Income Tax OFFICER vs SOVASARIA MOTOR PARTS AND ACCESSORIES LTD. AND OTHERS.

U. L. BHAT C.J. - The respondents are a partnership firm and its two partners. The revision petitioner filed a complaint in the lower court against the respondents alleging commission of an offence punishable u/s 277 of the Income Tax Act, 1961. The prosecution examined six witnesses in support of its case. The learned magistrate held that there were no materials on the basis of which a charge could be framed and accordingly discharged the respondents u/s 245(1) of the Criminal Procedure Code. This order is now challenged.

The allegation against the respondents relates to the assessment year 1973-74. Exhibit-1 is the return submitted by the first respondent bearing the signature of the third respondent. It has disclosed a total income of Rs. 47,800. According to the petitioner, exhibit-2, is the balance-sheet of the firm produced by the respondents in the assessment proceedings. The balance-sheet discloses alleged liabilities of Rs. 1,77,629 owed to various tyre dealers. In the course of the assessment proceedings, the revision petitioner discovered that the liabilities shown were fictitious and shown only for the purpose of suppressing income. P. Ws.-1 to 6 are all personnel of the Income Tax Department. They can at best speak to their belief or satisfaction or conviction that the respondents have committed an offence punishable u/s 277 of the Act, namely, making a statement in any verification or delivering an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true. The question is whether the statement in the balance-sheet regarding liabilities and the consequent mention of the total income in the balance-sheet are false. The balance-sheet, exhibit-2, does not bear the signature of the partners of the firm. The learned magistrate was, therefore, not justified in accepting even prima facie that exhibit-2 is the balance-sheet of the first respondent-firm for which the second or the third respondent is required to take responsibility. The revision petitioner failed to place before the learned magistrate any material to show that any of the liabilities was fictitious. The evidence is only about what the officers of the Income Tax Department felt or concluded the assessment proceedings. That cannot be a material even for framing a charge, so far as criminal prosecution is concerned. No attempt was made to place before the court the records relating to the tyre dealers who, according to the alleged balance-sheet, advanced monies to the assessee. The learned magistrate was right in holding that no material had been placed before him which, if rebutted, would warrant conviction.

I find no ground to interfere with the order of discharge and dismiss the revision petition.