Section 277 Conviction Upheld for False Tax Refund Claim Using Forged Documents: Jharkhand HC

Sashi Bhusan Prasad Bhuian @ Shashi Bhusan Prasad Bhuia Vs State of Jharkhand & Anr. (Jharkhand High Court)

The Jharkhand High Court dismissed a criminal revision petition challenging the conviction and sentence imposed under Section 277 of the Income Tax Act for making a false statement in an income tax return. The petitioner had challenged the appellate judgment affirming the conviction recorded by the Special Judge (Economic Offences), Dhanbad, who had sentenced him to one year’s rigorous imprisonment and a fine of ₹5,000.

The petitioner, an employee of Eastern Coalfields Limited and an income tax assessee, filed his return for Assessment Year 2003-04 declaring an annual income of ₹1,72,055 and claimed a refund of ₹35,875 on the basis of a TDS certificate and exemption relating to a housing loan. During enquiry, the Income Tax Department found that the TDS certificate had not been issued by the employer and no housing loan had been sanctioned by any bank in the petitioner’s favour. A show cause notice was issued, to which the petitioner replied that he was not well educated and that an office clerk had filed the return without his instructions, although he had never intended to claim any refund.

Following the enquiry, a complaint was filed under Section 277 of the Income Tax Act. During trial, the prosecution examined six witnesses and produced documentary evidence, including the sanction order, complaint, original return, computation of income, TDS documents, correspondence from Eastern Coalfields Limited, the show cause notice and reply, and the Bank of India communication. The defence did not adduce any oral or documentary evidence and denied the allegations, contending that no mens rea had been established.

The petitioner argued before the High Court that his reply to the show cause notice had not been properly examined and that the complainant admitted no enquiry had been conducted on that reply. The State and the complainant opposed the revision, contending that illiteracy or reliance on another person to file the return did not absolve the petitioner from liability. They submitted that the petitioner had consciously claimed a refund on the basis of a non-existent housing loan and false documents, attracting Section 277.

The High Court examined the concurrent findings of the trial court and the appellate court. It noted the testimony of the Income Tax Officer, who stated that the petitioner had claimed the refund using documents found to be forged after enquiry, including verification by the Senior Accounts Officer. The Court also relied on the evidence of the Branch Manager of Bank of India, who confirmed that the housing loan account mentioned by the petitioner did not exist and proved the corresponding communication issued by the bank.

Referring to Sections 277 and 278E of the Income Tax Act, the High Court observed that Section 278E provides a statutory presumption regarding the existence of a culpable mental state, subject to the accused proving otherwise. The Court found that the petitioner had furnished no valid explanation for claiming the refund on the basis of forged documents and had failed to rebut the statutory presumption or displace the prosecution evidence.

Holding that the trial court had passed a reasoned judgment, duly affirmed by the appellate court, the High Court found no legal ground to interfere with the concurrent findings of guilt. Accordingly, the criminal revision was dismissed, the petitioner’s bail bond was cancelled, and he was directed to surrender before the trial court within two months to undergo the remaining sentence, failing which coercive steps were directed to be taken for execution of the sentence.

FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT

Heard learned counsel for the petitioner and learned A.P.P. appearing for the State as well as learned counsel for the opposite party no. 2.

2. The instant criminal revision is directed against the judgment dated 26.11.2016 passed by learned Additional Sessions Judge-II, Dhanbad in Criminal Appeal No. 282 of 2013, whereby the appeal preferred by the present petitioner has been dismissed and the judgment of conviction and sentence of the petitioner dated 16.08.2013 passed by learned Special Judge (Economic Offences), Dhanbad in C.O. Case No. 42/2004 holding the petitioner guilty for the offence under Section 277 of the Income Tax Act and directing him to undergo R.I. for one year along with fine of Rs. 5,000/- with default stipulation, has been upheld and confirmed.

3. Factual matrix giving rise to this revision is that the petitioner Shashi Bhusan Bhuian was permanent employee of Mugma Area Eastern Coalfield Limited, a subsidiary of Coal India Limited and he is also a Tax assesse and required to file Form-16 Income Tax Return, he filed the same on 28.07.2003 for assessment Year 2003-04 showing his annual Income to be Rs.1,72,055/- with T.D.S. Certificate purported to be issued by Employer and he claimed for refund of Rs. 35,875/- as excess deduction of tax as an exemption on account of Housing Loan. It appears that in course of enquiry, it was found that T.D.S. Certificate has not been issued by Mugma Colliery and no housing loan was sanctioned by any Bank in favour of the petitioner. Therefore, a notice was issued to the petitioner and the petitioner submitted his reply that since he is not an educated person and requested to office clerk Sri Satyaban Roy for filing the Income Tax Return and without his instruction, the said return was submitted, although he has not claimed any refund.

4. Accordingly, a complaint was lodged under Section 277 of the Income Tax Act against the petitioner. He denied the accusation and claimed to be tried.

5. In course of trial, altogether 06 witnesses were examined by the complainant. Apart from oral evidence, following documentary evidence has been adduced by the prosecution:-

6. However, no oral or documentary evidence has been adduced by the defence. The case of defence is denial from occurrence and false implication and no mens rea or intention for committing such crime has been proved by the prosecution.

7. The learned trial court, after taking into consideration the oral as well as documentary evidence available on record, recorded the specific findings about guilt of the petitioner for the offence under Section 277 of the Income Tax Act and convicted and sentenced him accordingly, as stated above.

8. Assailing the impugned judgment, Cr. Appeal No. 282/2013 preferred by the petitioner against the impugned judgment passed by the learned Special Judge (Economic Offences), which has also been dismissed after re-assessing the evidence available on record.

9. Learned counsel for the petitioner has submitted that no offence under Section 277 of the Income Tax Act is attracted against the petitioner as per reply to show cause (Exhibit-5/1).

10. It is further submitted that P.W.-4, Chandra Prakash Bhatia, the complainant himself has categorically submitted that on the show cause reply submitted by the petitioner, he has conducted no enquiry. Therefore, both trial court as well as appellate court has committed serious error of law in arriving at right conclusion. As such, the conviction and sentence of the petitioner is liable to be set aside and this revision may be allowed.

11. On the other hand, learned A.P.P. as well as learned counsel for the opposite party no. 2 has controverted the aforesaid contentions raised on behalf of the petitioner and has submitted that none of the grounds taken by the petitioner is legally tenable. Illiteracy or being rustic villager for the purpose of disclosure in the Income Tax Return is no concern or any excuse. The petitioner has specifically claimed deductions and refund of Rs. 35,875/- due to housing loan, but on enquiry, it was found that he has taken no housing loan at all. Therefore, he has willingly and deliberately filed false statement for claiming refund, which comes within the ambit of Section 277 of the Income Tax Act. There are concurrent findings about the guilt of the appellant / petitioner and there is no valid reason to interfere with the concurrent findings of the trial court as well as appellate court. This revision has no merits and fit to be dismissed.

12. I have gone through the judgment passed by the learned trial court as well as learned appellate court. It appears that P.W.-4 Chandra Prakash Bhatia, the complainant has clearly stated that he was posted as Income Tax Officer at Dhanbad in financial year 2002-03 and the present petitioner filed return for the assessment year 2003-04 claiming refund of Rs. 35,875/-. He filed TDS Certificate Form-16 of Eastern Coalfield Ltd. account of Bank of India, on the enquiry, it was found that document filed by the appellant / petitioner was forged and enquiry was conducted by Sr. Accounts Officer. The Bank of India has also replied that there was no housing loan in the name of accused and a show cause was issued against the petitioner, but no satisfactory reply was given, although he admits the signature on his reply.

13. Similarly, P.W.-6 Sudhir Kumar Ganguli, the then Branch Manager of Bank of India has deposed that pursuant to the letter issued from the Department of Income Tax, he had conducted an enquiry relating to housing loan account of Sashi Bhushan Bhuian and during that course, it was found that housing loan Account No. 1230 does not exit, in his Branch. This witness has proved the letter issued under his signature marked as Exhibit-7. From the impugned judgment, it is crystal clear that present petitioner has claimed on the basis of forged document, a refund of Rs. 35,875/- for which no valid explanation or reasons has been furnished by him.

14. At this juncture, the relevant provisions i.e. Section 277 and 278E of the Income Tax Act are extracted herein:-

277. [False statement in verification, etc. [ Substituted by Act 41 of 1975, Section 70, for Section 277 (w.e.f. 1.10.1975).]

– If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable,-

(i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.]

278E. [ Presumption as to culpable mental state. [Inserted by Act 46 of 1986, Section 29 (w.e.f. 10.9.1986).]

(1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

Explanation. – In this sub-section, “culpable mental state” includes intention, motive or knowledge of a fact, or belief in, or reason to believe, a fact.

(2) For the purposes of this section, a fact is said to be proved only when the Court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.]

15. It appears that the learned trial court has passed a reasoned order, which has been upheld by the learned appellate court. Therefore, I do not find any valid reasons for interfering in the impugned judgment and no legal substance in the point of argument raised by the petitioner.

16. Accordingly, this revision is dismissed.

17. The petitioner is on bail. His bail bond is hereby cancelled.

18. The petitioner is directed to surrender before the concerned Trial Court within two months from the date of this judgment and receive the remaining sentence awarded by the learned Trial Court and undergo the remaining period of imprisonment, failing which, the learned Trial Court shall take all coercive steps in securing the attendance of the petitioner and sending him under proper conviction warrant to jail custody for undergoing the remaining period of sentence awarded to him.

19. Pending I.A., if any stands disposed of.

20. Let a copy of this judgment along with trial court record be sent to the concerned court for information and needful.