JUDGMENT

Rengasamy, J.

1. This revision is directed against the conviction and sentence imposed by the learned Sessions Judge, Madras, in C. A. No. 103 of 1991 against the order of conviction imposed by the learned Addl. Chief Metropolitan Magistrate (E. O. I.), Madras, in E. O. C. C. No. 268 of 1989 for the offence under s. 277 of the IT Act, 1961 and ss. 192, 193, 196 and 420 r/w s. 511 of the IPC, 1860.

2. The revision petitioner, who is an IT assessee, is owning a Flat No. 15, Baliah Avenue, Madras, using it for his own occupation. He was also owning a vacant land in Giriyappa Road, Madras. He was showing the notional rental income from the self-occupied house property in his IT returns exhibits P-3 and P-4 filed for 1982-83 and 1983-84. In 1984-85, he sold his vacant site in Giriyappa Road for Rs. 4,21,818 and he was claiming exemption from the capital gains on the sale price of that property on the ground that he wanted to invest the sale price in purchasing a residential house. Exhibit P-7 is the undertaking letter given by him for investment in the house property. He also filed IT return exhibit P-2 for 1984-85 on 30th April, 1984, but he did not mention the notional rental income for his self-occupied property in Baliah Avenue. When the assessee owns another housing property other than the property for which exemption is claimed, he is not entitled to the benefit under s. 54F of the IT Act to claim exemption for the capital gain. But, in this case, as the revision petitioner owned the housing site in Giriyappa Road and a residential flat in Baliah Avenue, he was not entitled to claim exemption. However, he claimed exemption under exhibit P-7. The ITO who perused his IT returns for the previous year had found that though for 1982-83 and 1983-84, the petitioner had mentioned the notional rental income from the self occupied property, he deliberately omitted to mention the notional rental income for the self-occupied flat, namely, No. 15, Baliah Avenue, in exhibit P-2 return filed for 1984-85 deliberately to conceal the ownership of more than one housing property. Therefore, the income-tax officials initiated penalty proceedings against him under s. 271(1)(c) of the IT Act for wilful omission of the rental income and also criminal proceedings under ss. 276C(1), 277 of the IT Act and also under ss. 181, 182, 193, 196 and 420 r/w s. 511 of the IPC, 1860.

3. In the penalty proceeding taken under s. 271(1)(c) of the IT Act, 1961, though the CIT ordered the penalty of Rs. 88,102 as seen from exhibits P-10 and P-11, the Tribunal cancelled his penalty proceedings. Exhibit D-7 is the order of the Tribunal setting aside the penalty imposed on the revision petitioner. However, in the criminal proceedings before the learned Addl. Chief Metropolitan Magistrate (E. O. I.), he was found guilty of all the offences and was convicted to undergo rigorous imprisonment for three months and also to pay a fine of Rs. 250 for each of the offences under ss. 276C(1) and 277 of the Act and no separate sentence was imposed for the other offences alleged under the IPC, 1860. As against this order of the learned Addl. Chief Metropolitan Magistrate, the revision petitioner herein filed the appeal before the Sessions Judge, Madras, and the learned Principal Sessions Judge, Madras, finding that s. 276C(1) of the Act is not attracted for the reason that there was no wilful suppression of the income by the revision petitioner herein, held that he could not be punished for the abovesaid offences but he found him guilty under s. 277 of the Act and also for the other offences under ss. 182, 196 and 420 r/w s. 511 of the IPC, 1860. Hence, the revision petitioner has come forward with this revision.

4. Learned senior counsel, Mr. G. Subramanian, appearing for the revision petitioner, would submit that the petitioner never intended to suppress his income in the return exhibit P-2 submitted by him for 1984-85 but as the property No. 15, Baliah Avenue, was occupied by him and only the notional rental income was to be worked out according to the provisions of the IT Act, by mistake, the notional rental income for the house property was omitted to be mentioned in exhibit P-2 return and this has been accepted by the learned Principal Sessions Judge holding that the omission to include the notional rental income is not wilful on the part of the revision petitioner herein and also has acquitted the revision petitioner on that ground of the charge under s. 276C(1). When such view has been taken by the learned Principal Sessions Judge for the offence under s. 276C(1) of the Act, he cannot take a different view for the offence under s. 277 of the IT Act, holding that the return exhibit P-2, submitted for 1984-85, is a false statement attracting punishment under s. 277 of the IT Act, 1961, and, therefore, the order of the learned Principal Sessions Judge convicting the revision petitioner for the offence under s. 277 of the IT Act, 1961, has to be set aside.

5. Learned senior counsel, Mr. G. Subramanian, would concede that the revision petitioner was not entitled to the benefits of s. 54F of the IT Act, 1961, to claim exemption of capital gain in view of the fact that he owned two premises, that the Department also had subsequently levied the tax on capital gain but the revision petitioner was claiming exemption from the capital gain on wrong advice and that claim has nothing to do with the filling of the return exhibit P-2 for 1984-85. Learned senior counsel further argues that in exhibit P-2, the revision petitioner has specifically mentioned the housing flat in Baliah Avenue while giving the value of the assets, that when he had described the value of the asset, namely, the house property, No. 15, Baliah Avenue, in the IT return exhibit P-2, there could not have been any intention on the part of the revision petitioner to suppress the income from this house property for the purpose of claiming exemption on the capital gain and, therefore, the omission of the notional rental income in exhibit P-2 is only a mistake and this unintentional mistake cannot be used against the petitioner to rope him under s. 277 of the IT Act, 1961.

6. Learned senior counsel further argues that the Tribunal has cancelled the penalty imposed upon the revision petitioner under s. 271(1)(c) of the IT Act as seen from exhibit D-1 and when the penalty proceeding itself has been cancelled holding that there was no violation of the IT law on the part of the revision petitioner, the finding of the Tribunal has to be honoured and the revision petitioner cannot be convicted of the offence under s. 277 of the IT Act, 1961. On a perusal of the order of the Tribunal under exhibit D-1, the Tribunal has not held that the failure of the revision petitioner to mention the income of the house property was unintentional or an incidental omission. But the Tribunal has merely considered the approach on the part of the ITO in imposing the penalty for claiming the exemption under s. 54F by the revision petitioner herein. The Tribunal holds that s. 271(1)(c) of the Act does not seek to punish the assessee for making untenable claims. In this case, as it appears from this order of the Tribunal, the ITO had imposed the penalty under s. 271(1)(c) of the Act against the revision petitioner for the sole reason that he was claiming exemption on the capital gain in spite of the fact that he was not entitled to such claim under s. 54F as he owned two housing properties. Therefore, the Tribunal held that making untenable claims by an assessee is not an offence to punish him under s. 271(1)(c) of the Act. The Tribunal observes that :

"10. .... the ITO's case is that the assessee concealed his income from the Baliah Avenue flat with the ulterior motive of claiming exemption under s. 54, s. 54F. We are convinced that s. 271(1)(c) is not designed to rope in such cases; nor is it the legislative intent that the said section should be invoked in such a fashion."

7. Therefore, as it was contended by the ITO that the rental income was suppressed for the purpose of claiming the exemption, the Tribunal held that s. 271(1)(c) could not be invoked. The Tribunal has further observed.

"10. ..... We could have readily appreciated his stand had the ITO come to the conclusion that the assessee was guilty of concealment of income from the self-occupied Baliah Avenue property. That, however, is not the ITO's case."

8. From the above view taken by the Tribunal, the approach of the Tribunal is not in relation to the point urged in this matter as the revision petitioner herein is convicted for the suppression of his income by filing a false statement. Therefore, exhibit D-1 is not in any way helpful to the revision petitioner.

9. As mentioned above, the learned Principal Sessions Judge has taken the view that when the assessee has mentioned in exhibit P-2 return, filed for 1984-85, the house property, namely, Baliah Avenue flat, while describing the value of the assets, he could not have intended to conceal his income from that property and, therefore, it could not have been an attempt on his part to suppress the notional income from the property. The learned Principal Sessions Judge has expressed his view as follows :

"Failure to mention the notional income therefore does not matter much in view of the fact that the accused appellant has mentioned the presence of the existence of a flat at Baliah Avenue. Therefore, it cannot be said that the omission to mention the notional income from the Baliah Avenue property is a wilful act on the part of the appellant to avail the benefits of the capital gains tax. When he cannot avail of the benefit of capital gains tax, once he admits the existence of Baliah Avenue property, it cannot be said that he can attempt to avail of the said benefit by wilfully suppressing the notional income from the property. In the present case, the notional income which at the most the appellant can show is only a meagre amount, in view of the fact that in the previous returns, it was only Rs. 452 and Rs. 458. By suppressing this meagre amount, nothing could be achieved by the appellant in payment of tax of the said income. While so, the prosecution case is that the attempt of the appellant in concealing the income is with the object of availing of the benefits of the capital gains tax. But the appellant cannot avail of the benefits of the capital gains tax on account of the fact of owning a flat in Baliah Avenue. Therefore, it cannot be said that the omission to mention the notional income from that property is a wilful omission made by the appellant to achieve the object of availing of the benefits of capital gains tax."

10. The learned Principal Sessions Judge has taken a clear view that the omission to mention the notional income of the house property in exhibit P-2 was not wilful and, therefore, it would not amount to an offence under s. 276C of the Act to punish the assessee on the assumption that he tried to evade the tax.

11. In spite of the above findings by the learned Principal Sessions Judge, he has found the revision petitioner guilty of the offence under s. 277 of the IT Act, 1961, holding that when the statement exhibit P-2 is found to be false and untrue, irrespective of the mens rea on the part of the assessee, he is liable to be punished under s. 277 of the IT Act, 1961.

12. The learned Principal Sessions Judge proceeds on the footing that no mens rea or criminal intention is required for the offence under s. 277 of the IT Act, 1961, and when once the return filed by the assessee is found to be false or incorrect, it will constitute the offence punishable under s. 277 of the IT Act, 1961. The learned Principal Sessions Judge observes :

"According to learned counsel appearing for the appellant, it is only a mistake. Whether it is a mistake or a deliberate action, the fact remains that the assessee has signed the statement under verification which contains particulars which are not true. Concealing the income in the IT returns per se being an offence, the appellant has been rightly found guilty of the offence under s. 277(ii) of the Act by the trial Court..."

13. But on a reading of s. 277 of the IT Act, 1961, it does not reveal that a statement with incorrect particulars, per se, becomes an offence. Sec. 277 of the Act reads as follows :

"277. 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."

14. The wording of the section makes it clear that to constitute an offence, the statement under the Act or under any rule, should have been made, or account should have been delivered and such statement or account should be false to the knowledge of the assessee or he should believe the same is false or believe that it is not true. These words very clearly indicate that unless the assessee knows or believes that the statement of account is false, or does not believe it to be true, there cannot be an offence under s. 277 of the IT Act, 1961. When the words are so carefully worded that "he knows or believes to be false", the criminal intention is connected with the filing of the statement or delivering of the account and mens rea becomes an ingredient of the offence. If a person files a statement or delivers an account with incorrect particulars, due to his negligence or lack of knowledge, there is no element of consciousness as to the falsity of the statement or account and in such cases, s. 277 of the Act cannot be made applicable. Learned counsel for the respondent, Mr. Ramasamy, also is unable to support the view of the learned Judge that mens rea is immaterial for this offence. Therefore, the learned Principal Sessions Judge is not correct in holding that the statement which is not true per se, is an offence under s. 277 of the Act.

15. When the learned Principal Sessions Judge has already found that the omission to mention the notional rental income in exhibit P-2 was not wilful, he cannot hold that the revision petitioner has committed the offence under s. 277 of the IT Act, because of the absence of mens rea or criminal intention. The learned Principal Sessions Judge has observed that ss. 182, 196 and s. 420 r/w s. 511 of the IPC, 1860, also have been proved against the revision petitioner since no mens rea is contemplated for these offences also. This view of the learned Principal Sessions Judge also cannot be accepted, because these sections read that the offence should have been committed intentionally.

16. Learned counsel for the Department, Mr. Ramasamy, argued that even though the observation of the learned Judge that criminal intention is not a necessity to constitute the offence, cannot be countenanced, taking into consideration the conduct of the petitioner accused in suppressing the notional rental income purposely for one year, i.e., for 1984-85, to claim exemption from capital gains tax, there cannot be a contra view that the petitioner has no mens rea to file a false statement, for which he has to be dealt with according to law. This argument will have force, had the respondent-Department filed an appeal against the order of acquittal of the learned Principal Sessions Judge for the offence under s. 276C of the Act. When the learned Principal Sessions Judge has given a finding on the facts that the omission to include the notional rental income in the return for 1984-85 is not wilful or wanton and this finding has become final as it was not challenged by any appeal, naturally that finding of fact is binding upon this Court also against which this Court cannot give a different finding on the same facts, though the offence may vary. From the findings of the learned Principal Sessions Judge, as the omission in the return for 1984-85 was not wilful the statement of return is not false to the knowledge of the petitioner, and it cannot attract the punishment under s. 277 of the IT Act, 1961. Hence, the finding of conviction for the said offence is not sustainable and the same is liable to be set aside.

17. In the result, setting aside the conviction and sentence, the revision petitioner is acquitted of the charge. The revision is allowed.