2023 (4) TMI 1180 - HC - Income Tax

Appeal dismissed, trial court acquittal upheld in false tax return case due to evidence discrepancies and legal barriers

Income-Tax Officer (Union of India), Jeypore Versus Nagendranath Khuntia

The court dismissed the appeal, upholding the trial court's acquittal of the respondent-accused in a case involving filing a false return to defraud the ... Order of Acquittal - offence u/s 276(C)/277 of the IT Act - complaint was made against the assessee/accused for filing false return to defraud the Income Tax Department - defence plea of the assessee accused was that he did not tendered any false statement to the Income Tax Department and he filed the IT return by getting the contents verified by the Office of the Branch Manager, LIC, but the ITO hurriedly passed the assessment order without appreciating the material furnished by him HELD THAT:- Admittedly, this is an appeal against acquittal, which was recorded by the learned trial Court way back in the year 1994 and law is well settled that in case of acquittal, the presumption of innocence of accused as provided under law, is reinforced and unless there appears miscarriage of justice and compelling reasons, no judgment of acquittal can be interfered with after near about 29 years more particularly in a case of this nature, where the offences with which the respondent-accused stood charged. In this case, the appellant was charged for offence u/s 276(C)/277 of the IT Act, but offence u/s 276(C) of IT Act can be established by way of evidence that such persons willfully attempted in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act. Similarly, offence u/s. 277 of IT Act can be established by way of evidence that such persons made a statement in any verification under this Act or under any rule made there under or delivered an account of statement, which is false, and which he either knows or believes it to be false or does not believe it to be true. While scrutinizing the impugned judgment, it appears that the learned trial Court has rightly framed the points of determination and proceeded to appreciate the evidence on record. Respondent-accused had not been noticed to have his say in the matter and the BM, LIC did not proved by showing any document of his Office that the respondent-accused had received Rs. 1,00,000/- (Rupees One Lakh) towards his additional conveyance allowance at the time of his assessment and in the course of hearing of appeal, the appellate authority was pleased to deduct Rs. 30,000/- (Rupees Thirty Thousand) from the additional conveyance allowance of the respondent-accused. It is also a fact that the respondent-accused was never given an opportunity to explain as to why complaint should not be filed against him and there appears from the record that a penalty proceeding was also pending at the time of institution of the complaint, which is contrary to law inasmuch as unless there is any finding in the penalty proceeding, the department should be slow to file complaint against the respondent-accused for the self same cause of action. In the course of trial, the respondent-accused had stoutly taken two pleas. One is that even for a moment, the evidence of prosecution is taken into consideration, yet he cannot be convicted for the offences with which he stood charged for want of sanction, which is defective and illegal. Second is the pendency of penalty proceeding U/S.271(1) against him is a bar for institution of the complaint. The learned trial Court after due analysis of provision and evidence, had concurred with the above pleas of the respondent-accused, but in the course of hearing of this appeal, the appellant could not validly dispute the said findings of the learned trial Court and, it therefore, appears to this Court that the appellant has failed to satisfy this Court either on merit or on the ground of technicalities. In view of the aforesaid discussion, this Court has no other option left, but to concur with the findings of the learned trial Court acquitting the respondent-accused. Issues involved:The appeal against the acquittal of the respondent-accused in a case related to filing a false return to defraud the Income Tax Department.Summary:Issue 1: Prosecution's case and acquittal by trial courtThe respondent-accused, a Development Officer at LIC, was accused of filing a false return to evade tax. The Income Tax Officer (ITO) doubted the accuracy of the accused's income declaration for the assessment year 1990-91. The ITO alleged that the accused had concealed income and inflated expenses to evade tax liability. Despite the prosecution's case, the trial court acquitted the respondent-accused.Issue 2: Defence plea and appeal against acquittalThe respondent-accused defended himself by stating that he did not provide false information to the Income Tax Department and had his return verified by the LIC Branch Manager. The Income Tax Officer, authorized by the Union of India, filed an appeal challenging the trial court's acquittal of the respondent-accused.Issue 3: Legal scrutiny and appellate argumentsDuring the appeal hearing, the appellant argued that the trial court erred in appreciating the evidence and wrongly acquitted the respondent-accused. The respondent-accused's counsel contended that the trial court's findings were legally sound and did not warrant interference after almost 30 years.Issue 4: Analysis of evidence and legal scrutinyThe court examined whether the respondent-accused intentionally filed a false return to evade tax. The prosecution relied on a confidential communication from the LIC Branch Manager regarding an incentive bonus, alleging willful concealment by the accused. However, evidence revealed discrepancies in the communication, casting doubt on the prosecution's claims. The respondent-accused's lack of willful intent was supported by testimony indicating procedural irregularities in the assessment process.Issue 5: Compliance with legal standards and technicalitiesThe respondent-accused raised objections regarding the defective sanction for prosecution and the pending penalty proceeding as legal barriers to the complaint. The trial court upheld these objections, and the appellant failed to challenge these findings during the appeal. Consequently, the court affirmed the trial court's decision to acquit the respondent-accused.In conclusion, the court dismissed the appeal, upholding the trial court's acquittal of the respondent-accused, citing lack of merit or legal grounds for intervention.