Illiteracy No Excuse For Filing False Income Tax Returns, Court Must Presume Culpable Mental State Under Section 278E: Jharkhand High Court

"Illiteracy or being rustic villager for the purpose of disclosure in the Income Tax Return is no concern or any excuse. The petitioner has willingly and deliberately filed false statement for claiming refund, which comes within the ambit of Section 277 of the Income Tax Act," Jharkhand High Court, in a significant judgment, has held that a taxpayer cannot escape criminal liability for filing false income tax returns by pleading illiteracy or lack of education.

A bench of Justice Pradeep Kumar Srivastava observed that under Section 278E of the Income Tax Act, the court must presume the existence of a culpable mental state, and the burden lies on the accused to prove otherwise.

The petitioner, an employee of Eastern Coalfield Limited and a tax assessee, filed his Income Tax Return for the Assessment Year 2002-03, claiming a refund of Rs. 35,500 based on a housing loan and TDS certificates. An enquiry by the Income Tax Department revealed that the TDS certificate was forged and no such housing loan had been sanctioned. Consequently, he was convicted by the Special Judge (Economic Offences), Dhanbad, under Section 277 of the Income Tax Act and sentenced to six months of rigorous imprisonment, a decision later upheld by the Sessions Court.

The primary question before the Court was whether the petitioner could be held liable under Section 277 of the Income Tax Act when he claimed that the false return was filed by an office clerk without his specific instructions. The Court also considered whether the petitioner's plea of being uneducated was sufficient to rebut the statutory presumption of a culpable mental state under Section 278E of the Act.

Claiming Refund Based On Forged Documents Attracts Criminal Liability

The Court noted that the petitioner had specifically claimed deductions and a refund of Rs. 35,500 on the grounds of a housing loan. However, the evidence provided by the Income Tax Officer (PW-4) and the Deputy Commissioner of Income Tax (PW-6) clearly established that the documents relied upon were forged. The Bank of India also confirmed that no housing loan existed in the name of the accused.

The bench observed that the filing of a return containing a verification that the person knows or believes to be false is a direct violation of Section 277. The Court emphasized that the act of claiming a refund through fabricated documents constitutes a deliberate attempt to evade tax or obtain an undue financial benefit from the state.

Illiteracy Is Not A Valid Defense For Misstatements In IT Returns

The petitioner argued that as an uneducated person, he had requested an office clerk to file his return and was unaware of the specific claims made therein. The Court categorically rejected this contention, stating that the law does not provide an exemption for taxpayers based on their educational status or background.

The bench held that the responsibility for the accuracy of the statements made in an Income Tax Return rests solely with the assessee who signs the verification. The Court noted that the petitioner admitted his signature on the show-cause reply, which further weakened his defense of being an uninformed bystander in the filing process.

"Illiteracy or being rustic villager for the purpose of disclosure in the Income Tax Return is no concern or any excuse."

Statutory Presumption Of Culpable Mental State Under Section 278E

The Court highlighted the impact of Section 278E of the Income Tax Act, which creates a mandatory legal presumption regarding the accused's mental state. According to this provision, in any prosecution requiring a culpable mental state, the Court "shall presume" its existence. The burden of proof then shifts to the accused to prove through a preponderance of probability that they had no such intention or knowledge.

Justice Srivastava remarked that the petitioner failed to furnish any valid explanation or evidence to rebut this presumption. The Court found that the trial and appellate courts were correct in their concurrent findings that the petitioner had willingly and deliberately filed a false statement to claim a refund.

"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."

Concurrent Findings Of Lower Courts Require No Interference

The High Court observed that the trial court had passed a reasoned order based on both oral and documentary evidence, including the original SARAL return and the testimony of bank officials. Since the petitioner could not point out any serious error of law or jurisdictional infirmity in the lower court judgments, the High Court declined to exercise its revisional jurisdiction.

The Court concluded that there was no legal substance in the arguments raised by the petitioner. The bench affirmed that the conviction and sentence were legally tenable and reflected the gravity of economic offences involving the forgery of financial documents.

The Criminal Revision was dismissed, and the petitioner’s bail bond was cancelled. The Court directed the petitioner to surrender before the Trial Court within two months to undergo the remaining period of his six-month sentence. The ruling reinforces that the statutory burden under the Income Tax Act makes it difficult for assessees to plead ignorance or third-party negligence when faced with charges of filing false verifications.

Date of Decision: 02 July 2026