Law:

Section:

Section 276C of the Income-tax Act, 1961, read with section 378 of the Code of Criminal Procedure, 1973 - Offences and prosecution - Wilful attempt to evade tax, etc. - Assessment year 1986-87 - While trial court found that charges had been proved, appellate court, after examination of evidence held that evidence on record did not prove charge of wilful evasion of tax or preparation of false accounts; that orders passed were not in presence of accused and order of penalty was passed without any notice to firm or its partners - Whether since nothing was pointed out to show that findings recorded by lower court were not in consonance with evidence, petition filed by revenue under section 378 was liable to be dismissed in limine - Held, yes FACTS While finalising assessment of the respondent-company, deduction claimed towards depreciation and maintenance of car was disallowed and certain other additions were made. Penalty was levied under section 271(1)(c) and complaints under section 276C/277, read with section 278B were filed against the company and its partners. While the trial court convicted the accused, the appellate court acquitted them. The revenue thereupon filed instant petition under section 378(4) of the Code of Criminal Procedure, 1973, for leave to file appeal. On petitions : HELD The appellate court after examination of the evidence had found that the charge of wilful evasion of tax or preparation of false accounts was not proved. It had been, inter alia, observed that the authorities had placed reliance on the statement of 'S'. He was not a partner of the firm. He had nowhere agreed to surrender the amount of purchase of car, depreciation or salary of the driver. The statement of 'S' was conditional. It was specifically said that he was making the surrender subject to no penal action. This statement, the Court had held, could not be used as an admission of the assessee in the proceedings for prosecution. Still further, it was also held that the admission made by one person could not form the basis of conviction of another person. It was further held that the evidence on record did not prove the charge. The orders passed by the authorities were not…

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