Law:

Section:

Section 276C of the Income-tax Act, 1961 - Offence and prosecution - Willful attempt to evade tax, etc. Where petitioner was actively connected with business of firm and was responsible for maintaining accounts and conduct of business of firm and, it was found by Courts below that discrepancy in stock was not properly explained, prosecution of petitioner was justified [In favour of revenue] The accused-petitioner, along with his partners, dealt in the sale and purchase of wholesale cloth. On 10-8-1981, the stock and account books of the firm were checked and a physical verification of the stocks found there was made. A show-cause notice was issued to the accused to explain the difference between the actual stock and the stock as per books. The reply given by the accused was found to be unsatisfactory. The accused, thus, was held to have evaded payment of tax, penalty or interest that could have been charged or imposed under the Act. Accordingly, the accused was prosecuted. Held that, the reply to the show-cause notice was sent to the Income-tax Officer by the petitioner under his signature on behalf of the firm. In the reply, the petitioner took the stand that all the purchases and sales made were duly vouched and that there was no discrepancy. He did not take the stand that he was not responsible for the conduct of the business affairs of the petitioner-firm. Both the Courts below found sufficient evidence to hold that the petitioner was actively connected with the business of the petitioner-firm and was responsible for maintaining the accounts and conduct of the business of the firm. The accused had been operating capital outside the books of account and thereby evading the payment of tax etc. imposable under the Act. The accused did not show the true stock in the stock books which enabled the accused to evade payment of tax legally bound to be paid. The petitioner-accused, thus, by wilfully attempting to evade tax, penalty or interest chargeable, committed the offence punishable under section 276C and his prosecution was to be upheld. Kapil Aggarwal for the Petitioner. Pardeep Virk and Yogesh Putney for the Respondents. JUDGMENT Mohinder Pal, J.-This…

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