Law:

Section:

Section 276C read with section 278B, of the Income-tax Act, 1961 - Offences and prosecutions - Wilful attempt to evade tax - Assessment year 1977-78 - Discrepancies were found between income originally returned by assessee-firm on which assessment order was passed and secret account books found during survey - Managing partner of assessee-firm had signed return and books of account were seized from house of accountant- Court found that offences under sections 276C and 277 read with section 278B were committed by Firm - But, as Firm could not be given corporal punishment, it was acquitted and managing partner and accountant were sentenced to pay fine and also to undergo imprisonment till rising of court - Whether prosecution of managing partner and accountant was valid - Held, yes - Whether it was a fit case for imposition of higher punishment - Held, on facts, no FACTS The assessee-firm filed its original return disclosing an income of Rs. 1,14,970. Its profit and loss accounts and computation of income were signed by the managing partner based on the profit and loss account and computation of income. The ITO completed the assessment and computed the total income at Rs. 3,61,920 and passed assessment order on 30-11-1981. Subsequently, there was a survey of the premises of the firm and the residence of its managing partner and its accountant. The ITO impounded day books, ledgers and other account books. Discrepancies were found between the income originally submitted by the firm on the basis of which the assessment order was passed and the secret account books found during the survey. In response to a notice under section 148 the assessee filed a revised return showing an income of Rs. 4,01,050. The ITO examined the entries in the first set of books of account and also the secret set of accounts that were impounded and found suppression in purchases, sales, gross profit and net profit. He computed the assessment and initiated penalty proceedings against the firm. As many as eleven charges were framed against the firm, managing partner and accountant, on different counts under Indian Penal Code, 1860 as well as under the Income-tax Act. The Special Judge for…

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