LAWS(KER)-1987-6-61

INCOME TAX OFFICER Vs. ABDUL MAJEED T

Decided On June 11, 1987
INCOME-TAX OFFICER, B-WARD Appellant
V/S
T. ABDUL MAJEED Respondents

JUDGEMENT

(1.) The Income tax Officer, Ernakulam filed a complaint against the respondent for offences under S.276C(1) and 277 of the Income Tax Act, 1961 (for short 'the Act'). The Chief Judicial Magistrate, Ernakulam who tried the case, acquitted the respondent. Hence the Income Tax Officer filed this appeal.

(2.) The respondent is a wholesale dealer in textiles. The respondent is the proprietor of the shop by name Textile Centre, Broadway, Ernakulam. For the assessment year 1977-78, he filed his returns in which he had shown the closing stock as on 31-12-1976 as Rs. 10,36,384.75. According to the Income Tax Officer, the aforesaid return contained incorrect and untrue statement and by filing a false return of income, the respondent willfully attempted to evade the tax payable by him under the Act. The basis for the said allegation is that when a search was conducted by the Income Tax authorities on 12-1-1977, the inventory of the stock as on 30-12-1976 was obtained from Exts. P2 and P3 books of account. The inventory revealed the closing stock as on 30-12-1976 as Rs. 12,17,725.72. The Income tax officer who conducted the search, recorded the statement of the respondent which is marked in this case as Ext. P1. On the strength of the closing stock found in the inventory, the Income tax officer made the assessment by adding Rs. 1,71,341/- to the income returned by the respondent as value of the undisclosed closing stock. Consequently, a penalty of Rs. l,20,000/- was levied on the respondent. Therefore, the respondent, according to the Income tax Officer who filed the complaint, committed the offences mentioned above.

(3.) The Chief Judicial Magistrate acquitted the respondent mainly on two grounds. The first is that the complainant has not proved that sanction was accorded by the Commissioner of Income Tax under S.279 (1) of the Act, and hence the institution of the prosecution proceedings was without authority. The second ground is that the order imposing penalty on the respondent was set aside by the Commissioner of Income tax on appeal filed by the respondent which was confirmed by the Income Tax Appellate Tribunal and hence the stand of the Income tax Officer that the respondent furnished incorrect or false return is not sustainable. It is also found that mere seizure of Exts. P2 and P3 and the statement alleged to have been given by the respondent on the date of seizure are not sure grounds to conclude that the income returned by the respondent is false to his knowledge.