Law: Income Tax Act, 1961

Section: 276

Income-tax-----Offences and prosecution---Concealment of income---Condition precedent for prosecution---Existence of mens rea---Bona fide mistake which would be discovered subsequently---Prosecution cannot be launched---Reimbursement of loss by insurance company not reflected in return---Reimbursement made after the end of the accounting year---Fact which could be discovered subsequently--¬Prosecution not valid---Indian Income-tax Act, 1961, S. 276-C. JUDGMENT These Special Criminal Applications filed under Article 226 of the Constitution of India seek to quash the complaints which have been filed against the petitioners who are the assessees. Petitioner No. 1 is a company of which the remaining petitioners are the directors. In the accounting year ending June 30, 1979, the petitioner-company sustained a loss on account of some fire having taken place in the company's premises. The said loss was reimbursed by the insurance company and in the return that was filed on June 30, 1980, this particular reimbursement made by the insurance company was not reflected with the result that "lie income-tax Officer, while making the assessment, found that there was an attempt to conceal income and reap an advantage by claiming deduction. Therefore, proceedings were started under section 276 of the Income-tax Act as well as also under the provisions of the Indian Penal Code. The petitioners being aggrieved by the same have preferred the present applications for quashing the complaints. Lengthy arguments were advanced by senior counsel appearing for the rival sides but it appears that what would be punishable under section 276-C of the Income-tax Act would be dishonest intention or a mala fide intention and there should be mens rea for committing a particular crime before an assessee can be prosecuted. All bona fide mistakes made by an assessee while filling in the Income-tax return forms would not necessarily amount to an intention to commit a crime and if section 276-C were to be used for penalising every delinquent assessee on that score, it would wrack havoc. What is to be found by the Court is as to whether the assessee wanted to defraud the Revenue. Thus, from that…

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