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Issues:
1. Whether the criminal prosecution of the petitioner under s. 276CC of the IT Act should be quashed. 2. Whether the delay in filing the return of income was wilful. 3. Whether the absence of penalty imposed by the ITO indicates a lack of wilful default. 4. Whether the special Court's constitution for trial of economic offences was illegal. Analysis: Issue 1: The petitioner challenged the criminal prosecution under s. 276CC of the IT Act, arguing that the delay in filing the return was not wilful. The complaint alleged wilful failure based on the due date for filing the return and the subsequent delay. The court noted that the presumption of culpable mental state under s. 278E could be rebutted by the accused. The petitioner's explanation for the delay, citing public engagements, was considered insufficient to prove lack of wilful default. The court concluded that the prosecution could not be quashed solely on the ground of absence of wilful default. Issue 2: The petitioner contended that since no penalty was imposed by the ITO under s. 271(1)(a) of the Act, it indicated a lack of wilful default. However, the court clarified that the absence of a penalty order did not automatically imply a reasonable cause for the delay. Citing a precedent, the court emphasized that the mere absence of a penalty order did not establish the lack of wilful default. The petitioner's argument based on the absence of penalty imposition was deemed insufficient to quash the criminal prosecution. Issue 3: The petitioner initially raised a ground challenging the constitution of the special Court for trial of economic offences. However, this ground was withdrawn during the proceedings as the situation had changed. The court acknowledged this withdrawal and proceeded to address the remaining grounds raised by the petitioner. The court rejected the argument that the constitution of the special Court rendered the prosecution illegal, as the petitioner's focus shifted to challenging the prosecution on the grounds of wilful default and absence of penalty imposition. Conclusion: The court, after considering the arguments presented by both parties, held that the allegations in the complaint prima facie constituted an offence under s. 276CC of the IT Act. Consequently, the court dismissed the application to quash the criminal prosecution, stating that the inherent powers of the Court could not be exercised to quash the prosecution. The court clarified that any observations made during the judgment were solely for the purpose of disposing of the application and should not be construed as an opinion on the case's merits.
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