Law:

Section:

Section 276C/277 of the Income-tax Act, 1961 - Offence and prosecution - Willful attempt to evade tax, etc. - Assessment year 1965-66 - Assessee declared in return loss from a branch - On scrutinising books produced, AAC found that assessee had income from that branch - Accordingly assessed income was enhanced and penalty under section 271(1)(c) was also levied - Thereafter, complaint under section 277 was filed in connection with same matter - Assessee contended that figures from branch office were supplied by a clerk at that branch on basis of which return was prepared and signed in routine manner - Clerk was produced who corroborated said fact - Whether, on facts, it was merely a case of negligence on part of assessee and, therefore, after a penalty was imposed, assessee's, further prosecution was not called for - Held, yes FACTS In his return of income, the assessee had indicated a net loss in respect of a particular branch. The assessee had also verified the aforesaid return as required under the law. The ITO passed assessment order on that basis. On appeal, the books of account produced were scanned by the AAC and he found that a net profit was shown therein instead of loss. Accordingly, the AAC enhanced the income. The assessee readily admitted his mistake and stated that he had no objection to the aforesaid enhancement. The AAC also imposed a penalty under section 271(1)(c). Thereafter complaint under section 277 was filed for his prosecution in connection with the same matter. In the course of prosecution proceedings, he admitted having produced the same books of accounts, before the AAC as before the ITO and stated that the figures of the said branch had been supplied to him by his clerk working at that branch. The assessee also produced the employee in defence who corroborated the above assertions. The trial court acquitted the assessee of the charge leveled against him. On appeal : HELD Section 277 says that if a person makes a statement in any verification under the Act, or delivers an account or statement which is false, he may be punished with the penalties as prescribed in the said section. However, the section contains some crucial words in…

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