Penalties and Prosecutions under the Income-tax Act, 1961

Chapter XXI of the Income-tax Act containing sections 270 to 275 provides for levy of penalties under the Income-tax Act in respect of various defaults committed by an assessee such as, concealment of income, failure to furnish return, failure to provide required information or attend proceedings and failure to comply with provisions regarding deduction of tax at source or certain other requirements under the Act. Similarly, Chapter XXII of the Act containing sections 275A to 280D provides for prosecution for various defaults committed by an assessee under the Income-tax Act relating to filing of return, disclosure of income or failure to deposit tax deducted or collected at source. In this article efforts are being made to discuss the provisions regarding penalties and prosecution in relation to concealment of income and evasion of tax.

Levy of Penalty u/s. 271(1)(c) – up to A.Y. 2016-17

Section 271(1)(c) of the Act has been governing the levy of penalty for concealment of income or for furnishing inaccurate particulars up to A.Y. 2016-17. Thereafter, levy of penalty for concealment of income is being governed by provisions of section 270A read with section 270AA of the Income-tax Act. Section 276C deals with the prosecution in case of evasion of tax. Accordingly, the scope of aforesaid provisions is being discussed hereinafter.

Under section 271(1)(c) of the Income-tax Act, penalty is leviable equal to the amount of tax and it may extend up to 3 times of the tax, in a case where the assessee has concealed the income or has furnished inaccurate particulars. The scope of terms “concealment of income” and “furnishing of inaccurate particulars” have been subject matter of litigation in large number of cases. The important point in this context has been, whether concealment of income or furnishing of inaccurate particulars needs to be intentional or not. In other words, whether there should be mens rea of the assessee in this regard. There has been a long line of judgments of Hon’ble Supreme Court, viz., CIT v. Anwar Ali (1970) 76 ITR 696 (SC); Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC), K.C. Builders v. ACIT (2004) 265 ITR 562 (SC) T. Ashok Pai v. CIT (2007) 292 ITR 11 (SC) and Dilip N. Shroff v. JCIT (2007) 291 ITR 519 (SC)wherein it was held that to levy the penalty conscious concealment of income or furnishing of inaccurate particulars was necessary. In the case of Union of India v. Dharmendra Textile Processors & Ors. (2008) 306 ITR 277 (SC), the Hon’ble Supreme Court had taken a different view and it was held that penalty is a civil liability and, therefore, wilful concealment is not an essential ingredient as it would be in the case of prosecution u/s. 276C of the Income-tax Act. The position, however, was again clarified by the Apex Court in subsequent decisions in the cases of CIT v. Atul Mohan Bindal (2009) 317 ITR 1 (SC) and UOI v. Rajasthan Spinning and Weaving Mills (2009) 238 ELT 3 (SC) that deliberate concealment or furnishing of inaccurate particulars is necessary to levy penalty u/s. 271(1)(c) of the Act. Subsequently, the issue regarding levy of penalty has also been considered by the Supreme Court in the cases of CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) and PriceWaterhouseCoopers (P) Ltd. v. CIT (2012) 348 ITR 306 (SC). In the case of Reliance Petroproducts Pvt. Ltd., the Hon’ble Supreme Court has been pleased to observe to the extent that making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars even if the claim has not been accepted by the Assessing Officer. In the case of PriceWaterhouseCoopers (P) Ltd., the Hon’ble Supreme Court deleted the penalty even in the circumstances when provision for gratuity made in the books of account which was clearly disallowable was not disallowed by the assessee in the return of income though disclosure in this regard had been made in Tax Audit Report. The Hon’ble Supreme Court considered that it was a bona fide and unintentional error. In regard to the matter, reference can also be made to the decision of Hon’ble Supreme Court in the case of MAK Data Pvt. Ltd. v. CIT (2013) 358 ITR 593 (SC) wherein the Hon’ble Supreme Court has held that even if the assessee has surrendered an income during the course of assessment proceedings, it would not absolve the assessee from explaining his conduct.

In regard to the matter there have been large number of decisions of various High Courts considering different circumstances and coming to the conclusion whether penalty is leviable or not for concealment of income or for furnishing inaccurate particulars in the specific facts of the case. Broad principles emerged from the decisions are that no penalty is leviable if the assessee has made due disclosure in respect of facts or there has been bona fide mistake in the return, the issue has been debatable, disallowance has been made on ad hoc basis, income has been charged under different heads, dispute is relating to year of taxability, claim was made based on case law or on the basis of advice of the counsel etc., where it has been shown by the assessee that he had acted in a bona fide manner. Penalty, however, has been held to be leviable where claim has been made against clear provisions of law or the claim has been bogus or the assessee has intentionally concealed the particulars of income or has furnished inaccurate particulars. As an example, reference can be made to following latest decisions of High Courts:

– PCIT v. Dhariwal Industries Ltd. ITA No. 1133 of 2016 (Bom.) decided on 4-9-2018

In the facts of above case the assessee had claimed benefit u/s. 80-IA of the Act and had also considered sales tax incentive as capital receipt and had claimed 100% depreciation on some items based on certain judicial decisions prevailing at the time of making the claim. Particulars were duly disclosed in the return. In the circumstances, the Hon’ble High Court held that it could not be said that assessee had furnished inaccurate particulars or had concealed his income within the meaning of section 271(1)(c) of the Act.

– CIT v. M/s. L&T Finance Ltd. ITA No. 1363 of 2015 decided on 4-6-2018 (Bom.)

The Hon’ble High Court held that merely allegation by the Assessing Officer that there has been concealment of income or furnishing of inaccurate particulars is not sufficient to levy penalty. He should give a finding as to what particulars of income have been concealed or what particulars of income are inaccurate. The words ‘concealment’ or ‘inaccurate particulars of income’ have to be read strictly.

– DIT v. Nomura India Investment Fund Mother Fund (2018) 404 ITR 636 (Bom.)

The assessee did not set-off brought forward long term capital loss in respect of shares against long term capital gains earned during the year which was claimed as exempt u/s. 10(38) of the Act and he had given a note in the return reserving his right to carry forward the loss. The Hon’ble High Court held that provisions of section 271(1)(c) can only be invoked upon satisfaction of the ingredients as laid down in the said section. In the present case the assessee had disclosed in its return the loss sustained by him and had also given a note in the return reserving its right to carry forward the same. The note was given keeping in mind the interpretation of section 10(38) of the Act and the action of the assessee was bona fide.

– Sundaram Finance Ltd. v. ACIT (2018) 403 ITR 407 (Mad.)

The assessee claimed depreciation showing the transaction as of purchase and lease back of equipment whereas it was, in fact, a finance transaction and no asset was in existence. The assessee had withdrawn the claim of depreciation during the course of assessment proceedings. It was held that penalty was leviable as it was an admitted fact that depreciation was claimed on an asset which was not in existence.

– Rajnish Jain v. CIT & Anr. (2018) 402 ITR 12 (All.)

The assessment of the assessee was reopened on the basis of information regarding accommodation entries provided by the broker in the form of purchase and sale of shares resulting in capital gains. The assessee during the course of assessment proceedings surrendered income equal to consideration received on sale of shares subject to non-initiation of penalty proceedings u/s. 271(1)(c) of the Act. The Assessing Officer added the amount and also levied the penalty. Penalty was upheld by the High Court observing that surrender was not relevant and genuineness of the transaction has also been dispelled by lower authorities.

Levy of Penalty u/s. 270A – W.e.f. A.Y. 2017-18

With effect from A.Y. 2017-18, penalty will be leviable with reference to

“Under-reported income” u/s. 270A of the Act. In view of change in the terminology, it is necessary to understand the impact of change in the terminology used in new section. Sub-section (3) provides for determination of quantum of under-reported income in different circumstances such as when the assessee has filed the return or has not filed the return or assessment had earlier been made. In short, the quantum of under-reported income is the difference between the assessed income and the returned income or the income reassessed and the income assessed in earlier order. In a case where the assessee has claimed loss, the difference between the loss claimed and loss assessed will be deemed to be under-reported income.

Sub-section (6) provides that certain amounts included in the taxable income will not be considered to be under-reported income and such amounts are:

(a) the amount of income in respect of which the assessee has offered an explanation to the satisfaction of the Assessing Officer, Commissioner (Appeals), the Commissioner or the Principal Commissioner, as the case may be, that explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered;

(b) the amount of under-reported income has been determined on the basis of estimate by the Assessing Officer on the ground that though the accounts are correct and complete but the income cannot properly be deduced therefrom;   

(c) the amount of under-reported income is determined by making a further addition in the amount of estimated disallowance made by the assessee and the assessee had disclosed all the facts material to the addition or disallowance;

(d) the amount of under-reported income represents the addition on account of adjustment in ALP in respect of international transactions and the assessee had maintained information and documents as prescribed u/s. 92D and had disclosed all the material facts relating to the transactions; and

(e) the amount of undisclosed income is on account of search operation and penalty in respect thereof is leviable u/s. 271AAB.

As per sub-section (7) penalty is leviable equal to 50% of the amount of tax payable on under-reported income.

Sub-section (8) provides that in case under-reported income is in consequence of any mis-reporting thereof by the assessee penalty will be leviable equal to 200% of the amount of tax payable on under-reported income.

Sub-section (9) provides for circumstances when under-reported income shall be deemed to be income as a consequence of misreporting of income and such circumstances are :

(i) Misrepresentation or suppression of facts;

(ii) Non-recording of investments in books of account;

(iii) Claiming of expenditure not substantiated by any evidence;

(iv) Recording of false entry in books of account;

(v) Failure to record any receipt in books of account having a bearing on total income;

(vi) Failure to report any international transaction or deemed international transaction or any specified domestic transaction to which Chapter X applies.

Section 270AA has also been inserted along with section 270A in the Act. This section provides for immunity to be granted by the Assessing Officer to an assessee from imposing of penalty u/s. 270A and also from initiation of prosecution proceedings u/s. 276C or 276CC of the Act in case the assessee makes payment of tax as well as of interest as per order of assessment within the period specified in the notice of demand and no appeal is filed against the assessment order.

Analysis of provisions of sections 270A and 270AA of the Act

Though provisions of sections 270A and 270AA have been inserted in the Act, as stated in the memorandum, with the intention to rationalise and provide objectivity, certainty and clarity in penalty provisions, it appears ongoing through the provisions that same will not serve the intended purpose. In this regard, it may be stated that:

1. Under the old provisions of section 271(1)(c) of the Act the quantum of income concealed or the income for which inaccurate particulars were furnished was to be decided on the basis of satisfaction of the Assessing Officer subject to explanation as is given by the assessee and disclosure made in the return in regard to the same. The aforesaid provisions have been subject-matter of substantial litigation. As per sub-section (3) the quantum of under-reported income is required to be determined straightaway on the basis of difference between the returned income and the assessed income. Same, however, is subject to provisions of sub-section (6) which provides for circumstances when the amount will not be considered to be under-reported income. Each of the circumstances provides for satisfaction of the Assessing Officer as regards the bona fideand disclosure of material facts by the assessee. Hence, new provisions cannot be said to be simplified and certain. Same litigation will continue.

2. Sub-section (9) provides for circumstances when under-reported income shall be deemed to be income as a consequence of misreporting of income. Such circumstances are like misrepresentation, suppression of facts, non-recording of entries, claim of expenditure not substantiated by evidence, recording of false entries, etc. These circumstances cannot be said to be such circumstances, in respect of which there will be no litigation. In fact, the term ‘misrepresentation’ will have same meaning as furnishing of inaccurate particulars and ‘suppression of facts’ will have same meaning as ‘concealment’. Accordingly, the scope of litigation appears to be same as it has 
   been earlier and may be even more than that.

3. On the basis of reading of provisions of section 270A of the Act, it appears that the amount will not be in the nature of under-reported income in case the Assessing Officer is satisfied as regards explanation of the assessee. In case the Assessing Officer is not satisfied, he is likely to allege that under-reported income is as a consequence of misrepresentation, suppression or false recording of transaction. Hence, there will be no income as such in the nature of under-reported income liable for penalty at the rate of 50% of tax.

4. In terms of section 270AA of the Act one gets the impression that in case the assessee makes payment of tax and interest within the time period provided in the notice of demand, the Assessing Officer will grant immunity and no penalty will be leviable. The aforesaid section, however, further provides that immunity will not be available in the circumstances when under-reported is as a consequence of mis-reporting of income. The Assessing Officer in most of the cases will allege that under-reported income is as a consequence of mis-reporting of income. Therefore, immunity will not be available to the assessee and he has to litigate the matter as regards merits of the disallowance and also levy the penalty.

In view of above, it can be said that litigation will continue even under the new provisions inserted in the Act.

Prosecution Provisions for Evasion of Tax

Section 276C of the Act provides that if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable or under-reports his income, he shall, without prejudice to any penalty that may be imposable on him under other provisions of the Act, be punishable:

(i) In a case where amount sought to be evaded or tax on under-reported income exceeds ₹ 25 lakh, with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine;

(ii) In any other case with rigorous imprisonment for a term which is not less than 3 months but which may extend to 2 years and with fine.

The Explanation to section 276C specifies the scope of the term “wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act” and provides that it will include the case where any person:-

(i) has in his possession or control books or other documents containing false entry; or

(ii) makes or causes to be made any false entry in the books or documents; or

(iii) wilfully omits or causes to be omitted any relevant entry; or

(iv) causes any other circumstances which will have the effect of enabling such person to evade any tax, penalty or interest.

As a matter of principle a person is liable for prosecution for an offence only when he has committed an offence with conscious mind and with mala fide intention. In other words, there should be mens rea in committing the offence.

Section 278E of the Act, however, provides that in any prosecution for an offence under the 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. The section further provides “culpable mental state” includes intention, motive or knowledge of a fact or belief in, or reason to believe a fact. Sub-section (2) further provides that for the purpose of this section, fact is said to be proved only when the court believes it to exceed beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.

The scope of section 278E of the Act came up for discussion before the Hon’ble Supreme Court in the case of Prakash Nath Khanna v. CIT (2004) 266 ITR 1 (SC) in the context of prosecution proceedings u/s. 276CC of the Act which was for the failure to file return of income. The Hon’ble Court observed that in terms of section 278E the court has to presume the existence of culpable mental state. Absence of such mental state can be pleaded by the accused as a defence. The aspect whether the accused has been able to prove absence of such mental state will depend upon the facts of the case. In the case of Selvi J. Jayalalithaa v. ACIT (2007) 290 ITR 55 (Mad.) wherein the Constitutional validity of the provisions of section 278E were also challenged. The Hon’ble Court held that provisions of section 278E were not violative of Articles 14, 20 and 21 of the Constitution merely for the reason that section presumes the culpable mental state of the assessee.

In this regard, reference can also be made to the provisions of section 277 of the Act which provides for prosecution in a case where a person makes a statement in any verification under the Act or delivers account or statement which is false or which he knows or believes to be false or does not believe to be true. As per above, section also provides for rigorous imprisonment of not less than 6 months which may extend to 7 years and also with fine, in case the amount of tax which would have been evaded exceeds ₹ 25 lakh and of not less than 3 months, which may extend to 2 years and with fine in other cases. Reference can also be made in this regard to section 279 of the Act which provides that prosecution proceedings shall be launched only with the previous sanction of the Pr. Commissioner or Commissioner or Commissioner (Appeals) or the appropriate authority. Sub-section (2) further provides that an offence can also be compounded by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General either before or after the institution of proceedings. In this regard, CBDT has issued guidelines from time-to-time for compounding of offence on payment of compounding fee and other charges.

Section 278B provides that in case of a company, firm or AOP/BOI every person in charge and responsible for the conduct of business shall be deemed to be guilty of the offence. Company shall be punished with fine and other person with punishment as per provisions of the Act. Further, Section 278C provides that in case of HUF, Karta and also any other member, with whose consent and connivance default has been committed, shall be deemed to be guilty.

With a view to elaborate and understand the scope of above provisions of Income-tax Act, broad legal propositions are being discussed hereunder with reference to relevant case law.

Person with whose consent and connivance default has been committed

In the case of Om Prakash Katyal and Ors. v. Union of India (2009) 310 ITR 174 (Patna), it was held that the Director or person who was not involved in day-to-day activities and was not responsible for the act, could not be prosecuted. In the case of Sri Kumarasagaran Chinniah v. ITO, Cr. Petition No. 6577 of 2015 decided on 
1-10-2015 by Karnataka High Court, it was held that since the petitioner was non-executive director and was not involved in day-to-day activities, he could not be prosecuted. In the case of Union of India v. Nalinidevi and Anr. (2008) 304 ITR 382 (MP) also the High Court held that the partner who was not playing active role in the business of the firm could not be considered liable for prosecution.

Law as on date of default is applicable

In the case of Punjab Business and Supply Co. Pvt. Limited and Anr. v. ITO and Anr. (1991) 188 ITR 550 (P&H), it was held that law as on date of default is applicable.

Sanction for launching of prosecution

It was held by Hon’ble Supreme Court in the case of Mansukhlal Vithaldas Chauhan v. State of Gujarat (1997) 7 SCC 622 (SC) that:

(i) The order of sanction must ex facie disclose that the sanctioning authority had considered the evidence and other material placed before it.

(ii) The sanctioning authority has to apply its own independent mind.

(iii) Discretion should be shown to have not been effected by any extraneous consideration.

(iv) Sanction is a weapon to ensure discouragement of frivolous and vexatious prosecutions and is a safeguard for the innocent but not a shield for the guilty.

It has also been held by the Supreme Court in the case of ACIT v. Velliappa Textiles Ltd. (2003) 263 ITR 550 (SC) that Act does not provide that the Commissioner has to necessarily afford an opportunity to be heard before deciding to initiate proceedings and absence of an opportunity to be heard will not make the order of sanction void or illegal. The Hon’ble Supreme Court has also held in the case of Superintendent of Police (CBI) v. Deepak Chowdhary and Ors. AIR 1996 SC 186 that grant of sanction is an administrative function and, therefore, it does not require an opportunity of hearing should be given to the accused before granting the sanction.

In the case of Krishnaswami Vidhyakumar v. PCIT (2018) 404 ITR 442 (Mad.) sanction was given by Pr. DIT, who was not included at the relevant time in the Authorities who were empowered to grant sanction and therefore, it was held that he could not grant the sanction.

Circumstances in which Commissioner cannot grant sanction

As per Section 279(1A) sanction for prosecution will not be granted by Commissioner in a case where penalty imposed or leviable on the assessee u/s. 270A or 271(1)(iii) of the Act has been reduced or waived by an order u/s. 273A.

Prosecution will not be sanctioned against a person who has attained the age of 70 years in view of Circular of CBDT dated 7-2-1991. It has been held in the case of Pradip Burman v. ITO (2016) 382 ITR 418 (Del.) that in the facts of that case the petitioner had not reached the age of 70 years at the time of committing the offence and, therefore, prosecution proceedings could be initiated.

Whether proceedings can be launched even before completion of assessment proceedings

It has been held by the Supreme Court in the case of P. Jayappan v. ITO (1984) 149 ITR 696 (SC) that assessment proceedings and criminal proceedings are independent proceedings. Accordingly, criminal proceedings can be launched even before completion of assessment proceedings. In that case reassessment proceedings were pending at the time of institution of criminal proceedings. It was observed by the Hon’ble Court that the Court will, however, have the discretion to postpone or drop the proceedings if in its view disposal of any proceedings under the Income-tax Act which have bearing on the proceedings before it is imminent.

Relevance of findings in appeal on merits in criminal proceedings

In the case of Uttam Chand v. ITO (1982) 133 ITR 909 (SC), the Hon’ble Supreme Court held that once the Tribunal has held in the facts of the case that the firm was a genuine firm prosecution proceedings could not be launched on the basis that the firm was not genuine. Similarly, in the case of Yogendra Prasad and Others v. State of Bihar and Ors. (2009) 309 ITR 28 (Patna), it was held that once the liability determined on assessment was set aside by the Tribunal, prosecution proceedings for non-payment of tax could not be sustained. Similarly, in the case of G. L. Didwania v. ITO (1997) 224 ITR 687 (SC), it was held that if the allegation against the assessee that he has made false statement in the return has been set aside by the Tribunal, criminal proceedings on that ground cannot be sustained. Similarly, in the case of K. C. Builders v. ACIT (2004) 265 ITR 562 (SC), it was held that if the addition made in the assessment order is deleted, penalty cannot stand and subsequently prosecution for evasion of tax cannot be proceeded with. Allahabad High Court in the case of Kohli Brothers Colour Lab (P) Ltd. v. UOI vide its judgment dated  20-7-2017 in Petition No. 2480 of 2006 held that once the penalty imposed has been set aside by the Tribunal, criminal proceedings does not survive. To the same effect are the decisions in following cases.

• M/s. Raj Bricks Field and Ors. v. ITO, CRR No. 440 of 2002 decided on 5-2-2002 (P&H).

• ITO v. Nandlal and Co. & Vishram & Ajayprakash & Veer Radios (2012) 341 ITR 646 (Bom.).

• M/s. Prem Tailor and Anr. v. ITO, Crl. Misc. No. M-22921 of 2011 (O&M) decided on 27-8-2012 (P&H).

• Ashok Kumar Jhunjhunwala v. State of Bihar (2009) 310 ITR 160 (Patna).

• Harkawat and Company v. Union of India (2010) 328 ITR 624 (MP).

• Shashi Chand Jain v. UOI (1995) 213 ITR 184 (Bom.).

• CIT v. Nayan Builders and Developers (2014) 368 ITR 722 (Bom.).

• CIT v. Dr. Harsha N. Biliangady (2015) 379 ITR 529 (Karn.).

• Smt. Malti Mishra v. State of Uttar Pradesh and Anr. (2018) 401 ITR 327 (All.).

In regard to the matter, reference can also be made to the decision of Hon’ble Supreme Court in the case of Radheshyam Kejriwal v. State of West Bengal (2011) 333 ITR 58 (SC) wherein it has been held that when a person has been exonerated on merits, criminal proceedings on the same facts and circumstances cannot be allowed. In the case of Vijay Kumar Mallik v. CIT (2017) 397 ITR 130 (Patna), the assessee had claimed that criminal proceedings could not be proceeded with against him since SLP filed by him before the Supreme Court is pending. The Hon’ble Court held that all the lower authorities had decided against him on merits including the High Court and pendency of SLP does not mean that he has been exonerated.

Prosecution proceedings on the basis of abatement

It has been held in the case of Navarathna & Co. v. State (1987) 168 ITR 788 (Mad.) that merely preparing return and statement on the basis of the accounts placed before the Chartered Accountant would not mean that there has been abatement or conspiracy. Therefore, proceedings cannot be launched against the Chartered Accountant.

Power of the Court to reduce punishment

The issue had come up before the Supreme Court in the case of State of Maharashtra v. Jugamander Lal, AIR 1966 SC 940, whether the Court can reduce the punishment in case the section is specifically providing the same. The Court held that using the expression “shall be punishable” the legislature has made it clear that offender shall not escape the punishment. Accordingly, the Court cannot reduce or do away with the punishment provided under the law. In the case of Modi Industries Ltd. v. B.C. Goel (1983) 144 ITR 496 (All.) also the Hon’ble Court held that Court has no power to reduce the punishment prescribed by the statute. In the case of Satwant Singh Mehta v. ITO 2017 397 ITR 45 (P&H), the facts were that the assessee was convicted and sentenced to undergo rigorous imprisonment for a period of two years in the case filed for one assessment year. The assessee was also convicted in the case filed for another assessment year and both the sentences were ordered to run concurrently. In these circumstances, the Hon’ble High Court reduced the sentence in the second case by the period for which he had already undergone the sentence.

If two views are possible as regards prosecution on the basis of evidence and material, prosecution is not warranted.

It has been held in the case of K. Prakashan v. P. K. Surenderan (2008) (1) SCC 258 that in case the lower Court has acquitted the person on the basis of evidence, Appellate Court will not reverse a judgment of acquittal only because the another view is possible on the basis of same evidence. Similarly in the case of UOI v. Bhupendra Singh (2009) 318 ITR 270 (MP), the High Court held that Appellate Court could not reverse the order of acquittal if the same is based on evidence on record and the view taken is a possible and reasonable view.

In conclusion, it is stated that subject of penalty and prosecution even in relation to concealment of income and evasion of tax is very vast and has multiple issues involved therein. Only main issues concerning therewith have been discussed herein.

[Source : Paper printed in Paper Book of National Tax Conference, Thane, held on 6th & 7th October, 2018]