INCOME TAX OFFICER Vs. SHIVLAL DHULICHAND AGARWAL

JUDGEMENT

(1.) THIS is an appeal filed by the Income-tax Department against the acquittal of respondent Nos. 1 to 3 who were charges under section 276(1) and 277 of the Income-tax Act and under section 193 and 196 of the Indian Penal Code.

(2.) THE facts of the case are that A-1 is the firm and A-2 and A-3 are partners. A-1 firm filed a return, exhibit P-3, dated June 25, 1985 before P-W-1, Income-tax Officer, D-Ward, Circle-1, Hyderabad, for the assessment year 1984-85 declaring an income of Rs. 99,980. It was A-3 that signed in exhibit P-3 (a), the verification on behalf of A-1 firm. Along with the return, exhibits P-4 to P-6, adjusted profit and loss account and the trial balance were also filed. In exhibit P-6, under the head "List of sundry creditors". THE names of Sri Ramavatar Sharma and Smt. Bhagirathi Sharma were shown. THEy are supposed to have lent sums of Rs. 62,457 and Rs. 55,406, respectively, to A-1 firm. During the assessment proceeding, P.W-1 (Income-tax Officer) took up the inquiry of A-1 firm. During the inquiry, the accountant of the first filed before him exhibit P-8 and P-9, confirmatory letters given by the creditors, Mr. and Mrs. Sharma confirming the lending of aforesaid amounts. P. W-1 directed the authorised representative to produce the two creditors before him on March 12, 1985. On March 13, 1985, the authorised representative produce Ramavatar Sharma. P.W-1 then recorded his statement, exhibit P-10, during the course of examination, initially, Ramavatar Sharma maintained that the loans were advanced from his saving from his salary and performing and by tuitions, etc., but after persistent examination, Ramavatar Sharma is said to have broken down and admitted before him that it was A-1 itself that deposited the amounts of Rs. 62,000 and 55,000 in the names in the State Bank of Hyderabad and withdrew the amounts of cheques issued by him and his wife. THEreafter, P.W-1 examined A-2 of March 27, 1985, and recorded his statement, exhibit P-11, wherein he admitted that the amounts were actually monies of A-1 firm and that the monies are not of Mr. and Mrs. Sharma. THE borrowals, exhibit P-12 and Exhibit P-12(b) were recorded at pages 32 and 33 of the ledger and exhibit P-12 P.W-1 considered the said amounts as the income of the first and by exhibit P-13 assessment order dated March 28, 1985, he computing the income at Rs. 2,30,600 and initiated penalty proceeding. THEreafter he launched prosecution against the accused on the basis of the exhibit P-1 directed issued by the commissioner of Income-tax.

(3.) THE accused were examined under section 313, Criminal procedure Code. THEy stated that there are three partners, another partner is one Hazarilal. THEy admitted that they filed exhibit P-3 returns together with the enclosures. But they contended that the loans were advanced by Mr. and Mrs. Sharma by way of cheques and thus those amounts did not belong to the firm. Regarding the statement, Exhibit P-11, given by A-2, the stand of the accused is that they were not confronted with exhibit P-10 statement of Ramavatar Sharma and A-2's statement was obtained under inducement and threat. THE court below, after considering the entire material evidence on record, acquitted the accused. Against that order, the present appeal has been filed.