Satish Chandra, C.J.

1. ON November 28, 1979, the Income-tax Officer, Central Circle III, Meerut, filed two complaints under Sections 277 and 278 of the I.T. Act, 1961, against nine persons, the ninth of which was M/s. Modi Industries Ltd., Modinagar, through its chairman, Sri K.N. Modi. One complaint related to the assessment year 1965-66, while the other related to the year 1966-67. It was alleged that M/s. Modi Industries Ltd., accused No. 9, filed returns of its income for the aforesaid assessment years wherein deliberately excessive expenditure was claimed in the form of payment of agency commission to several firms. The assessments were completed on March 24, 1970, for the assessment year 1965-66, and on March 26, 1971, for the year 1966-67. For both the years the excessive claim was disallowed on the finding that the firms to whom the agency commission was alleged to have been paid were bogus and non-existing firms to the knowledge of the concerned persons. In para. 30 of the complaint, it was stated that accused No. 1 in collusion with other accused at serial numbers 2, 3, 4, 5 and 8 had fabricated false evidence in supporting the false accounts to avoid payment of r