1. This is a petition under section 482 of the Criminal Procedure Code to quash the proceedings in CC No. 704 of 1983 on the file of the Additional Chief Metropolitan Magistrate (Economic Offences-I), Egmore, Madras-8. The accused is the petitioner.
2. The Income-tax Officer, Central Circle-XV, has launched a criminal prosecution against the petitioner for offences under sections 193, 420 read with section 511 of the Indian Penal Code and sections 277 and 276C(1) of the Income-tax Act of 1961, on the following averments.
3. The petitioner, who is the proprietor of Ratna Movies, carrying on business in distribution of films, is an income-tax assessee with the status of 'individual'. On October 11, 1977, the petitioner delivered his income-tax return for the assessment year 1977-78, showing a total income of Rs. 1,03,740. Along with the return, the petitioner also furnished a statement of profit and loss account for the year ending March 31, 1977, and trial balance as on March 31, 1977. The profit and loss account showed a collection of Rs. 14,89,681 for the year ending March 31, 1977. Subsequently, on March 14, 1978, a raid on the premises of his office and residence was made by the Income-tax authorities resulting in the seizure of more than one set of account books maintained by the petitioner in respect of his film business for the assessment year 1977-78, and a sum of Rs. 50,000 in cash. The scrutiny of the accounts seized showed discrepancies and suppression of the collection made by the petitioner in his film business and he was called upon to explain. This prompted the petitioner to file a revised return for the assessment year 1977-78 showing a total income of Rs. 2,36,240 as against the income of Rs. 1,03,740 originally returned by him. On November 15, 1979, an order of assessment was passed by the Income-tax Officer for the year 1977-78, determining the total income of the petitioner at Rs. 3,29,964. On appeal, the Commissioner of Income-tax (Appeals), Madras, confirmed the assessment. On further appeal, the income-tax Appellate Tribunal determined the income of the petitioner for the assessment year 1977-78 at Rs. 2,34,233. Thereafter, the Income-tax Officer imposed on the petitioner a penalty of Rs. 2,17,910 under section 271(1)(c) of the Income-tax Act, by his order dated March 3, 1982, for concealing the particulars of income deliberately and furnishing inaccurate particulars in the original return. The petitioner preferred an appeal before the Commissioner of Income-tax, who, while confirming the penalty, directed the Income-tax Officer to levy minimum penalty adopting the income fixed by the Income-tax Appellate Tribunal as the basis. According to the respondent, the petitioner, with a view to defraud the exchequer of its legitimate revenue, has fraudulently maintained more than one set of account books for the assessment year 1977-78 and has been found in possession of the said fabricated account books, which were intended to be produced as genuine evidence in the course of the income-tax assessment proceedings and has systematically suppressed the collections from his business and submitted a false return and statement of accounts. The petitioner attempted to deceive the Income-tax Officer and induced him to pass an order of assessment on the basis of his false return (sic) is to quash this proceeding that the petitioner has come forward with this Petition.
4. It is contended by the petitioner that the accounts were maintained by his accountant who looked after the entire matter relating to the maintenance and finalisation of the accounts and preparation of profit and loss account and other statements. The petitioner was, in fact, not properly equipped to maintain or look after the accounts. He reposed implicit faith in his accountant and signed the returns and other statements prepared by the accountant. After the search and seizure of the account books from his business premises, the petitioner looked into the account books and records and found certain discrepancies, but he could not get any explanation in regard to the various entries, as the petitioner's accountant could not be traced. The accounts were then thoroughly examined by an auditor, and a fresh return, rectifying the omission and wrong statement, was filed, showing a total income of Rs. 2,36,240. The revised return was filed under section 139 of the income-tax Act and only subsequent thereto, the assessment proceedings were taken. The Income-tax Officer did not accept even the revised return as correct, and determined the total income at Rs. 3,23,840. The petitioner filed an appeal before the Commissioner of Income-tax (Appeals), but it was rejected. However, the Income-tax Appellate Tribunal allowed the appeal and determined the total income of the petitioner at Rs. 2,34,233 which was less than the amount of Rs. 2,36,240 shown by the petitioner in his revised return. The Tribunal also observed that there was no justification to assume that the petitioner had maintained duplicate or triplicate set of accounts for the assessment year 1977-78. Though the Income-tax Appellate Tribunal allowed the appeal and accepted the revised return filed by the petitioner, the Income-tax Officer initiated penalty proceedings against the petitioner and levied a penalty of Rs. 2,17,910 under section 271(1)(c) of the Income-tax Act. On appeal,the Commissioner of Income-tax directed the Income-tax Officer to levy the minimum penalty under the Act taking into account the income accepted by the Income-tax Appellate Tribunal. Notwithstanding the aforesaid proceedings, the respondent, the Income-tax Officer, has now initiated proceedings for prosecution under sections 193 and 420 read with sections 511 of the Indian Penal Code and sections 277 and 276C(1) of the Income-tax Act in CC No. 704 of 1983 on the file of the court of the Additional Chief Metropolitan Magistrate (Economic Offences-I), Madras-8. It is contended by the petitioner that the entire proceedings in CC No. 704 of 1983 are vexatious and intended to harass the petitioner. The prosecution based on the original return is untenable in law in view of the revised submitted by him under section 139 of the Income-tax Act. He is not guilty of any of the offences under which he could prosecuted.
5. Sections 193 of the Indian Penal Code runs thus :
'193. Punishment for false evidence. - Whoever intentionally gives false evidence in any stage of a judicial proceeding, or fabricates false evidence for the purpose of being used in any stage of a judicial proceeding, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine; and whoever intentionally gives or fabricates false evidence in any other case, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine.
Explanation 1. - A trial before a court-martial is a judicial proceeding.
Explanation 2. - An investigation directed by law preliminary to a proceeding before a court of justice, is a stage of a judicial proceeding though that investigation may not take place before a court of justice.'
6. Section 415 of the Indian Penal Code reads as follows : -
'415. Cheating. - Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to 'cheat'.
Explanation. - A dishonest concealment of facts is a deception within the meaning of this section.'
7. Section 276C(1) of the Income-tax Act reads thus :
'276C(1) : If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable, -
(i) in a case where the amount sought to be evaded exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;
(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine......
Explanation. - For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person -
(i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or
(ii) makes or causes to be made any false entry or statement in such books of account or other documents; or
(iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or
(vi) causes any other circumstances to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof.'
8. Section 277 of the Income-tax Act is as follows :
'277. If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or dose, not believe to be true, he shall be punishable, -
(i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less then six months but which may extend to seven year and with fine;
(ii) in any other case with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.'
9. The thrust of the arguments of learned counsel for the petitioner is based upon the revised return submitted by him before the completion of the assessment for the year 1977-78 under section 139(5) of the Income-tax Act. Section 139(5) of the Income-tax Act lays Act lays down that Act lays down that if any person having furnished a return under sub-section (1) or sub-section (2) discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made. According to the learned counsel for the petitioner, section 139(5) of the Income-tax Act gives locus poenitentiae to the assessee and the revised return takes the place of the original return, which thereafter becomes non est in the eye of law and hence no proceedings for penalty or for prosecution could be based on the original return submitted by the assessee. I am afraid the contention is far fetched and cannot be accepted. It is opposed to the long line of decisions on this aspect.
10. In CIT v. Angara Satyam : 37ITR230(AP) , the view has been expressed that the concealment or the deliberate furnishing of inaccurate particulars can take place at the time of making the original return, as well as at the time of making the return in compliance with the notice under section 34, that if the discovery takes place during 'any proceedings under the Act', it can be said that income had been concealed or inaccurate particulars of income were deliberately furnished and this will vest jurisdiction to impose a penalty under section 28(1)(c) of the old Act. In Vadilal Ichhachand v. CIT : 32ITR569(Bom) , the Bombay High Court rejected the view expressed by the Tribunal that the assessee was not liable to penalty taking into account the revised return filed by the assessee and held that the penalty had to be calculated on the basis of the original return and not on the basis of the revised return. In Jayabhai Girdharibhai v. CIT : 32ITR677(Bom) , the same High Court expressed the view that the actual result of the assessment has nothing whatever to do with an attempt made by the assessee to conceal particulars of his income in his original return in which he deliberately furnished inaccurate particulars of his income and that the fact that the income had not escaped assessment as a result of the concealment made in the original return is of no consequence for imposing penalty under section 28(1)(c). This court in Sivagaminatha Moopanar and Sons v. CIT : 52ITR591(Mad) expressed that if an assessee made a false return knowing it to be false, the fact that he subsequently disclosed the true particulars of income cannot prevent the application of that section which is intended to punish fraud or contumacy on the part of the assessee.
11. After reviewing the aforesaid, decisions, a Bench of this court in a very recent decision in CIT v. Ramadas Pharmacy : 77ITR276(Mad) held that the mere fact that the assessee filed a revised return after concealment had been detected by the Income-tax Officer would not wipe out the contumacious conduct on the part of the assessee in filing the original return, which, if it had been accepted would have resulted in avoidance of tax. The Bench, however, pointed out that in the proceedings for imposition of penalty, the original return along should not be considered in isolation without reference to the subsequent conduct of the assessee and all the facts and circumstances commencing with the filing of the original return and ending with the assessment may be taken as relevant for considering the assessee's liability for penalty. While it is held that the filing of the revised return will not expatiate the contumacious conduct on the part of an assessee in not having disclosed the true income in the original return and will not be a bar to the initiation of the penalty proceedings, it will not likewise be a bar to the launching of criminal prosecution. It cannot, therefore, be said that the original return is completely wiped out and no prosecution can be instituted on the basis of the original return.
12. In the original return submitted by the petitioner, he has given a false return of income at Rs. 1,03,740 while the real income has finally been adjudicated upon by the Tribunal at Rs. 2,34,233. In the profit and loss account submitted along with the original return, the collections have been falsely given at Rs. 14,89,681 which is less by more than a lakh of rupees than the real collection as disclosed by the revised by the revised return. The petitioner, has, therefore, made a false return under verification and delivered a false statement of account along with it and the provisions of section 277 of the Income-tax Act are prima facie attracted. The petitioner has wilfully attempted to evade tax by submitting such a false return and he, therefore, comes within the mischief of section 276C(1) of the Income-tax Act. Under Explanation to section 276C(1), the mere possession or control of any books of accounts or other documents containing a false entry or statement does itself amount to an attempt to evade tax within the meaning of section 276C(1) of the Act. The furnishing in a statement of profit and loss account showing a false amount of collection would amount to giving false evidence within the meaning of section 193 of the Indian Penal Code. By submitting a false return and a false statement of profit and loss account, the petitioner has attempted to deceive the Income-tax Officer and to fraudulently and dishonestly induce him to pass an order of assessment on the basis of the false return and thereby evade proper taxation. Prima facie the provisions of the aforesaid sections come into play. The question whether the petitioner was misled by his accountant or whether he deliberately and wilfully submitted the false return, the false statement of account and maintained a false account is a matter which has to be gone into in the trial court and not in these proceedings for quashing.
13. In his petition, the petitioner has also challenged the competency of the respondent to institute this prosecution and the competency of the Commissioner of Income-tax, Central-I Madras, to give sanction for this prosecution. But no arguments were advanced thereon before me. It is open to the petitioner to raise this contention in the court below, if so advised.
14. In the result, the petition fails and is dismissed.