Section 278E of ITA, 1961 : Section 278E: Presumption As To Culpable Mental State

Explanation using Example

Imagine a business owner, Mr. Sharma, who is being prosecuted for tax evasion under the Income-tax Act, 1961. The prosecution must establish that Mr. Sharma had a "culpable mental state," meaning he intentionally evaded taxes. According to Section 278E, the court will initially presume that Mr. Sharma had the intention to evade taxes. However, Mr. Sharma can defend himself by presenting evidence that he did not have the intention, motive, or knowledge that would constitute a culpable mental state. For example, if Mr. Sharma can prove that his accountant made an error without his knowledge, he might successfully argue that he lacked the requisite mental state for the offence of tax evasion.