INCOME-TAX OFFICER Vs. MOHINDER PAL AJAY KUMAR

JUDGEMENT

(1.) MURARI Lal, partner, in charge of the business of Messrs. Mohinder Pal Ajay Kumar, a registered partnership concern of Kath Mandi, Hissar, was charged by the learned trial court on February 15, 1986, of having prepared false books of account for the assessment year 1981-82, and thereby wilfully attempted to evade income-tax, penalty and interest chargeable under the Income-tax Act, 1961. The accused pleaded "not guilty" thereto and claimed to be tried. Vide its impugned judgment, dated November 25, 1986, the learned trial court acquitted the accused. Feeling aggrieved by the judgment of acquittal aforesaid, the Income-tax Officer, A-Ward, Hissar, has filed Criminal Appeal No. 391-DBA of 1987 in this court.

(2.) WE have heard Shri R. P. Sawhney, Advocate, for the appellant and Shri Ashok Aggarwal, Senior Advocate, with Sarvshri Rajesh Bindal and Ramesh Kumar, Advocates, for the respondents and have perused the relevant material on record very carefully.

(3.) THE facts leading to the prosecution are that the business premises of the accused firm were surveyed under Section 133a of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), on July 10, 1981. During the survey, the inventory of stock of timber wood of the accused firm was prepared. In that survey, the books of account of the assessee were also checked and signed by the Income-tax Officer. In the books of account, the assessee had shown an opening balance of stock as on April 1, 1981, as Rs. 61,450 which was the closing balance of the stock as on March 31, 1981. The valuation of stock as per inventory prepared at the time of survey on July 10, 1981, was found to be Rs. 1,38,970. 51, whereas the stock of the accused No. 1 firm as per its books of account worked out to Rs. 1,05,019. 10 as on July 10, 1981, which was the closing stock as on July 9, 1981. Thus, there was an excess of stock of about Rs. 34,000 on the date of survey in respect of accused No. 1 firm. Statement of Murari Lal accused partner was recorded at the time of survey. It has been alleged that, in his account books, the accused No. 1 firm had shown a profit of Rs. 68,526. 55 in the timber trading account for the accounting year 1980-81 (assessment year 1981-82), but, because of the said survey, the accused in their income-tax return for the assessment year 1981-82 added Rs. 35,000 to the profit in the timber trading account as supplementary profit in addition to Rs. 61,450 as per its accounts as on March 31, 1981, by making the total stock of Rs. 96,450. Had there been no survey the assessee would not have disclosed the aforementioned amount of Rs. 35,000 as profit in the books of account and they mentioned this amount of profit after survey by drawing a separate profit account in the books of account by words "to profit to supplementary to profit and loss account" and in the stock account by words "additional closing stock valuation by profit share from supplementary profit and loss account". Thus, the allegation that the accused had wilfully attempted in the aforementioned manner to evade tax, penalty and interest chargeable or imposable on him by preparing false books of account which were in their possession and control and made false entries in them regarding the stock held by them and wilfully omitted the entry of profit in those books of account with a view to enable the accused/ assessees to avoid tax, etc. , and have thus committed an offence punishable under Section 276c of the Act. Hence this complaint.