SHANKAR BHANDAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS application is directed against the impugned order dated March 26, 1983, by which cognizance has been taken, of the offences under Sections 276C and 277 of the Income-tax Act and Section 420 of the Indian Penal Code against the petitioners.

(2.) THE prosecution has been initiated on a complaint filed by the Income-tax Officer, Biharsharif. In the petition of complaint it has been mentioned that M/s. Shankar Bhandar, Nawadah, petitioner No. 2, was a dealer in foodgrains. THE firm for the assessment year 1972-73 had filed a return at Biharsharif Income-tax Office on November 24, 1977, on a total income of Rs. 4,447 and the original assessment was completed on a total income of Rs. 1,09,163 against a returned income of Rs. 4,447. THE above assessment was set aside by the Appellate Assistant Commissioner, vide his order dated August 25, 1976. THE accused persons thereafter filed a revised return on February 22, 1979, and in that revised return the sales and purchases of cement, wheat, moong dal, etc., had been enhanced. This return had been filed at the instance of the Department when a search and seizure had been conducted by the Commercial Taxes Department. THE Commercial Taxes Department had found that many of the transactions were not recorded in the books of account of the accused persons. THE seizure made by the Commercial Taxes Department indicated that the accused persons had not made correct statements regarding the purchases of potatoes mustard oil, groundnut, chillies, rice, maize, etc., and the stock found at the premises of the accused persons completely differed from the stock shown in the stock register. Further, it appears that the Commercial Taxes Department had also seized a Takada Bahi and loose sheets and they had been returned to the petitioners. THE Income-tax Officer had demanded the Takada Bahi and the loose sheets from the accused persons but they had not been produced on the plea that they had been lost. It appears that the Income-tax Department, on the basis of the documents seized by the Sales Tax Department, fixed the turnover at Rs. 3,62,571 and the assessment made was on an income of Rs. 86,870. Thus the Income-tax Department had enhanced the gross profit rate and also made addition under the head undisclosed income on account of undisclosed investment and undisclosed sales. THErefore, it indicated that the accused persons had not filed correct returns at all and further this conduct indicated that the accused persons had tried to evade taxes. On the basis of this complaint, the impugned order of cognizance has been passed.