Section 277 — False statement in verification, etc.
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live and frequently invoked, usually with section 276C.
Finance Act, 2026: AMENDED w.e.f. 1 March 2026 — clauses recast into graded thresholds; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes a person who makes a false statement in any verification, or delivers a false account/statement, knowing or believing it to be false, or not believing it to be true.
Litigation profile: High — governed by the same Supreme Court line as section 276C on mens rea and the conclusive effect of favourable findings.
A. COMMENTARY
The offence — falsity plus guilty knowledge
Section 277 punishes a false statement in a verification (most commonly the verification of a return), or the delivery of a false account or statement, where the maker either knows or believes it to be false, or does not believe it to be true. The ingredients are therefore (i) a statement/account false in a material particular; and (ii) the requisite guilty knowledge. It is the income-tax counterpart of perjury/false-evidence offences and is almost invariably charged together with section 276C (wilful evasion) where a concealment case is prosecuted.
Mens rea, the evidentiary source, and the conclusiveness principle
As with section 276C, the prosecution must establish that the statement was false and that the accused knew it to be false or did not believe it to be true; mens rea is essential (Prem Dass), and the incriminating material must emanate from the assessee (Srinidhi Karti Chidambaram). Crucially, where the Tribunal finds that the return/statement was not false — that the firm was genuine or that there was no concealment — that finding is conclusive and the section 277 prosecution cannot stand (Uttam Chand; K.C. Builders; G.L. Didwania). Conversely, the pendency of assessment does not bar prosecution (P. Jayappan).
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 27 of the Finance Act, 2026, with effect from 1 March 2026, clauses (i) and (ii) of section 277 are substituted by a graded structure: (a) simple imprisonment up to two years, or fine, or both, where the tax that would have been evaded if the false statement/account had been accepted exceeds Rs. 50 lakh; (b) simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and (c) fine only in any other case. The rigorous imprisonment and the mandatory minimum sentences are removed and the Rs. 25 lakh single threshold is replaced by the Rs. 50 lakh / Rs. 10 lakh bands. The substantive ingredients (falsity plus knowledge) are unchanged. The verbatim text in Part B is the pre-amendment text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text; from 1 March 2026 the punishment clauses are recast into graded thresholds with simple imprisonment — see the amendment note above.
False statement in verification, etc.
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 twenty-five 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 two years and with fine.
C. AUTHORITIES
The governing authorities overlap substantially with section 276C; they are grouped by mens rea, the Tribunal-finding linkage, and corporate liability.
Cluster 1 — Falsity and guilty knowledge must be proved; source of evidence
Prem Dass v. ITO (1999) 236 ITR 683 (SC)
Citation (1999) 236 ITR 683 (SC).
Facts Prosecution under sections 277/276C(2); the question was whether the requisite mental element had been established.
Held / ratio The prosecution must prove both that the statement was false and that the accused knew it to be false (or did not believe it true); mens rea is an essential ingredient and cannot be presumed from mere default.
Significance The leading authority that section 277 requires proof of guilty knowledge.
Srinidhi Karti Chidambaram v. PCIT (2021) 437 ITR 206 (Mad)
Facts Prosecution under sections 276C/277/278 resting largely on statements and material gathered from third persons; the section 279 sanction was challenged.
Held / ratio For section 277 (and 276C/278) the incriminating material must emanate from the assessee; third-party material plus the assessee's denial does not establish the false statement, and a sanction reflecting non-application of mind is bad. Prosecution quashed.
Significance A recent High Court authority on the evidentiary source and sanction validity for section 277.
Cluster 2 — Tribunal (ITAT) finding that the return is not false is conclusive
The Tribunal does not try the section 277 charge, but a conclusive finding that the return/statement was not false destroys the substratum of the offence and obliges quashing.
Uttam Chand v. ITO (1982) 133 ITR 909 (SC)
Citation (1982) 133 ITR 909 (SC).
Facts Prosecution proceeded on the basis that the firm was not genuine and the return false; the Tribunal found the firm genuine.
Held / ratio Where the Tribunal finds the return not false, the partner cannot be prosecuted under section 277; prosecution quashed.
Significance The earliest application of the conclusiveness principle to section 277.
K.C. Builders v. ACIT (2004) 265 ITR 562 (SC)
Citation (2004) 265 ITR 562 (SC).
Facts The Tribunal cancelled the concealment penalty on a finding of no concealment, the penalty having been the basis of the section 276C/277 complaint.
Held / ratio Cancellation of the penalty on a finding of no concealment knocks out the basis of the section 277 (and 276C) prosecution; quashing follows by operation of law.
Significance Extends the linkage squarely to section 277.
G.L. Didwania v. ITO (1997) 224 ITR 687 (SC)
Citation (1997) 224 ITR 687 (SC).
Facts The Tribunal held the suppressed income did not belong to the assessee, negating the alleged false statement.
Held / ratio A Tribunal finding that there was no false statement is conclusive; a section 277 prosecution built on the same allegation cannot be sustained.
Significance Confirms the binding effect of a conclusive appellate finding.
Cluster 3 — Pendency no bar; corporate liability
P. Jayappan v. S.K. Perumal (1984) 149 ITR 696 (SC)
Citation (1984) 149 ITR 696 (SC).
Facts / holding Assessment pendency does not bar a section 277/276C prosecution; the criminal court proceeds independently, subject to the Uttam Chand escape route if a conclusive favourable finding is later recorded.
Standard Chartered Bank v. Directorate of Enforcement (2005) 4 SCC 530 (SC, CB)
Citation (2005) 4 SCC 530 (Constitution Bench).
Facts / holding A company is prosecutable even for offences carrying mandatory imprisonment and fine; the court imposes fine. Overrules Velliappa Textiles (2003) 263 ITR 550. Decisive for prosecuting companies under section 277 read with section 278B.
CHAPTER XXII — OFFENCES AND PROSECUTIONS
Section 277 — False statement in verification, etc.
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live and frequently invoked, usually with section 276C.
Finance Act, 2026: AMENDED w.e.f. 1 March 2026 — clauses recast into graded thresholds; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes a person who makes a false statement in any verification, or delivers a false account/statement, knowing or believing it to be false, or not believing it to be true.
Litigation profile: High — governed by the same Supreme Court line as section 276C on mens rea and the conclusive effect of favourable findings.
A. COMMENTARY
The offence — falsity plus guilty knowledge
Section 277 punishes a false statement in a verification (most commonly the verification of a return), or the delivery of a false account or statement, where the maker either knows or believes it to be false, or does not believe it to be true. The ingredients are therefore (i) a statement/account false in a material particular; and (ii) the requisite guilty knowledge. It is the income-tax counterpart of perjury/false-evidence offences and is almost invariably charged together with section 276C (wilful evasion) where a concealment case is prosecuted.
Mens rea, the evidentiary source, and the conclusiveness principle
As with section 276C, the prosecution must establish that the statement was false and that the accused knew it to be false or did not believe it to be true; mens rea is essential (Prem Dass), and the incriminating material must emanate from the assessee (Srinidhi Karti Chidambaram). Crucially, where the Tribunal finds that the return/statement was not false — that the firm was genuine or that there was no concealment — that finding is conclusive and the section 277 prosecution cannot stand (Uttam Chand; K.C. Builders; G.L. Didwania). Conversely, the pendency of assessment does not bar prosecution (P. Jayappan).
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 27 of the Finance Act, 2026, with effect from 1 March 2026, clauses (i) and (ii) of section 277 are substituted by a graded structure: (a) simple imprisonment up to two years, or fine, or both, where the tax that would have been evaded if the false statement/account had been accepted exceeds Rs. 50 lakh; (b) simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and (c) fine only in any other case. The rigorous imprisonment and the mandatory minimum sentences are removed and the Rs. 25 lakh single threshold is replaced by the Rs. 50 lakh / Rs. 10 lakh bands. The substantive ingredients (falsity plus knowledge) are unchanged. The verbatim text in Part B is the pre-amendment text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text; from 1 March 2026 the punishment clauses are recast into graded thresholds with simple imprisonment — see the amendment note above.
False statement in verification, etc.
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 twenty-five 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 two years and with fine.
C. AUTHORITIES
The governing authorities overlap substantially with section 276C; they are grouped by mens rea, the Tribunal-finding linkage, and corporate liability.
Cluster 1 — Falsity and guilty knowledge must be proved; source of evidence
Prem Dass v. ITO (1999) 236 ITR 683 (SC)
Citation (1999) 236 ITR 683 (SC).
Facts Prosecution under sections 277/276C(2); the question was whether the requisite mental element had been established.
Held / ratio The prosecution must prove both that the statement was false and that the accused knew it to be false (or did not believe it true); mens rea is an essential ingredient and cannot be presumed from mere default.
Significance The leading authority that section 277 requires proof of guilty knowledge.
Srinidhi Karti Chidambaram v. PCIT (2021) 437 ITR 206 (Mad)
Citation (2021) 437 ITR 206 / 282 Taxman 112 (Madras).
Facts Prosecution under sections 276C/277/278 resting largely on statements and material gathered from third persons; the section 279 sanction was challenged.
Held / ratio For section 277 (and 276C/278) the incriminating material must emanate from the assessee; third-party material plus the assessee's denial does not establish the false statement, and a sanction reflecting non-application of mind is bad. Prosecution quashed.
Significance A recent High Court authority on the evidentiary source and sanction validity for section 277.
Cluster 2 — Tribunal (ITAT) finding that the return is not false is conclusive
The Tribunal does not try the section 277 charge, but a conclusive finding that the return/statement was not false destroys the substratum of the offence and obliges quashing.
Uttam Chand v. ITO (1982) 133 ITR 909 (SC)
Citation (1982) 133 ITR 909 (SC).
Facts Prosecution proceeded on the basis that the firm was not genuine and the return false; the Tribunal found the firm genuine.
Held / ratio Where the Tribunal finds the return not false, the partner cannot be prosecuted under section 277; prosecution quashed.
Significance The earliest application of the conclusiveness principle to section 277.
K.C. Builders v. ACIT (2004) 265 ITR 562 (SC)
Citation (2004) 265 ITR 562 (SC).
Facts The Tribunal cancelled the concealment penalty on a finding of no concealment, the penalty having been the basis of the section 276C/277 complaint.
Held / ratio Cancellation of the penalty on a finding of no concealment knocks out the basis of the section 277 (and 276C) prosecution; quashing follows by operation of law.
Significance Extends the linkage squarely to section 277.
G.L. Didwania v. ITO (1997) 224 ITR 687 (SC)
Citation (1997) 224 ITR 687 (SC).
Facts The Tribunal held the suppressed income did not belong to the assessee, negating the alleged false statement.
Held / ratio A Tribunal finding that there was no false statement is conclusive; a section 277 prosecution built on the same allegation cannot be sustained.
Significance Confirms the binding effect of a conclusive appellate finding.
Cluster 3 — Pendency no bar; corporate liability
P. Jayappan v. S.K. Perumal (1984) 149 ITR 696 (SC)
Citation (1984) 149 ITR 696 (SC).
Facts / holding Assessment pendency does not bar a section 277/276C prosecution; the criminal court proceeds independently, subject to the Uttam Chand escape route if a conclusive favourable finding is later recorded.
Standard Chartered Bank v. Directorate of Enforcement (2005) 4 SCC 530 (SC, CB)
Citation (2005) 4 SCC 530 (Constitution Bench).
Facts / holding A company is prosecutable even for offences carrying mandatory imprisonment and fine; the court imposes fine. Overrules Velliappa Textiles (2003) 263 ITR 550. Decisive for prosecuting companies under section 277 read with section 278B.