J K SYNTHETICS LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) M /s J. K. Synthetics Ltd. (for short "the company") is a public limited company duly incorporated under the Indian Companies Act. It was engaged in the manufacture and sale of synthetic yarn, cement, etc. During the relevant period, i.e., accounting year ending 31st Dec., 1974 (asst. yr. 1975 -76), Shri Sita Ram Singhania was its president. Sh. Rama Shankar Bajpai was its secretary and General Manager (Taxation). For the said year, a notice under S. 210 of the INCOME TAX ACT, 1961 (hereinafter to be referred as "the Act"), requiring to pay a sum of Rs. 1,43,47,719 as advance tax was served on the company on 30th May, 1974. This notice was issued on the basis of the previous assessments. Under S. 212 of the Act, it was open to the company, instead of making the payment of advance tax demanded under S. 210, to submit an estimate of its current income if this current income was likely to be less than the income on which advance tax had been demanded under s. 210. The company, in exercise of this right, filed an estimate in the prescribed form signed by Sh. Rama Shankar Bajpai on 13th June, 1974, estimating its total income as nil. The second estimate, estimating the total income at Rs. 311.31 lakhs on which income advance tax payable came to Rs. 179.78 lakhs, was filed under the signature of the said Sh. Bajpai on 7th Sept., 1974. The third estimate, estimating the total income of the company at Rs. 176.92 lakhs, was filed under the signature of the said Sh. Bajpai on 13th Dec., 1974, i.e., 17 days before the closing of the year.

(2.) THE company filed a return of its income for the said assessment year declaring a total income of Rs. 3,88,63,416 on which the tax payable came to Rs. 2,24,43,623. After claiming credit for the tax already paid, the company paid a sum of Rs. 1,21,31,784 as tax. The assessment was completed and ultimately as a result of appeal, etc., the total income was finally computed at Rs. 4,17,87,323.

(3.) ON 15th Nov., 1985, Sh. K Chaufla, ITO, Central Circle XVIII, New Delhi, filed a complaint for offences under ss. 277 and 278 of the Act and ss. 177 and 109, IPC, against the company, Sh. Sita Ram Singhania and Sh. Rama Shankar Bajpai, before the Additional Chief Metropolitan Magistrate, Delhi. It was averred that the company wilfully, deliberately and mala fide delivered the accounts or statements in the shape of estimates of advance tax in Form No. 29 as prescribed under the IT Rules, 1962, which were false and which it either knew or believed to be false or did not believe to be true. The company had thus committed an offence punishable under S. 277 of the IT Act and s. 177 of the IPC. It was further averred that Sh. Sita Ram Singhania and Ram Shankar Bajpai had abetted the company in filing a false estimate of its total income and had thus committed offences punishable under S. 278 of the Act and S. 109 of the IPC.