Revised return correcting tax-payment error before coercive action defeats wilful-evasion prosecution under the Income-tax Act

An erroneous tax-payment entry in a return, when corrected through a revised return before any coercive action, was treated as a bona fide mistake rather than a wilful attempt to evade tax. The record showed that the later tax payment was accepted and that the facts indicated, at most, delayed payment, not deliberate suppression. In the absence of material showing dishonest evasion, the penal ingredients under the Income-tax Act were not made out, and continuation of the prosecution was considered an abuse of process.

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Issues: Whether the criminal proceedings for alleged offences under the Income-tax Act could be quashed on the ground that the original return contained an erroneous tax-payment entry which was corrected by a revised return filed before the show-cause notice and complaint, and whether such conduct disclosed a willful attempt to evade tax.

Analysis: The return originally filed showed self-assessment tax as paid, but the assessee later filed a revised return correcting the tax-payment particulars before any coercive step was taken. The correction was treated as arising from a bona fide omission or mistake rather than a deliberate false statement. The Court noted that the subsequent tax payment was accepted by the Department and that the facts indicated, at the highest, delayed or deferred payment, not a dishonest attempt to evade tax. In the absence of material showing a deliberate suppression or wilful evasion, the ingredients of the penal provisions were not made out.

Conclusion: The proceedings were held liable to be quashed, as continuation of the prosecution would amount to an abuse of process and the alleged offences were not established.

Final Conclusion: The complaint and the criminal case could not be sustained on the facts, and the inherent jurisdiction was exercised to terminate the prosecution.

Ratio Decidendi: Where an erroneous tax-payment entry in a return is promptly corrected by a revised return filed before initiation of coercive action, and the record does not show a wilful attempt to evade tax, criminal prosecution under the penal provisions of the Income-tax Act is not maintainable.

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