B T X CHEMICALS PRIVATE LIMITED NANDESARI Vs. SURAJ BHAN
HIGH COURT OF GUJARAT
B T X Chemicals Private Limited Nandesari
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(1.)These Special Criminal Applications filed under Art. 226 of the Constitution of India seek to quash the complaints which have been filed against the petitioners who are the assessees Petitioner No. 1 is a Company of which the remaining petitioners are the directors. In the accounting year ending 30/06/1979 the petitioner-Company sustained a loss on account of some fire having taken place in the Companys premises. The said loss was reimbursed by the Insurance Company and in the return that was filed on 30/06/1980 this particular reimbursement made by the Insurance Company was not reflected with the result that the Income-tax Officer while making the assessment found that there was an attempt to conceal the income and reap the advantage by claiming deduction. Therefore proceedings were started under Sec. 276 of the Income-tax Act as well as also under the provisions of the Indian Penal Code. The petitioners being aggrieved by the same have preferred the present applications for quashing the complaints.
(2.)Lengthy arguments were advanced by the senior Counsels appearing for the rival sides but it appears that what would be punishable under Sec. 276(c) of the Income-tax Act would be a dishonest intention or a mala fide intention and there should be mens rea for committing a particular crime before an assessee can be prosecuted. All bona fide mistakes made by the assessee while filling in the Income tax return forms would not necessarily amount to an intention to commit crime and if Sec. 276(c) were to be used for penalising every delinquent assessee on that score it would wreck havoc. What is to be found by the Court is as to whether the assessee wanted to defraud the revenue. Thus from that angle it appears that in the instant case the assessee could not have harboured such an intention. I am tampted to hold this wise for the simple reason that the return that was filed on 30/06/1980 pertained to the accounting period which ended on 30/06/1979 It would therefore reflect the picture of the Companys finances and the Companys affairs between the period 1/07/1978 and 30/06/1979 A thing which transpired in December 1979 namely reimbursement by the Insurance (Company would not be reflected in such a return because it was an event which had taken place subsequently. To expect an assessee to reflect this thing in the return for the said period would be an anachronism.
(3.)The second ground which Mr. Bhatt learned Advocate appearing for the revenue urged was that the loss of Rs. 100112.00 if it was not deducted by the Income-tax Officer would have resulted in an advantage to the assessee by way of double deduction and it was only when the Income-tax Officer drew the attention of the assessee that the assessee came out with a story that it was a mistake of the Chartered Accountant. Here also there is a snag inasmuch as the assessee could not have escaped with impunity because this loss of Rs. 100112.00 would have been definitely found out in the next years opening stock and with the enormous powers with which the Income-tax Officer are armed for re-opening the previous year as assessment this would certainly have been found out. So ultimately it would not have resulted in any advantage to the assessee. I therefore feel that the complaints were misconceived and would if allowed to continue definitely amount to an abuse of the process of the Court. Under the circumstances the petitions are required to be allowed. They are accordingly allowed. The complaints are ordered to be quashed and the Rule in each of these two petitions is made absolute accordingly. Prosecution quashed.
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