

---