BNS Section 344: Falsification of Accounts

Definition of BNS Section 344

Section 344 of the Bharatiya Nyaya Sanhita (BNS), 2023 states:

Whoever, being a clerk, officer or servant, or employed or acting in the capacity of a clerk, officer or servant, wilfully, and with intent to defraud, destroys, alters, mutilates or falsifies any book, electronic record, paper, writing, valuable security or account which belongs to or is in the possession of his employer, or has been received by him for or on behalf of his employer, or wilfully, and with intent to defraud, makes or abets the making of any false entry in, or omits or alters or abets the omission or alteration of any material particular from or in, any such book, electronic record, paper, writing, valuable security or account, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.

Explanation.—It shall be sufficient in any charge under this section to allege a general intent to defraud without naming any particular person intended to be defrauded or specifying any particular sum of money intended to be the subject of the fraud, or any particular day on which the offence was committed.

Explanation and Illustration of BNS Section 344

This section is applicable to any person within the sovereign borders of India, whether citizen, resident or otherwise. It deals with the offence of falsifying accounting records. Let us break down the section to get a better understanding of it.

• Offence

  This section deals specifically with the act of falsifying books of records. The offence has been categorised into two types of acts for the purposes of this section. Let us take a look at the two.
  
  Destroying accounting records - Since this section is specific to falsifying of accounting records, it usually applies to persons who have access to such records such as, a clerk, officer or servant, or any other person who has been employed to act in the capacity of a clerk, officer or servant. If any such person with access to the accounting records of a person or a business wilfully destroys, alters, mutilates or falsifies any book, record, ledger, or any other item that contains any details of the accounts of the employer or the business and does so with intent of committing fraud, then it shall be considered an offence under the provisions of this section. The last part regarding the intent is very crucial to this offence. The destruction of the accounts must have been done only for the purpose of committing fraud. But if it has been done for any other reason, it will not fall under this section and will instead be treated as a criminal breach of trust.
  
  For instance, Z, an accountant, embezzles some money from his employer and then destroys a a part of the accounting ledger that contains details of revenue made so that it may seem like the employer has made lesser revenue and will hence not notice the missing money. This amounts to an offence under the provisions of this section.
  
  But say, Z destroys the books of accounts so that it would cause confusion in the accounts and lead to regulatory problems for the employer because Z did not get a promotion and wants to take revenge. This is not an act of fraud and hence does not constitute an offence under the provisions of this section. However, Z is still guilty of criminal breach of trust and shall be punished under the provision of that respective section.
  
  Altering or misreporting the accounts - if any of the persons described above alters or omits any material item from the accounts that shall be considered as an offence under this section as well. However, two conditions have been put forth. It has to be done with the intention of committing fraud. And the item that has been altered or omitted has to be of material value. That is, the alteration or omission of the item should have a significant impact on the profit or loss calculated at the end of the accounts. If the item has no material impact on the results of the accounting, then it may not be considered an offence under the provisions of this section.
  
  For instance, Z receives payment from a customer, which he pockets and then alters the books of accounts to make it look like the customer never owed any money to the employer hence ensuring that the owner does not notice. Now if the annual turnover of the employer is ten lakhs, and the amount of money embezzled is one lakh, then it is almost ten percent of the annual turnover which is considered a material amount. But if the amount diverted from the books is, say, five hundred rupees, then it may not amount to an offence under this section.
  
  Further there is an explanation that clarifies that if a general intent to defraud is established at the time of investigating such an action, then the specifics of date, amount and intended victim are irrelevant. This is because sometimes a person may defraud several people at once or commit small immaterial fraudulent acts everyday for a long period of time. The specifics of these are impossible or tedious to put together. So this ensures that a person whose intent has been established is automatically culpable under the provisions of this section

• Punishment

  Any person found guilty of destroying or misreporting any accounting records for dishonest or fraudulent purposes shall be punished with imprisonment for a term which may extend to seven years, or with fine, or with both.

• The above actions may not be an offence under this section if:

  • The offender is forced or coerced into performing the offence
  • The offender is a minor or not of sane mind.

• However, there may be other sections under the BNS under which the above actions can be prosecuted and while they may be disqualified under the provisions of this section, such actions will still be punishable under the provisions of those respective sections of the BNS.

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