INCOME-TAX OFFICER Vs. KISHAN LAL KATHURIA

JUDGEMENT

(1.) KRISHAN Lal Kathuria was prosecuted under Section 277, Income-tax Act, 1961. The Judicial Magistrate, First Class, Faridabad, on August 4, 1981, convicted him and sentenced him to rigorous imprisonment for three months and to pay a fine of Rs. 3,000 in default of payment of fine he was to further undergo rigorous imprisonment for six months. This order was successfully challenged before the Sessions Judge, Faridabad, who, vide his order dated November 4, 1982, set aside the conviction and sentence. This appeal is by the Income-tax Officer.

(2.) A criminal complaint was filed by the Income-tax Officer against Krishan Lal Kathuria under Section 277 of the Act. The accused, Krishan Lal Kathuria, was carrying on business of manufacturing cast iron under the name and style of Messrs. Indian Castings, Faridabad. Krishan Lal is the proprietor. He had submitted income-tax return on July 29, 1972, for the assessment year 1972-73, accounting year being 1971-72. Along with the return, balance-sheet, profit and loss account, list of sundry creditors and debtors were furnished. The return was verified by Krishan Lal. The Income-tax Officer directed the assessee to file copies of closing stock and certificate from the bank showing details of stocks pledged and hypothecated and certain other documents. On October 30, 1974, these documents were furnished. According to the statement of closing stocks furnished, 22 tonnes of pig iron valued at Rs. 12,000 and 2 tonnes of cast iron scrap valued at Rs. 960 and consumable stores valued at Rs. 525, i. e. , goods worth Rs. 12,485 were shown in stock on March 31, 1972. The Income-tax Officer also secured certain records from the bank. There were discrepancies and after giving notice to the assessee, he added a sum of Rs. 12,000 to the income of the assessee as undisclosed income. The assessment order was made on December 31, 1974. The appeal of the assessee was dismissed on January 28, 1976, by the Appellate Assistant Commissioner and the second appeal was dismissed by the Income-tax Appellate Tribunal on November 17, 1976. It was, thereafter, that the Income-tax Officer started penalty proceedings for concealing the aforesaid income of Rs. 12,000 and as per order dated March 30, 1977, the Income-tax Officer imposed penalty of Rs. 12,000 holding that the assessee had made a false statement in the verification of return. This was false and the assessee knew it to be false. Proceedings under Section 277 of the Income-tax Act were started by filing a criminal complaint.

(3.) THE complainant examined P. W.-1, V. R. Rishi, Income-tax Officer, P. W.-2, L. R. Dhingra, Assistant Director, P. W.-3, Miss Anita, clerk from the office of the Income-tax Officer, and P. W.-4, Shri M. L. Gari, Assistant in the State Bank of India. The accused, while making the statement under Section 313, Criminal Procedure Code, admitted to being the proprietor of the firm and having filed the return and other documents. He, however, denied for want of knowledge that any information was sought by the Income-tax Officer directly from the bank. He further asserted that the penalty of Rs. 12,000 imposed by the Income-tax Officer was ultimately set aside by the Income-tax Appellate Tribunal in appeal. He pleaded false implication. In defence, he produced five witnesses.