What is falsification of accounts?

Question: What is falsification of accounts?

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Answer

Section 477A deals with the falsification of accounts. It speaks essentially of two offences, namely:

1. defrauding, altering, destroying, mutilating or falsifying any book or accounts or electronic record; and
2. making or abetting the making of false entries in the same.

These two offences are distinct and not interdependent. The main ingredients of the section are:

1. the persons covered by the provision are, a clerk, officer, or servant, or acting in such capacity;
2. he must willfully and with the intention to defraud:
   destroy, alter, mutilate or falsify any book, electronic record, paper, writing, valuable security;
3. which belongs to, or is in possession of, his employer;
4. has been received by him for, or on behalf of, his employer; or

2. makes or abets the making of any false entry in or omits or alters from or in any such book, electronic record, paper, writing, valuable security or account.

Thus, the offence is established where it is shown that there was falsification of accounts with the intention to defraud by either falsifying accounts or making false entries in any of the valuable securities mentioned in the section. The section does not require any deprivation of property.

The importance of proving that the act of the accused was wilful and possessed the intention to defraud as an essential element to prove the offence under section 477A was stated by the Supreme Court in Harnam Singh v. Delhi Administration [AIR 1976 SC 2140]. In this case, the accused was a goods loading clerk of the Indian Railways.

He was prosecuted and convicted for committing offences under section 477A, IPC, for falsifying certain entries in the marketing-cum-loading register to show that a certain consignment of cloth from a cotton mill was received on 10 January 1967, as there were restrictions on booking of goods which became effective from the next day, i.e., 11 January 1967.

It was the contention of the accused that he had no intention to defraud, as he had made an entry about the date of receiving the goods based on the intimation given by the time-keeper. And in any case, he had put the correct date under his signature in the same register as 11 January 1967.

In accepting his contentions, the Supreme Court said that ‘wilfully’ as used in s 477A, meant intentionally or deliberately doing an act. By the mere fact that some entries were made wilfully, it need not necessarily imply that the accused did so with the intention to defraud within the meaning of the section.

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