The Hindu Business Line : India Inc for review of `falsification of accounts' proposal

CORPORATE India has stepped up pressure on the Finance Ministry to modify the proposed provision in the Income-Tax law on falsification of books of accounts.

Stating that this proposal in the Finance Bill 2004 has created a fear psychosis among industry and chartered accountants, the Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the Finance Minister, Mr P. Chidambaram, to do away with the `explanation' to the proposed Section 277A of the Income-Tax Act.

The Section 277A provides that it would be sufficient for the tax authorities to allege a "general intent" to enable the other person to evade any tax, penalty or interest without specifying any particular instance where such tax, penalty or interest would have been evaded by such other person.

"The proposed amendment gives unduly wide powers of prosecution without tax department having to prove that such an offence has been willingly and intentionally committed. The proposed `explanation' is beyond the well-settled principles of criminal jurisprudence," FICCI said in its post-Budget memorandum submitted to the Government.

On its part, the PHD Chamber of Commerce and Industry (PHDCCI) has called for withdrawal of the proposed Section 277A.

In a representation to the Finance Ministry, PHDCCI has said that at a time when the tax authorities are being asked to encourage an "assessee-friendly" environment, introducing such a provision in the Act that gives sweeping powers to the Income-Tax official to allege a "general intent" would be a retrograde step.

This would amount to bringing any tax practitioner into the net of the income tax official merely on suspicion without establishing mens rea as required by common law, the PHDCCI has said.

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